WisdomTree Asset Management, a WisdomTree subsidiary, received a Wells Notice from the Securities and Exchange Commission regarding alleged violations involving ESG-focused ETFs, WisdomTree said on Aug. 6.
WTAM received the Wells Notice on Aug. 5 advising it that SEC staff had made a “preliminary determination” to recommend that the SEC file an enforcement action against WTAM alleging violations of certain provisions of U.S. federal securities laws, WisdomTree said in an Aug. 6 filing with the SEC.
“The alleged violations relate to three U.S. listed ETFs managed by WTAM that pursued ESG-focused investment strategies,” a WisdomTree spokesperson said in an Aug. 6 email. “These funds were liquidated earlier this year, and during their periods of operations, had average assets under management, in the aggregate, of approximately $119 million.”
After considering various factors, “including the persistent lack of investor demand and limited prospects for future asset growth,” the board of trustees of WisdomTree Trust approved the liquidation of the ESG funds in December 2023 and each fund completed its liquidation in February 2024, the filing said.
In a December 2023 news release, WisdomTree announced plans to close and liquidate three ETFs: the WisdomTree International ESG Fund, the WisdomTree Emerging Markets ESG Fund and the WisdomTree U.S. ESG Fund.
A Wells Notice is not a formal charge of wrongdoing or a final determination that the recipient has violated any law, the filing said.
“We maintain that WTAM’s actions have been in compliance with all applicable laws and regulations and intend to pursue the Wells Notice process, which will include the opportunity to respond to the SEC staff’s position,” the spokesperson said. “We have cooperated at every step of this process, and we will continue to do so.”
WisdomTree had $104.9 billion in assets under management globally as of Aug. 5, the spokesperson said.
