The SEC has charged BNY Mellon Investment Adviser for misstatements and omissions on ESG considerations regarding investment decisions for certain mutual funds it managed.
According to the SEC, to settle the charges, BNY Mellon Investment Adviser has agreed to pay a penalty of $1.5m.
The SEC’s order found that from July 2018 to September 2021, BNY Mellon Investment Adviser represented or implied in various statements that all investments in the funds had undergone an ESG quality review, even though this was found to not always be the case.
BNY Mellon Investment Adviser consented to the entry of the SEC’s order finding that it violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-7 and 206(4)-8 and Section 34(b) of the Investment Company Act.
Without admitted or denying the findings, the company has agreed to a cease-and-desist order, a censure and the penalty. It also undertook remedial acts and cooperated with SEC staff in its investigation.
Sanjay Wadhwa – SEC deputy director of division of enforcement and head of its climate and ESG Task Force – said, “Registered investment advisers and funds are increasingly offering and evaluating investments that employ ESG strategies or incorporate certain ESG criteria, in part to meet investor demand for such strategies and investments. Here, our order finds that BNY Mellon Investment Adviser did not always perform the ESG quality review that it disclosed using as part of its investment selection process for certain mutual funds it advised.”
Co-chief of the SEC Enforcement Division’s Asset Management Unit Adam Aderton added, “Investors are increasingly focused on ESG considerations when making investment decisions. As this action illustrates, the Commission will hold investment advisers accountable when they do not accurately describe their incorporation of ESG factors into their investment selection process.”
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