SEC slaps BNY Mellon Investment Adviser with $1.5 million penalty

The Securities and Exchange Commission has announced charging BNY Mellon Investment Adviser, Inc. for misrepresentations and omissions regarding Environmental, Social, and Governance (ESG) considerations in making investment decisions for certain mutual funds that it managed.

BNY Mellon Investment Adviser has agreed to pay a $1.5 million penalty to settle the charges.

According to the US regulator, between July 2018 and September 2021 BNY Mellon Investment Adviser implied that all investments in the funds had undergone an ESG quality review. However the agency has discovered that this was not always the case for numerous investments held by certain funds of the time of investment.

BNY Mellon Investment Adviser charged with omissions in ESG by SEC

Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement and head of its Climate and ESG Task Force, said:

Registered investment advisers and funds are increasingly offering and evaluating investments that employ ESG strategies or incorporate certain ESG criteria, in part to meet investor demand for such strategies and investments. Here, we allege that BNY Mellon Investment Adviser did not always perform the ESG quality review that it disclosed using as part of its investment selection process for certain mutual funds it advised.

Adam S. Aderton, Co-Chief of the SEC Enforcement Division’s Asset Management Unit and a member of the Task Force, added:

Investors are increasingly focused on ESG considerations when making investment decisions. As this action illustrates, the Commission will hold investment advisers accountable when they do not accurately describe their incorporation of ESG factors into their investment selection process.

BNY Mellon Investment Adviser has neither confirmed or denied the SEC’s findings. However, the company has agreed to a cease-and-desist order, a censure, and to pay a $1.5 million penalty. The regulator also pointed out that BNY Mellon Investment Adviser promptly undertook remedial actions and cooperated with Commission staff in its investigation.

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