SEC Chair Gary Gensler. Photographer: Al Drago/Bloomberg

For all the greenwashers out there on Wall Street, the party may really be over. There's now little doubt that the U.S. Securities and Exchange Commission (SEC) actually means business in its bid to crack down on misleading claims by managers of environmental, social, and corporate governance (ESG)–focused funds.

Last month, the regulator fined a Bank of New York Mellon Corp. investment unit on allegations that it falsely implied some of the firm's mutual funds had undergone so-called ESG quality reviews. And now, the agency has taken on much bigger game, looking into whether some of Goldman Sachs Group Inc.'s mutual funds fail to meet the environmental, social, and governance metrics proclaimed by their marketing materials.

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