WisdomTree Asset Management Inc is not a firm: it's a company. And despite its assertion, the SEC has not "charged" it, it's sued it. No allegations of criminal conduct have been made. But there are allegations of non-criminal fraud.

WisdomTree is referred to as "an investment adviser" but that's stretching the term. In fact it is a fund manager running at least three investment trusts.

According to the SEC, and accepted by the company in its settlement deal, "March 2020 until November 2022, WisdomTree represented in prospectuses for three ESG-marketed exchange-traded funds, and to the board of trustees overseeing the funds, that the funds would not invest in companies involved in certain products or activities, including fossil fuels and tobacco. "

In fact, the company invested in companies in "companies that were involved in fossil fuels and tobacco, including in coal mining and transportation, natural gas extraction and distribution, and retail sales of tobacco products. "

The SEC accepts that the company used data provided by third party information providers and that information did not screen out all relevant companies. WisdomTree failed to perform additional checks.

“At a fundamental level, the federal securities laws enforce a straightforward proposition: investment advisers must do what they say and say what they do,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “When investment advisers represent that they will follow particular investment criteria, whether that is investing in, or refraining from investing in, companies involved in certain activities, they have to adhere to that criteria and appropriately disclose any limitations or exceptions to such criteria. By contrast, the funds at issue in today’s enforcement action made precisely the types of investments that investors would not have expected them to based on WisdomTree’s disclosures.”

WisdomTree consented to the entry of the SEC’s order finding that it breached the antifraud provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940 and the compliance rule in the Investment Advisers Act. Without admitting or denying the SEC’s findings, WisdomTree agreed to a cease-and-desist order and censure and to pay a USD4 million civil penalty.