The US Securities and Exchange Commission (SEC) has announced charges against Invesco Advisers, Inc., alleging that the firm misled clients about the proportion of its assets under management (AUM) that incorporated environmental, social, and governance (ESG) factors in investment decisions. Invesco, based in Atlanta, has agreed to a settlement, including a $17.5 million civil penalty, to resolve the SEC’s claims.
The SEC’s findings reveal that from 2020 to 2022, Invesco’s client communications and marketing materials stated that between 70% and 94% of its parent company’s AUM were “ESG integrated.” However, these figures allegedly included substantial assets in passive ETFs that did not consider ESG factors. Additionally, the SEC noted that Invesco lacked a formal written policy defining its approach to ESG integration.
“As stated in the order, Invesco saw commercial value in claiming that a high percentage of company-wide assets were ESG integrated. But saying it doesn’t make it so. Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement.
The SEC has charged Invesco with willful violations of the Investment Advisers Act of 1940. Invesco, without admitting or denying the findings, has consented to cease and desist from further violations, face censure, and pay the $17.5 million penalty.
The investigation was led by Jonathan T. Menitove from the SEC’s Asset Management Unit, with contributions from Richard Rodriguez in the Atlanta Regional Office. Supervision was provided by Ruth Hawley from the San Francisco Regional Office and Stephen E. Donahue from Atlanta, alongside Andrew Dean and Corey Schuster from the Asset Management Unit.