The US Securities and Exchange Commission (SEC) has imposed a $4m fine on Goldman Sachs Asset Management (GSAM) over non-compliance of environmental, social, and governance (ESG) guidelines while managing certain funds.
The regulator alleged that GSAM did not follow proper ESG-related rules during the marketing of two mutual funds and one separately managed account strategy.
The asset manager violated several policies and procedures regarding its investment processes, including ESG research, for some of its products between April 2017 and February 2020, SEC said.
Similarly, between April 2017 and June 2018, the firm did not have any written policies and procedures for ESG research in one of its offerings.
Even after creating the policies and procedures, GSAM did not pursue them regularly before February 2020.
SEC also stated that GSAM mandated its personnel to fill up a questionnaire for every company it intended to add in specific investment portfolio before their selection.
However, the GSAM team completed various ESG questionnaires after selecting securities and depended on earlier ESG research.
GSAM provided data on its policies and procedures that the firm failed to always follow, added SEC.
The firm has agreed to pay the penalty without acknowledging or refusing the charges.
SEC deputy director of division of enforcement and head of climate and ESG task force Sanjay Wadhwa said: “In response to investor demand, advisers like Goldman Sachs Asset Management are increasingly branding and marketing their funds and strategies as ‘ESG’.
“When they do, they must establish reasonable policies and procedures governing how the ESG factors will be evaluated as part of the investment process, and then follow those policies and procedures, to avoid providing investors with information about these products that differs from their practices.”