The SEC’s ESG Task Force, created only one year ago to proactively identify ESG-related misconduct, has fined a Bank of New York (“BNY”) Mellon advisory unit for $1.5 million over alleged ESG disclosure failures. According to the ESG Task Force, BNY Mellon Investment Advisory Inc. provided clients with false assurance that certain fund investments had received ESG quality reviews between July 2018 and September 2021. Specifically, a group of funds termed the Overlay Funds misrepresented that ESG quality reviews of risks and opportunities associated with the funds’ investments had been conducted.
Adam S. Aderton, co-chief of the SEC enforcement division’s asset management unit and a member of the ESG Task Force, has expressed that the “commission will hold investment advisers accountable when they do not accurately describe their incorporation of ESG factors into their investment selection process.”
BNY Mellon did not admit or deny the findings but agreed to a cease and desist order, censure and the $1.5 million civil penalty. This is the first time the ESG Task Force has been directly responsible for a settled order.
Earlier this year, I partnered with Noor Al-Banna, CFA to explore the importance of having a clear, accurate, and comprehensive understanding of ESG factors. In our Ocean Tomo Insights post, we report on the two factors that define a company’s ESG impact: the accounting standards dictating how ESG should be measured, and ESG’s intangible nature. We will continue to follow and report on this space.
To explore this topic and how it could impact your business, please contact: Noor Al-Banna, CFA at Noor.AlBanna@jsheld.com or +1 (312) 327-4434; Nicole McTernan, CPA, CFF firstname.lastname@example.org or +1 (703) 654-1433.
Nicole McTernan, CPA, CFF is a Manager in the Financial Expert business unit working out of the Reston (DC Metro) office of Ocean Tomo, a part of J.S. Held. She provides litigation support and forensic accounting consulting services, including financial statement analysis, the application of generally accepted accounting principles, regulatory compliance, valuation, calculations of economic damages, evaluation of complex accounting and financial issues, and identification of key underlying facts and trends. Her casework frequently involves research related to GAAP, GAAS, PCAOB standards, industry-specific authoritative literature, and new emerging accounting standards. Nicole is responsible for assisting counsel with document review and discovery, preparation of expert reports and analysis of opposing experts’ reports.