SEC Charges WisdomTree with ESG Investment Criteria Failures

In October, the Securities and Exchange Commission (SEC) charged WisdomTree Asset Management with misstatements contained in fund prospectuses for three separate funds marketed as ESG ETFs. In addition to the misstatements, the SEC found compliance failures in the execution of the stated ESG investment strategy. According to the fund prospectuses, the funds would not invest in companies involved in certain products or activities, including fossil fuels and tobacco. However, the SEC order found that WisdomTree used data from third-party vendors that did not screen out all companies involved in fossil fuel and tobacco-related activities. Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement noted “investment advisers must do what they say and say what they do.” WisdomTree agreed to a cease-and-desist order and agreed to pay a $4 million civil penalty.

Click here to read the SEC press release covering the settlement.