SEC charges BNY Mellon Investment Adviser over ESG misstatements

The US Securities and Exchange Commission (SEC) has charged the investment management arm of BNY Mellon for misstatements and omissions regarding how the firm incorporates environmental, social and governance (ESG) factors into its investment decisions. The SEC also levied a fine of $1.5m on BNY Mellon Investment Adviser. The SEC argued that between July 2018 and September 2021, the company had implied that ESG quality reviews were adopted for a number of its funds. However, the SEC found that this was not the case. Demand for investment products that factor in ESG criteria is high, resulting in many firms offering new funds along ESG lines. However, this also has the risk of greenwashing. Financial regulators have expressed concern about this issue, with the SEC's move on BNY Mellon signalling a willingness to adopt a more proactive approach.