FCC Flash

On September 25, 2023, Deutsche Bank subsidiary DWS Investment Management Americas Inc. (DIMA or DWS) faced charges and received penalties from the Securities and Exchange Commission (SEC) in two separate enforcement actions. DWS has agreed to pay a total of $25 million in penalties to the SEC for violations related to Anti-Money Laundering (AML) and Environmental, Social, and Governance (ESG) matters.

To read detail, click https://www.fcctimes.com/2023/09/25/sec-takes-action-against-dws-investment-management-americas-inc-for-aml-and-esg-violations-imposing-25-million-in-penalties/

In the AML action, the SEC determined that DWS, acting as an investment advisor to mutual funds, failed to fulfill its obligation to establish an effective AML program, as mandated by regulations. Additionally, DWS did not implement policies and procedures designed to identify money laundering activities or provide relevant AML training specific to the operations of mutual funds.

The second enforcement action focuses on DWS’s misleading statements about its controls for incorporating ESG factors into research and investment recommendations for ESG integrated products. Despite marketing itself as an ESG leader with specific policies for integrating ESG considerations into its investments, DWS failed to adequately implement these provisions from August 2018 until late 2021, which led clients and investors to believe otherwise. Furthermore, DWS did not adopt and implement policies and procedures to ensure the accuracy of its public statements about ESG integrated products.

In the AML action, DWS has agreed to a cease-and-desist order and a $6 million penalty. In the ESG misstatements action, DWS will face a cease-and-desist order, censure, and a $19 million penalty.