Reported by Mengqi Sun

Deutsche Bank’s investment arm agreed to pay $25 million to settle allegations including that it overstated how it used environmental, social and governance factors in its funds, one of the first cases that questioned ESG claims by money managers.

The investment arm, DWS, also settled allegations from the Securities and Exchange Commission that it failed to comply with anti-money-laundering rules for its mutual funds.

The SEC alleged that DWS made materially misleading statements about its controls in incorporating ESG factors into its research and investment recommendations for ESG-integrated products, including actively managed ESG mutual funds and separately managed accounts. DWS agreed to pay $19 million for this settlement.

The SEC alleged that DWS failed to adopt and implement policies and procedures for its mutual funds to prevent money laundering and terrorism financing, in breach of Bank Secrecy Act and related Financial Crimes Enforcement Network regulations.

It agreed to pay about $6 million to settle the charges.

Read full report: https://www.wsj.com/articles/sec-fines-deutsche-bank-fund-unit-for-money-laundering-and-esg-misstatements-18f5c865