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SEC Charges GSAM Over ESG Fund Failures

The US Securities and Exchange Commission (SEC) has charged Goldman Sachs Asset Management (GSAM) for policies and procedures failures involving two ESG mutual funds and one managed account strategy. In response, GSAM has agreed to pay a US$4 million penalty to settle. The SEC found that between April 2017 and February 2020, GSAM had several policies and procedures failures involving the ESG research its investment teams used to select and monitor securities. Further, from April 2017 until June 2018, the company failed to have any written policies and procedures for ESG research in one product. Once policies and procedures were established, the firm “failed to follow them consistently” prior to February 2020. Andrew Dean, the SEC’s Enforcement Division’s Asset Management Unit’s Co-Chief, said: “Today’s action reinforces that investment advisers must develop and adhere to their policies and procedures over their investment processes, including ESG research, to ensure investors receive the advisory services they would expect to receive from an ESG investment.” 

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