On December 30, the U.S. Securities and Exchange Commission (SEC) Office of the Whistleblower posted eight new Notices of Covered Actions (NoCAs). Each NoCA signifies that the agency is now accepting whistleblower award claims for the covered enforcement action. One of the newly posted NoCAs covers a recent case where the SEC charged Goldman Sachs with failing to follow its policies and procedures involving ESG investments.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC with original information that contributes to a successful enforcement action, are entitled to monetary awards of 10-30% of the funds collected in the enforcement action. Once the SEC posts a NoCA for an enforcement action, a whistleblower has 90 days to file a whistleblower award claim.
The Goldman Sachs NoCA covers charges announced by the SEC on November 22. The SEC charged Goldman Sachs Asset Management, L.P. “for policies and procedures failures involving two mutual funds and one separately managed account strategy marketed as Environmental, Social, and Governance (ESG) investments,” according to the press release.
The SEC claims that “[f]rom April 2017 until June 2018, the company failed to have any written policies and procedures for ESG research in one product, and once policies and procedures were established, it failed to follow them consistently prior to February 2020.”
“In response to investor demand, advisers like Goldman Sachs Asset Management are increasingly branding and marketing their funds and strategies as ‘ESG,’” said Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement and head of its Climate and ESG Task Force. “When they do, they must establish reasonable policies and procedures governing how the ESG factors will be evaluated as part of the investment process, and then follow those policies and procedures, to avoid providing investors with information about these products that differs from their practices.”
The SEC announced the creation of the Climate and ESG Task Force in March 2021 as part of a shift towards an increased focus on climate-related issues. In May 2022, the agency announced the first enforcement action taken in connection with the Climate and ESG Task Force. Whistleblower advocates believe that whistleblowers will play a critical role in enforcing the SEC’s climate-risk disclosure rules and other climate and ESG related issues.
In fiscal year 2022, the SEC received a record 12,300 whistleblower tips and issued 103 whistleblower awards totaling $229 million. Since the beginning of the program, the SEC has awarded more than $1.3 billion to whistleblowers.
