The Frankfurt public prosecutor’s office pursues suspected investment fraud
The suspicion of greenwashing at the DWS fund house is not new, and investigations are ongoing. On February 1, 2024, the Frankfurt Public Prosecutor’s Office had the DWS premises in Frankfurt searched for the third time. This was the second raid within two weeks against DWS, after investigators had already searched the headquarters of Deutsche Bank’s fund subsidiary on January 16, 2024.
The investigation is due to the suspicion of investment fraud against DWS. Specifically, it concerns the accusation of greenwashing, meaning that DWS has represented its investments as more sustainable than they actually are. The so-called ESG criteria (Environment, Social, Governance) are decisive factors in this context. For investors, these aspects are playing an increasingly important role in their investment decision, according to the business law firm MTR Legal Lawyers, which advises among others in capital market law.
Investments presented as “greener” than they are
According to statements from the former sustainability head at DWS, the investment firm presented the ESG criteria in their fund products more positively than was the reality. This set the ball rolling, and in May 2022, the Frankfurt Public Prosecutor’s Office conducted its first raid on DWS in connection with suspicions of greenwashing. Subsequently, the public prosecutor’s office reported according to media reports that the ESG factors had been scarcely considered in a large number of investments.
DWS also faced trouble in the USA due to suspicions of greenwashing. Here, investigations by the US Securities and Exchange Commission (SEC) led to DWS having to pay a total fine of 25 million dollars. 19 million dollars were due for greenwashing, with the remaining 6 million dollars for deficiencies in money laundering control.
Two searches within two weeks
In Germany, investigations against DWS for suspected false statements about “green” investments continued. On January 16, 2024, the Frankfurt Public Prosecutor’s Office, with officers from the Federal Criminal Police Office, again searched the DWS premises. The trigger was again the suspicion of greenwashing. The investigations were directed against the former responsible person and so far unknown employees of DWS.
Then, on February 1, 2024, there was another raid on DWS. The company stated that it continues to fully cooperate with the authorities.
Investors’ claims for damages
Should the suspicion of greenwashing be confirmed, DWS could also face a substantial fine in Germany. However, more critical for investors is that they may have claims for damages. They could have been influenced in their investment decision by misleading statements from DWS regarding the ESG standards of the investments. This is especially true if incorrect information on sustainability criteria is also found in the prospectuses. If this is the case, investors may have a claim for damages. Claims for damages could also have arisen if the investment advice was not properly conducted.
MTR Legal Lawyers advises investors in capital market law.
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