DWS Investment Management Americas, a registered investment adviser and a subsidiary of Deutsche Bank, has agreed to pay $25 million in penalties to settle two separate enforcement actions filed by the Securities and Exchange Commission.
The enforcement actions related to DWS' failure to develop a mutual fund anti-money laundering program and to misstatements regarding the firm's environmental, social and governance investment process, said a Sept. 25 release from the SEC. The ESG charges made up $19 million of the penalties.
With respect to the anti-money laundering action, the SEC found that DWS caused mutual funds it advised to fail to develop and implement a reasonably designed AML program to comply with the Bank Secrecy Act and applicable Financial Crimes Enforcement Network regulations. In addition, DWS caused such mutual funds' failure to adopt and implement policies and procedures reasonably designed to detect activities indicative of money laundering and to conduct AML training specific to the mutual funds' business.
In the second enforcement action, the SEC's order found that DWS made materially misleading statements about its controls for incorporating ESG factors into research and investment recommendations for ESG integrated products, including certain actively managed mutual funds and separately managed accounts. The order also found that DWS marketed itself as a leader in ESG that adhered to specific policies for integrating ESG considerations into its investments.
However, from August 2018 until late 2021, the SEC added in the release, DWS failed to adequately implement certain provisions of its global ESG integration policy as it had led clients and investors to believe it would. The order found that DWS also failed to adopt and implement policies and procedures reasonably designed to ensure that its public statements about the ESG integrated products were accurate.
A spokesperson for DWS stated: "The SEC ESG order, following an extensive two-year examination, finds no misstatements in relation to our financial disclosures or in the prospectuses of our funds. We have consistently stated that we stand by our financial disclosures and the disclosures in our fund prospectuses. The order also makes clear that the weaknesses identified by the SEC are in relation to processes and procedures that the firm has already taken steps to address. We are pleased to have resolved these matters."