- Goldman Sachs Asset Management agreed to pay a $4 million penalty.
- GSAM failed to have written rules or procedures for ESG research in one product.
The U.S. Securities and Exchange Commission (SEC) ordered Goldman Sachs Asset Management to pay $4 million on Tuesday. According to a statement from the SEC, the charges were related to policies and procedures failures involving two mutual funds and one separately managed account strategy which is promoted as Environmental, Social, and Governance (ESG) investments.
Today we charged Goldman Sachs Asset Management for policies and procedures failures involving two mutual funds and one separately managed account strategy marketed as ESG investments.
— U.S. Securities and Exchange Commission (@SECGov) November 22, 2022
To settle the charges, GSAM agreed to pay a $4 million penalty.
SEC Monitor on Goldman Sachs
Regulators in the United States and Europe are just beginning to develop standards for ESG claims and disclosures. GSAM policies and procedures failures made the Enforcement Division’s Asset Management Unit in the New York Regional Office to carried out the SEC’s investigation under the direction of Mr. Dean.
According to the SEC’s order which monitored assets from April 2017 through February 2020, Goldman Sachs Asset Management had a list of regulations and procedures violations involving the ESG research. Also, the company failed to have written rules or procedures for ESG research in one product until February 2020.
Andrew Dean, o-Chief of the Enforcement Division’s Asset Management Unit stated;
Today’s action reinforces that investment advisers must develop and adhere to their policies and procedures over their investment processes, including ESG research, to ensure investors receive the advisory services they would expect to receive from an ESG investment.
Further, international investors have poured money into ESG-focused funds since they began paying greater attention to concerns like climate change or workforce diversity. However, the funds have seen net withdrawals of investor money thus far this year.
