Deutsche Bank’s DWS has set aside more than €20 million ($22.2 million) to settle allegations of greenwashing that have plagued the asset manager for roughly two years.
DWS is in “advanced resolution discussions” with the Securities and Exchange Commission, the asset manager said Wednesday in its half-year report but added, “the final outcome is yet to be concluded.”
The SEC investigation is just one of several probes DWS is facing in connection with allegations from a former executive that the company exaggerated, in its 2020 annual report, the proportion of its assets that were “ESG integrated.” German financial regulator BaFin, the U.S. Justice Department and Frankfurt prosecutors are also investigating.
DWS CEO Stefan Hoops said Wednesday the asset manager’s marketing “may have been overly exuberant” in the past, according to the Financial Times.
Curiously, reports varied as to the size of DWS’s set-aside — with Bloomberg claiming DWS had earmarked €27 million (labeled “other” in the report), while the Financial Times and Reuters put the figure at €21 million.
Either amount would far exceed previous SEC penalties related to environmental, social and governance matters. The SEC fined BNY Mellon $1.5 million in May 2022, while Goldman Sachs saw a $4 million penalty from the regulator in November.
The SEC aims to resolve the DWS probe by the end of September with a fine, Reuters reported Tuesday, citing two people with knowledge of the matter. The SEC, however, declined to comment to the wire service. DWS, meanwhile, said it couldn't comment on the time frame.
Hoops on Wednesday told analysts an end to the probes would make it easier for DWS to engage with clients on sustainability, and would reduce the amount of time “competent people spend on the past versus the future,” according to Bloomberg.
Hoops’s predecessor, Asoka Wöhrmann, resigned after Frankfurt police raided DWS’s offices in May 2022. Wöhrmann, however, is entitled to €13.7 million in compensation from last year, including €8.15 million in severance pay and his 2022 salary, the Financial Times reported. DWS said in March the severance package was subject to the “possibility of clawback,” according to the publication.
DWS told the Financial Times that its board would evaluate the matter and “fulfill its legal obligations.”
The set-aside DWS reported Wednesday comes in addition to €39 million in legal costs the asset manager disclosed in late May, according to the Financial Times.