Deutsche’s asset management investigated by the U.S. Securities and Exchange Commission

Monitoring Desk

The U.S. Securities and Exchange Commission is investigating Deutsche Bank’s (DBKGn.DE) asset manager DWS (DWSG.DE) over how it used sustainable investing criteria to manage its assets, two people with knowledge of the matter said on Thursday.

The news, first reported by The Wall Street Journal, sent DWS shares down nearly 12% at 0815 GMT.

DWS and Deutsche Bank declined to comment.

If it progresses, the case will be watched closely by the asset management industry.

It has rapidly amassed billions of dollars of assets that are supposed to have an environmental or social profile, but is facing growing scrutiny over how firms define and apply environmental, social and governance (ESG) standards.

The SEC investigation follows a report earlier this month, also by The Wall Street Journal (WSJ), citing the former head of sustainability at DWS saying the fund manager overstated how it used sustainable investing criteria to manage investments.

An SEC spokesperson said: “The SEC does not comment on the existence or nonexistence of a possible investigation.”

A spokesperson for the U.S. Department of Justice (DOJ) declined to comment on the WSJ report.

The WSJ, citing unnamed sources, also reported that federal prosecutors in Brooklyn, New York, were looking into the matter.

The new logo of Deutsche Bank's DWS Asset Management is pictured at their headquarters in Frankfurt, Germany, March 19, 2018. REUTERS/Ralph Orlowski
The new logo of Deutsche Bank’s DWS Asset Management is pictured at their headquarters in Frankfurt, Germany, March 19, 2018. REUTERS/Ralph Orlowski

Deutsche Bank, which has been expanding its sustainable financing business, has also been trying to restore its image in Washington amid several investigations into its dealings with U.S. President Donald Trump, a long-standing client.

DWS is the second German fund manager to face U.S. regulatory scrutiny.

Allianz (ALVG.DE) is also facing DOJ and SEC investigations over losses last year at its fund division, Allianz Global Investors.

Courtesy: Reuters

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