adequately disclose conflicts of interest to its clients, the U.S. Securities and Exchange Commission (SEC) said.
The SEC accused DWS of misleading investors by claiming that its ESG investment strategy was based on a proprietary model. However, according to the regulator, the firm did not use the model consistently and sometimes deviated from the factors it claimed to consider when making investment decisions. The SEC also found that DWS failed to disclose certain conflicts of interest that could have impacted its management of ESG investments.
As part of the settlement, DWS neither admitted nor denied the SEC’s findings but agreed to pay a $25 million penalty. The investment adviser also committed to enhancing its policies and procedures relating to ESG investments and conflicts of interest.
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