On Friday, the Securities and Exchange Commission announced it has charged Invesco Advisers, Inc. for making misleading statements about the percentage of company-wide assets under management that integrated environmental, social, and governance (ESG) factors in investment decisions.
The Atlanta-based registered investment adviser agreed to pay a $17.5 million civil penalty to settle the SEC’s charges.
According to the SEC’s order, from 2020 to 2022, Invesco told clients and stated in marketing materials that between 70% and 94% of its parent company’s assets under management were “ESG integrated.” However, in reality, the SEC said these percentages included a substantial amount of assets that were held in passive ETFs that did not consider ESG factors in investment decisions. The SEC’s order also found that Invesco lacked any written policy defining 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,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords.”
The order charges Invesco with willfully violating the Investment Advisers Act of 1940. Without admitting or denying the order’s findings, Invesco agreed to cease and desist from violations of the charged provisions, be censured, and pay the aforementioned $17.5 million civil penalty.
“We are pleased to resolve this matter related to historical statements made about the percentage of firmwide assets under management that were ESG-integrated. The SEC Order makes no allegations or findings related to disclosures about specific funds or investment strategies,” said a statement from Invesco provided to 401(k) Specialist. “Invesco has not issued public reports of firmwide ESG integration levels since late 2022. Invesco Advisers, Inc. cooperated fully with the investigation and will continue to take a client-led approach of offering investment strategies tailored to the specific investment objectives of its clients.”
Invesco Advisers was founded in 1986 and has been registered as an investment adviser with the SEC since 1988. Invesco Group Services, Inc. is the sole owner of Invesco Advisers and Invesco Ltd. is its ultimate parent company.
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