Overview and Practical Takeaways From the SEC’s Charges Against Fund Manager for Alleged ESG Misstatements

The US Securities and Exchange Commission (SEC) announced settled charges against BNY Mellon Investment Adviser, Inc. (BNYMIA) on May 23, 2022, for misstatements and omissions regarding Environmental, Social, and Governance considerations (ESG) related to investment decisions for certain of BNYMIA’s managed funds. While this is the SEC’s second ESG-focused action since the Division of Enforcement created its Climate and ESG Task Force in March 2021 (Task Force), it is more indicative of the Task Force’s priorities in the early stages of its ESG-focused mandate. As we wrote in our April 29, 2022 advisory, although the SEC’s first ESG-related action—against the Brazilian mining company, Vale S.A. (Vale)—is based on false and misleading ESG disclosures, that action is akin to a traditional fraud case that more remotely implicated ESG disclosures. The allegations against BNYMIA, on the other hand, involve the type of “greenwashing” statements that are likely to be the focus of the Task Force going forward.

With the SEC set to consider ESG-related rule amendments for investment advisers and investment companies this week, investment advisers and companies should expect more scrutiny related to ESG statements and disclosures.

Click here for our Advisory, which sets forth the Commission’s findings against BNYMIA and our observations for future ESG-related actions, as well as key takeaways and best practices.

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.