NEW YORK – WisdomTree, Inc., a financial services and investment management firm, has agreed to pay a $4 million civil penalty to the U.S. Securities and Exchange Commission (SEC) to settle allegations of violations related to its exchange-traded funds (ETFs).
The SEC made the announcement today, following a Wells Notice issued to WisdomTree Asset Management, Inc. (WTAM), a wholly-owned subsidiary of WisdomTree, on August 5, 2024.
The SEC's preliminary determination recommended an enforcement action against WTAM for alleged violations of the federal securities laws. The allegations pertained to three ESG-focused ETFs managed by WTAM, which were launched in March 2020 and liquidated in February 2024. These funds had an average cumulative assets under management of approximately $119 million during their operation.
WTAM, without admitting or denying the allegations, consented to the SEC's order to cease and desist from future violations of specific sections of the Investment Advisers Act of 1940 and the Investment Company Act of 1940. In addition to the monetary penalty, WTAM agreed to comply with certain undertakings.
Excluding the penalty, WisdomTree anticipates that all legal and other related expenses incurred in connection with the SEC matter will be covered by insurance, subject to a $1.0 million deductible.
This settlement resolves the SEC's investigation into the conduct of WTAM concerning the ESG-focused ETFs. WisdomTree's forward-looking statements caution about potential liabilities and legal expenses related to this matter, as outlined in the company's Annual Report for the year ended December 31, 2023, and other filings with the SEC.
WisdomTree, originally known as WisdomTree Investments (NYSE:WT), Inc., and prior to that as Index Development Partners Inc. and Financial Data Systems, is incorporated in Delaware and headquartered in New York. Its common stock and preferred stock purchase rights are traded on the New York Stock Exchange under the symbol "WT."
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