Mississippi State Secretary Issues Cease and Desist Order to Adviser for Inconsistent ESG Statements

The Mississippi Secretary of State issued a cease and desist order to an investment adviser as to the adviser's inconsistent statements to Mississippi investors on ESG strategies.

According to the Summary Cease and Desist Order and Notice of Intent to Impose Administrative Penalty, the adviser's deceptive statements include:

• Funds marketed as non-ESG. The adviser claimed that its non-ESG funds "do [] not seek to follow a sustainable, impact, or ESG investment strategy." The Secretary of State said that this statement was inconsistent with other representations the adviser made that it is committed to use all assets under management to advance the environmental agenda of reducing carbon emissions to "net zero."
• Funds marketed as ESG. The adviser claimed that ESG benefits companies' long-term financial prospects and drives financial outcomes. The Secretary of State asserted that consideration of ESG factors does not provide an indication of better financial returns or current/future risk profiles.

The Secretary of State found that the adviser violated provisions of the Mississippi Securities Act and ordered the adviser to cease and desist (i) "from making fraudulent statements, omissions, and other misrepresentations that operate or would operate a fraud against Mississippi investors," and (ii) "from offering securities ... containing a statement that is materially misleading or otherwise likely to deceive the public."