Deutsche Bank spin-off DWS has agreed to pay a combined US$25 million to settle two Securities and Exchange Commission (SEC) probes into its Environmental, Social and Governance (ESG) practices and anti-money laundering programs.
Asset manager DWS made “concerning” misstatements over its ESG policies and also failed to put safeguards in place to prevent money laundering, the SEC said in a statement.
According to the US regulator, investors were billed for its ESG practices between 2018 and 2021 despite DWS failing to implement such policies.
“Whether advertising how they incorporate ESG factors into investment recommendations or making any other representation that is material to investors, investment advisers must ensure that their actions conform to their words,” SEC deputy director Sanjay Wadhwa said.
No system was in place to flag any potential cases of money laundering meanwhile, which is required by law.
“DWS advised mutual funds with billions of dollars in assets, yet failed to ensure that the funds had an anti-money laundering program tailored to their specific risks,” SEC director Gurbir S Grewal said.
As a result, DWS agreed to pay US$19 million and US$6 million to settle the two cases respectively.
DWS responded that it had taken steps to address weaknesses, adding the firm stood by ESG statements made in disclosures.