(Reuters) – New Zealand’s financial markets regulator issued a warning to U.S. fund giant Vanguard Group on Wednesday for failing to disclose details within the required time over infringement notices filed against it in Australia for alleged greenwashing.
The Australian Securities and Investment Commission (ASIC) fined the world’s biggest mutual fund manager last year for misleading investors by overstating an exclusion, also known as an investment screen, claiming to prevent investment in companies involved in significant tobacco sales.
Vanguard, which has about A$110 billion ($74 billion) in assets in Australia and New Zealand, said at the time that one of its disclosure documents was mislabelled and that the error was corrected promptly.
These funds were also offered to New Zealand investors via a mutual recognition scheme but Vanguard missed the deadline by nearly two months to notify the Financial Markets Authority (FMA) about the action by ASIC, Australia’s securities regulator, it said.
“Vanguard Australia regrets our oversight in failing to comply with our notification obligations to the Financial Markets Authority of New Zealand,” a spokesperson said in an emailed response.
Environmental groups and regulators in Australia and elsewhere are stepping up action for greenwashing, which refers to misrepresenting the extent to which an investment or a financial product is environment-friendly and sustainable.
Vanguard failed to identify its obligations and did not have adequate processes in place to ensure that it filed the required notice within the required period, FMA said in a statement.
Vanguard’s breach, if not addressed, could harm the integrity of an agreement between Australia and New Zealand over market offerings, it added.
Australia and New Zealand have a mutual agreement in place that would allow issuers of Australian financial products to operate in New Zealand and a New Zealand issuer can extend an offer that is registered there into Australia.
“It is important that issuers taking advantage of the regime understand and attend to their obligations. In this case a formal, public warning was appropriate,” Paul Gregory, FMA executive director of regulatory response, said.
($1 = 1.4930 Australian dollars)
(Reporting by Renju Jose in Sydney; Editing by Jacqueline Wong)
