Vanguard 'theoretical maximum penalty' was in the billions of dollars, judge says
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More news: In a detailed judgment accompanying today's decision, Federal Court of Australia Judge Michael O'Bryan said the thousands of occasions on which a contravening representation was viewed by a potential investor resulted "in a theoretical maximum pecuniary penalty in the billions of dollars".
However, O'Bryan catagorised contraventions into courses of conduct, including a product disclosure statement and YouTube publications, against which he assessed an appropriate penalty, having said previously that the maximum penalty could have been "so high as to be practically meaningless".
According to the judgment, as at mid-February 2021, around 74% of the securities in the ethical fund by market value were not researched or screened against applicable ESG criteria.
What they said: In a media statement following today's judgment, ASIC deputy chair Sarah Court said "this is an important decision and the penalty imposed is the highest yet for greenwashing conduct".
"It is essential that companies do not misrepresent that their products or investment strategies are environmentally friendly, sustainable, or ethical. The size of the penalty should send a strong deterrent message to others in the market to carefully review any sustainable investment claims," she said.
Vanguard fined $12.9 million in greenwashing lawsuit
The news: Vanguard has been fined $12.9 million after losing its court battle with the corporate regulator, which saw the watchdog secure its first greenwashing related civil penalty.
The context: Vanguard must also display an "adverse publicity notice" on a range of web pages set out by the court, alerting visitors to those sites of its misconduct.
Vanguard will also pay the Australian Securities and Investments Commission's (ASIC's) costs in the case.
Today's penalty follows a court decision in March by Federal Court of Australia Judge Michael O'Bryan, who found that Vanguard had breached the ASIC Act by engaging in conduct that was liable to mislead the public in how it had described screening processes linked to an environmental fund.
Vanguard had admitted to misleading conduct, aside from in relation to one point of liability that alleged it had said in a product disclosure statement on its website that all securities had been screened against applicable criteria.
Vanguard admitted only that securities issued by companies had been screened.
The sources: Federal Court of Australia, ASIC media release
