Invesco Advisers agreed to pay a $17.5 million civil penalty to settle Securities and Exchange Commission charges for making misleading statements about the percentage of its assets under management that integrated environmental, social and governance factors in investment decisions.
Between approximately April 2020 and July 2022, Invesco told clients and stated in marketing materials that between 70% and 94% of its parent company's AUM were “ESG integrated,” but the percentages counted Invesco’s passive exchange-traded funds, according to a Nov. 8 SEC order.
That was misleading because the passive ETF strategies could not consider ESG factors in making investment decisions, the SEC said. Among the ETFs included was the firm’s largest ETF, the Invesco QQQ Trust, an index product designed to track the 100 largest non-financial companies traded on the Nasdaq exchange, the SEC noted.
The SEC also found that Invesco lacked any written policy defining ESG integration.
“As stated in the order, Invesco saw commercial value in claiming that a high percentage of company-wide assets were ESG integrated,” said Sanjay Wadhwa, acting director of the SEC’s enforcement division, in a statement. “But saying it doesn’t make it so. Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords.”
In the fall of 2019, the SEC order found, Invesco believed that incorporating ESG considerations into its portfolio management activities globally was of commercial importance. An internal analysis completed by senior ESG team members indicated that, company-wide, at least $370 billion in AUM was “at risk” of clients moving the assets to another firm, prompting Invesco to accelerate its “ESG integration” effort, according to the SEC order.
“Consistent with its effort to market its ESG capabilities, Invesco made claims to certain clients and potential clients about the percentage of firmwide AUM at Invesco that was ‘ESG integrated,’” the order said.
Invesco, which was charged with violating the Investment Advisers Act of 1940, did not admit to or deny the SEC’s findings. But the firm did agree to cease and desist from violations of the charged provisions, a censure and to pay the $17.5 million civil penalty.
“We are pleased to resolve this matter related to historical statements made about the percentage of firmwide assets under management that were ESG-integrated,” an Invesco spokesperson said in an emailed statement. “The SEC Order makes no allegations or findings related to disclosures about specific funds or investment strategies. Invesco has not issued public reports of firmwide ESG integration levels since late 2022. Invesco Advisers, Inc. cooperated fully with the investigation and will continue to take a client-led approach of offering investment strategies tailored to the specific investment objectives of its clients.”
Invesco had assets under management of $1.8 trillion as of Sept. 30.
