The U.S. Securities and Exchange Commission penalized Goldman Sachs Asset Management $4 million on Tuesday after accusing it of breaking rules for investments in the environment, the social sector, and other areas.
The regulatory body stated in a statement that the allegations were specifically related to “policy and procedures violations affecting two mutual funds and one separately managed account strategy advertised as Environmental, Social, and Governance (ESG) investments.”
The SEC said, “Goldman Sachs Asset Management agreed to pay the $4 million penalty without acknowledging or contesting the regulator’s conclusions.”
Since they began paying greater attention to concerns like climate change or workforce diversity, international investors have poured money into ESG-focused funds. However, the funds have seen net withdrawals of investor money thus far this year.
Regulators in the United States and Europe are just beginning to codify guidelines for ESG claims and disclosures.
According to a different statement from the company, “Goldman Sachs Asset Management, L.P. is glad to have resolved this matter, which addressed previous policies and processes pertaining to three of Goldman Sachs Asset Management Fundamental Equity group’s investment portfolios.”
According to the SEC, between April 2017 and February 2020, the company had several policies and procedure failures involving the ESG research its investment teams used to select and monitor securities.
“From April 2017 until June 2018, the company failed to have any written policies and procedures for ESG research in one product, and once policies and procedures were established, it failed to follow them consistently prior to February 2020,” the SEC said.