FRANKFURT - The CEO of Germany’s top DWS asset manager will step down next week, he said on Wednesday, a day after prosecutors searched for allegations that the company misled investors about “green” investments.
The raids and the departure of DWS CEO Asoka Woehrmann mark another setback for Deutsche Bank, the majority owner of DWS, which has tried to recover from regulatory violations, including money laundering and misappropriation of securities, leading to fines. billions.
DWS has been under investigation for months, prompting German prosecutors to raid DWS and Deutsche Bank headquarters on Tuesday.
As companies market their environmental, social and governance (ESG) credentials in an attempt to take advantage of the trillions of dollars they seek to have an environmental and social impact, regulators are digging deeper into their claims.
German and US officials have been investigating reports and allegations of an ad that DWS exaggerated the environmental credentials of the investments it sold - a practice known as environmental laundering. DWS has repeatedly denied misleading investors.
The change of leadership of DWS has been going on for some time, but it was finally made at the meetings late Tuesday, following the raids, said a person with direct knowledge of the matter.
Woehrmann told employees in a note that it was a joy to see DWS flourish, but that “the allegations … no matter how unfounded or necessary, have left a mark.”
“To quote Charles Dickens: it was the best time, it was the worst of all time,” he said in a memo, which was seen by Reuters.
Deutsche Bank, which retained its majority ownership in DWS after its initial public offering, has traded to which banking companies can turn in search of a greener future.
Desiree Fixler, the announcer involved in the investigation, told Reuters that the resignation was positive, but did not go far enough.
“It’s not just a one-man change,” she said.
“There’s the green wash and there’s the cover. It’s a huge culture issue at Deutsche Bank, “she said.
DWS and Deutsche Bank declined to comment on Fixler’s comments.
On Tuesday, German prosecutors said that “sufficient factual evidence has emerged” to show that ESG factors were taken into account in a minority of investments “but were not taken into account at all in a large number of investments”. unlike the DWS statements. prospectuses for the sale of funds.
The US Securities and Exchange Commission and the German financial watchdog BaFin launched separate investigations into the whistleblower allegations last year.
The SEC did not respond to a request for comment, but the U.S. supervisory body has stepped up its efforts to scrutinize companies’ claims about their ESG investments.
The agency proposed a pair of rules last week that would detail how ESG funds can be marketed and how to properly reveal the thinking behind the labeling of such a fund. SEC President Gary Gensler said the agency’s efforts are aimed at standardizing disclosures about such funds and providing investors with reliable information.
The announcer, Fixler, former head of the sustainability department at DWS, said the company exaggerated how it used sustainable investment criteria to manage investments.
In February, Deutsche Bank agreed with the US Department of Justice to extend the stay of a special monitor at the bank, after failing to report timely allegations of DWS.
DWS shares have fallen 24% since the SEC and BaFin investigations were made public in August last year. They were down about 5% late Wednesday.
The allegations show that “greenwashing is not a trivial crime,” said Magdalena Senn of the German consumer advocacy group Finanzwende.
“The raid and resignation will have a signal effect on other asset managers,” she said.
Credit Suisse analysts said Woehrmann’s departure was a disappointment as he successfully implemented reform and recovery at DWS.
“We see that the change in leadership heralds a period of uncertainty for the DWS strategy - and could even raise questions about its future as an independent asset management company,” said Credit Suisse.
DWS and Deutsche Bank said on Tuesday that the asset manager had cooperated with regulators and authorities in the past and would continue to do so.
Woehrmann has been under pressure on several fronts since allegations of environmental laundering broke out.
Deutsche Bank has conducted an internal investigation into Woehrmann’s possible use of private e-mail for commercial purposes, and the European Central Bank has also looked at corporate governance issues around it.
He also received threatening letters, including one in December, with red targets, white powder and a racial insult.
When asked about the allegations in a call for DWS revenue with analysts, Woehrmann said he firmly denied all allegations.
Deutsche Bank CEO Christian Sewing publicly supported Woehrmann in January, and on Wednesday thanked him for his “impressive work and performance.”
Stefan Hoops, who has been overseeing Deutsche Bank’s corporate banking division since 2019, will replace Woehrmann on June 10, the bank said.
Woehrmann’s resignation takes effect on June 9, the day of his annual general meeting.
(Reporting by Paul Carrel, Tom Sims and Frank Siebelt; Additional reporting by Anna Pruchnicka and Pete Schroeder; Editing by Bradley Perrett, David Goodman, Jane Merriman, Sabine Wollrab and Marguerita Choy)