SEC Fines BNY Mellon $1.5M Over ESG Disclosures
The SEC launched an ESG task force last year, a reflection of heightened scrutiny of the sector that’s expected to create myriad legal and regulatory headaches for corporate executives.
The U.S. Securities and Exchange Commission (SEC) on Monday said it had slapped the investment arm of Bank of New York Mellon Corp. with a $1.5 million fine for making misstatements related to environmental, social, and corporate governance (ESG) issues for certain mutual funds it manages.
The SEC said that from July 2018 through September 2021, BNY Mellon Investment Adviser stated or implied that all investments in the funds had undergone an ESG quality review, even though numerous investments actually had not undergone that scrutiny. New York-based BNY Mellon settled the matter without admitting or denying the allegations. It agreed to a cease-and-desist order, a censure, and the penalty.
The SEC’s action comes as companies are feeling increasing anxiety over the legal and reputational risks associated with the rising importance of ESG programs.
Norton Rose Fulbright’s 17th annual litigation trends survey, released in March, found that 37 percent of the 250 general counsel and in-house litigators surveyed reported being more concerned about ESG-related disputes, up from 21 percent in the previous survey.
“Environmental, social, and governance issues have taken center stage as various stakeholders challenge companies to improve their ESG performance,” stated commercial litigator and Norton Rose Fulbright partner Rachel Roosth of Houston.
The SEC signaled its increased focus on ESG-related misconduct by announcing in March 2021 that it was creating a climate and ESG task force in its Enforcement Division.
“Investors are increasingly focused on ESG considerations when making investment decisions,” said Adam S. Aderton, co-chief of the Enforcement Division’s Asset Management Unit and a member of the task force.
From: Corporate Counsel