Australia court fines Vanguard unit $9 million over ethical investment claims

(Reuters) – Australia’s federal court has imposed a record A$12.9 million ($8.89 million) fine on top U.S. asset manager Vanguard’s local unit for making misleading claims about its ethical and green investment options, the country’s securities watchdog said on Wednesday.

The Australian Securities & Investments Commission (ASIC) said the court found Vanguard Investments Australia misled investors about its “ethically conscious” bond index fund. The fund said it screened issuers to exclude those with operations in some sectors such as fossil fuels, when that was not always the case, ASIC added.

“Approximately 74% of the securities in the Fund by market value were not researched or screened against applicable ESG (environmental, social, and governance) criteria,” the court found.

“Further, Vanguard benefited from its misleading conduct.”

Vanguard made the claims in a range of public communications which included 12 product disclosure statements, a media release, and statements on its website, the ASIC said.

Vanguard Australia in an email response to Reuters said it has cooperated with ASIC since informing it of the issue in 2021, adding that “there were no findings of financial loss to investors.”

($1 = 1.4510 Australian dollars)