Advisory Firm Pays $17.5M Civil Penalty To Settle SEC Charges for Making …

On November 8, 2024, the Securities and Exchange Commission (SEC) took action against Invesco Advisers, Inc. for misleading statements about the percentage of assets under management (AUM) that incorporated environmental, social, and governance (ESG) factors in investment decisions. In order to address these claims, Invesco has agreed to pay a $17.5 million civil penalty.

According to the SEC’s findings, from April 2020 to July 2022, Invesco exaggerated the percentage of firmwide ESG-integrated AUM in communications with clients and in public documents. They claimed that 70% to 94% of AUM was ESG integrated, including assets in passive exchange-traded funds that did not consider ESG factors. The SEC determined that these claims were misleading and that Invesco lacked clear definitions or procedures for assessing which strategies truly qualified as ESG integrated.

This enforcement action is part of a broader trend of the SEC cracking down on greenwashing claims within the financial industry. Other firms, such as Goldman Sachs Asset Management, LP, Deutsche Bank subsidiary DWS Investment Management Americas, Inc., and WisdomTree Asset Management, Inc., have also faced penalties for similar violations in recent years.

Moving forward, advisory firms should be aware that the SEC will continue to closely examine ESG-related claims. Firms should establish clear policies and procedures for considering ESG factors in investment decisions and ensure that their disclosures are accurate and consistent. By being transparent and accountable in their ESG practices, firms can avoid potential enforcement actions from regulatory authorities.