Asoka Woehrmann, group CEO of DWS, resigned following a raid by German police on the asset manager’s Frankfurt offices, in connection with accusations of fraud relating to its environment, social and governance (ESG) funds.
Woehrmann, who had held the position since late 2018, will be replaced by Stefan Hoops, currently head of DWS parent Deutsche Bank’s corporate banking operations, from 10 June.
Investigators confirmed that they had seized several items of evidence, including documents and electronic media, which are now being evaluated.
The search involved public prosecutors from Frankfurt, federal police and officials from the German financial regulator BaFin.
The raids follow action brought against the firm by the US Securities and Exchange Commission (SEC), relating to evidence provided by former chief sustainability officer Desiree Fixler that DWS exaggerated the extent to which ESG principles were followed in funds marketed as sustainable.
“After an examination, there were sufficient factual indications that, contrary to the information in the sales prospectuses of DWS funds, ESG criteria were actually only taken into account in a minority of investments, but were not taken into account in a large number of investments (“prospectus fraud”)”, the German public prosecutor said.
It remains unclear which funds specifically are being investigated.
Deutsche Bank, which owns just under 80% of DWS, is not accused of greenwashing, but its premises were raided because it still shares some IT systems and facilities with DWS.
DWS and Deutsche Bank said the asset manager has been cooperating with regulators and authorities so far and would continue to do so. Since the investigation began, DWS has been in contact with authorities and has provided data and electronic communications.
DWS has denied any wrongdoing, but has changed its ESG criteria since Fixler’s revelations. In its 2021 annual report, published in March 2022, DWS reported just €115bn in “ESG assets” for 2021 — 75 per cent less than a year earlier when it stated that €459bn in assets were “ESG integrated”.
Regulators in multiple jurisdictions have pledged to clamp down on greenwashing or firms making exaggerated claims about the sustainability credentials of their products.
BNY Mellon Investment Adviser was fined $1.5 million by the SEC to resolve charges it misstated ESG investment policies for some mutual funds it managed.
The US regulator has also recently published proposals aimed at stamping out greenwashing, while European Securities and Markets Authority (ESMA) is currently working on a legal definition of greenwashing to strengthen enforcement action.
©Markets Media Europe 2022
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