Post by account_disabled on Feb 27, 2024 1:29:01 GMT -5
The US regulator announced a million-dollar sanction to the investment advisor division of the financial institution, the cause? Possible greenwashing practices . Will this case, where the Securities and Exchange Commission (SEC) fines BNY Mellon, leave a precedent for responsible investments?
According to the Financial Times portal, this conviction is due to not having integrated ESG (Environmental, Social and Governance) criteria to evaluate funds over several years.
SEC fines BNY Mellon
Fines for greenwashing
The omission of information has cost the Chinese American Phone Number List investment advisor division $1.5 million. Which has also translated into losses that exceeded 1,000 million.
SEC fines BNY Mellon
This comes just days before the SEC proposes rules that will establish how financial companies can apply ESG or other green labels to investment funds. The agency has been increasingly on the hunt for possible greenwashing — bad practices by some companies, which present products as environmentally friendly, but they are not.
Lack of clarity on ESG
As cited by the Financial Times , from July 2018 to September 2021, BNY Mellon suggested in documents that all investments in the funds had undergone an ESG quality review. But, the SEC has indicated that this was not always the case. Investments held by certain funds did not have a quality review score at the time they were made.
BNY Mellon Investment Adviser did not always perform the ESG quality review it disclosed as part of its investment selection process for certain mutual funds it advised
Sanjay Wadhwa, deputy director of enforcement at the SEC.
As the order puts it, between January 2019 and March 2021, of 185 investments made by a mutual fund advised by BNY Mellon Investment Adviser, 67 allegedly lacked an ESG quality review score, which represented almost a quarter of net assets.
SEC fines BNY Mellon
Registered investment funds and advisors 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.
Adam Aderton, co-director of the Compliance division of the Wall Street regulator, has explained that the SEC holds managers and advisors responsible when they do not accurately describe the incorporation of ESG criteria in the selection of their investments.
SEC fines BNY Mellon: Guilty
For its part, the investment advisor division BNY Mellon has not admitted carrying out the greenwashing practices exposed by the SEC, but it has not denied it either. It has limited itself to abiding by the resolution and ensuring that it will improve the way it interacts with its customers.
We take regulatory measures and compliance responsibilities very seriously.
BNY Mellon.
SEC fines BNY Mellon
ESG regulations grow
The growth of investments in sustainable funds has exceeded 2.77 trillion dollars, according to Morningstar, and is close to tripling the historic barrier of one trillion that was surpassed in 2019.
Therefore, the SEC is expected to increase the number of specifications that asset managers must disclose regarding investments classified as ESG. Finally, although SEC fines BNY Mellon, being the first case of its kind, it will surely leave a precedent against future greenwashing investments .
According to the Financial Times portal, this conviction is due to not having integrated ESG (Environmental, Social and Governance) criteria to evaluate funds over several years.
SEC fines BNY Mellon
Fines for greenwashing
The omission of information has cost the Chinese American Phone Number List investment advisor division $1.5 million. Which has also translated into losses that exceeded 1,000 million.
SEC fines BNY Mellon
This comes just days before the SEC proposes rules that will establish how financial companies can apply ESG or other green labels to investment funds. The agency has been increasingly on the hunt for possible greenwashing — bad practices by some companies, which present products as environmentally friendly, but they are not.
Lack of clarity on ESG
As cited by the Financial Times , from July 2018 to September 2021, BNY Mellon suggested in documents that all investments in the funds had undergone an ESG quality review. But, the SEC has indicated that this was not always the case. Investments held by certain funds did not have a quality review score at the time they were made.
BNY Mellon Investment Adviser did not always perform the ESG quality review it disclosed as part of its investment selection process for certain mutual funds it advised
Sanjay Wadhwa, deputy director of enforcement at the SEC.
As the order puts it, between January 2019 and March 2021, of 185 investments made by a mutual fund advised by BNY Mellon Investment Adviser, 67 allegedly lacked an ESG quality review score, which represented almost a quarter of net assets.
SEC fines BNY Mellon
Registered investment funds and advisors 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.
Adam Aderton, co-director of the Compliance division of the Wall Street regulator, has explained that the SEC holds managers and advisors responsible when they do not accurately describe the incorporation of ESG criteria in the selection of their investments.
SEC fines BNY Mellon: Guilty
For its part, the investment advisor division BNY Mellon has not admitted carrying out the greenwashing practices exposed by the SEC, but it has not denied it either. It has limited itself to abiding by the resolution and ensuring that it will improve the way it interacts with its customers.
We take regulatory measures and compliance responsibilities very seriously.
BNY Mellon.
SEC fines BNY Mellon
ESG regulations grow
The growth of investments in sustainable funds has exceeded 2.77 trillion dollars, according to Morningstar, and is close to tripling the historic barrier of one trillion that was surpassed in 2019.
Therefore, the SEC is expected to increase the number of specifications that asset managers must disclose regarding investments classified as ESG. Finally, although SEC fines BNY Mellon, being the first case of its kind, it will surely leave a precedent against future greenwashing investments .