Skip to content
  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management
Insurance Journal - Property Casualty Industry News

Featured Stories

  • Lemonade Posts Another Quarterly Loss
  • Tesla Must Pay $243M Over Fatal Autopilot Crash
  • Articles
  • Jobs
  • Markets

Current Magazine

current magazine
  • Read Online
  • Subscribe
  • Login
  • Front Page
    • National
    • International
    • Most Popular
    • Magazine
    • Forums
    • Blogs
    • Videos/Podcasts
    • Newsletters
  • News
    • Most Popular
    • National
    • International
    • East
    • Midwest
    • South Central
    • Southeast
    • West
  • Magazines
  • Research
  • Directories
  • Jobs
  • Features
    • Events
    • Forums
    • Market Directories
    • Quotes
    • Polls
    • Rankings & Awards
    • Insurance Giving Back
  • Subscribe

The SEC War on Greenwashing Has Begun

By Tim Quinson | June 15, 2022
Email This Subscribe to Newsletter
  • Article
  • 1 Comment

For all the greenwashers out there on Wall Street, the party may really be over.

There’s now little doubt that the US Securities and Exchange Commission actually means business in its bid to crackdown on misleading claims by managers of ESG funds.

Last month, the regulator fined a Bank of New York Mellon Corp. investment unit on allegations it falsely implied some of the firm’s mutual funds had undergone so-called ESG quality reviews. And now, the agency has taken on much bigger game, looking into whether some of Goldman Sachs Group Inc.’s mutual funds don’t meet the environmental, social and governance metrics proclaimed by the Wall Street giant’s marketing materials.

“These are the first ripples of a wave of regulatory interventions that we are likely to see in the coming months,” said Sonali Siriwardena, partner and global head of ESG at law firm Simmons & Simmons.

Under Chair Gary Gensler, nominated by President Joe Biden to run the SEC in 2021, officials have been demanding that money managers explain the standards they supposedly use to classify ESG-labeled funds. When the examination division spots potential misconduct, it typically alerts the agency’s enforcement unit for further investigation.

The BNY Mellon case may provide a roadmap for future cases. After a review, the SEC announced May 23 that BNY Mellon Investment Adviser Inc. used “material misstatements and omissions” concerning the consideration of ESG principles in making investment decisions for some mutual funds overseen by the firm.

The agency concluded that BNYMIA had said portfolio holdings in its Overlay funds would be subject to “an ESG quality review.” That turned out not to be the case, the SEC said.

As a result, the agency found the firm violated Section 34(b) of the Investment Company Act, which says it’s unlawful to make any untrue statement of material fact in any registered document. BNYMIA agreed to pay a civil penalty of $1.5 million. While certainly not a lot relative to other recent securities violations uncovered by the SEC, it’s likely just the beginning.

But one Wall Street lawyer sought to downplay the “wave of regulatory interventions” predicted by Siriwardena.

“We aren’t talking about a Ponzi scheme or allegations of an industry-wide fraud like what we saw with the subprime mortgage meltdown,” contends lawyer Marc Elovitz of Schulte Roth & Zabel, an adviser to private fund managers. “We aren’t talking here about a vast conspiracy by asset managers.”

Rather than a concerted Wall Street effort to make as much money as possible by slapping ESG labels on everything, Elovitz argues that the recent inundation of greenwashing is a function of the sector’s novelty. ESG is a fairly recent innovation in investment management, Elovitz said. As the market matures, he predicts there will be greater clarity around the definition of ESG and that will ultimately result in better transparency.

Not everyone is so sanguine. “It feels almost inevitable that more names will come out as regulators dig in,” said Fiona Huntriss, a partner at law firm Pallas, where she focuses on financial litigation and broader dispute strategies. And it’s important to remember, she said, that this isn’t just a US or UK or Europe issue — it’s a cross-border issue.

“We’re really just at the beginning of the cycle because there hasn’t been proper regulation between now and when asset managers started marketing ESG funds,” Huntriss said. “Even as increased regulation is brought in, there is still uncertainty as to what the standards are, and that sort of uncertainty is fertile ground for litigation.”

And globally, of course, there’s still the unsettled investigation of DWS Group, which really kicked off all the focus on possible ESG misselling.

Watch this space.

Bloomberg Green publishes Good Business every week, providing unique insights on ESG and climate-conscious investing.

Photo: SEC Chair Gary Gensler Photographer: Al Drago/Bloomberg

Copyright 2025 Bloomberg.

Was this article valuable?

Thank you! Please tell us what we can do to improve this article.

Thank you! % of people found this article valuable. Please tell us what you liked about it.

Here are more articles you may enjoy.

Demotech’s Petrelli Responds to WSJ Article. Others Say it Echoes Old Concerns
Lemonade Posts Another Quarterly Loss but Car Growth Continues
judge holds gavel in courtroom delivers verdictTrump Media CEO Nunes Loses Defamation Lawsuit Over Rachel Maddow Show
‘Soft Market Under Stress’ Offers Unique Window of Opportunity for Insurance Buyers

Written By Tim Quinson

More From Author

The most important insurance news,
in your inbox every business day.

Get the insurance industry's trusted newsletter

Email This Subscribe to Newsletter
  • Categories: National NewsTopics: environmental social and governance (ESG) criteria, ESG, greenwashing, SEC
  • Have a hot lead? Email us at newsdesk@insurancejournal.com

Latest Comments

  • June 16, 2022 at 11:07 am
    Tiger88 says:
    I don't care much for any green stuff or wokeness or any of it. However, if you state that you are compliant with certain ESG standards but you know you really aren't but try ... read more

Add a CommentSee All Comments (1)Add a Comment Cancel reply

Your email address will not be published. Required fields are marked *

*

*

More News
Louisiana Department of Insurance Launches Enhanced Mobile App
Insurtech Root Swings to Q2 Profit on Growth in Partnership Channel
Human Responses: Did Jurors React to Musk in Damage Award Against Tesla?
Neptune Flood: 77% of At-Risk Homes Outside FEMA Zones Have No Flood Insurance
More News Features

Read This Next

  • The SEC War on Greenwashing Has Begun
  • Lemonade Posts Another Quarterly Loss but Car Growth Continues
  • 'We'll Have to See How This Plays Out,' Says CEO Berkley on MGA Competitors
  • AIG General Insurance Underwriting Income Up 46% in Q2
  • Parrish Named CEO of Howden US, Is Sued by Former Employer Marsh

Insurance Jobs

  • Sales Agent - Encino, California
  • Insurance Account Executive/Manager Wanted Flexible Hours, Potential Equity - Dix Hills/Deer Park, NY
  • Product Development Analyst – Insurance – REMOTE - Remote
  • Director, SEC Reporting - Chicago, IL
  • P&C Senior Actuarial Assistant – Reserving - Remote, IL
MyNewMarkets
  • DIY Home Inspections Are Taking Over, Firms Say
  • Six Things to Know About Umbrella Insurance
  • What to Know About Construction and Environmental Liability
  • How Embedded Insurance Supports Real Livelihoods in the Growing On-Demand Economy
  • How to Keep Third-Party Events from Becoming First-Party Losses
Claims Journal
  • J&J Talc Evidence Gets Review by Ex-Judge at Drugmaker Law Firm
  • BHP, Vale Offer $1.4B Settlement in Lawsuit Over Brazil Dam Disaster
  • New Report Finds 77% of At-Risk Homes Outside FEMA Zones Have No Flood Insurance
  • US Auto Safety Regulator Sought Tesla Robotaxi Ride Last Month
  • Zurich Insurance Beats Estimates Despite LA Wildfire Hit
Academy of Insurance education
  • August 7 EPLI Basics
  • August 14 Managing and Insuring Reputational Risk
  • August 19 How To Write: Flood
  • August 21 Workers' Comp Crash Course

Insurance News

  • News by Region
  • News by Topic
  • Yesterday

Site Search

Features

  • Insurance Markets Directory
  • Forums
  • A.M. Best Company Ratings
  • Industry Events
  • Agencies For Sale
  • Newswire
  • Insurance Jobs
  • Rankings & Awards

Connect with us

  • Email Newsletters
  • Magazine Subscriptions
  • For Your Website
  • RSS Feeds
  • Twitter
  • Facebook
  • LinkedIn
  • Do Not Sell My Info

Insurance Journal

  • Submit News
  • Advertise
  • Subscribe
  • Reprints
  • Link to Us
  • Contact Us

Wells Media Group Network

  • Insurance Journal
  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management
© 2025 by Wells Media Group, Inc. Privacy Policy | Terms & Conditions | Site Map