Australian Securities and Investments Commission v Vanguard Investments Australia Ltd

COURT OR TRIBUNAL

Federal Court of Australia

DATE FILED (OR FIRST HEARING DATE)

24/07/2023

LITIGATION TYPE

Corporate Accountability

SUBJECT MATTER

Misleading and deceptive conduct

REVIEW TYPE

N/A

SUMMARY

ASIC has commenced civil penalty proceedings against Vanguard Investments alleging misleading conduct in relation to purported environmental, social and governance (ESG) exclusionary screens applied to investments in a Vanguard fund. ASIC alleges that Vanguard made representations, including in the Product Disclosure Statement, that the fund offered an "ethically conscious" investment opportunity. However, ASIC allege that contrary to the representations a significant proportion of the bonds were from issuers that were not researched or screened against ESG criteria and that the index and fund included issuers that violated these criteria. ASIC is seeking declarations that Vanguard contravened the ASIC Act, pecuniary penalties and adverse publicity orders.

On 28 March 2024, the Court delivered judgment in the matter. Vanguard admitted to most of ASIC's allegations that it had made representations that securities held by the fund had been screened against environmental, social and governance criteria, but where the screening was limited to a subset of the securities held by the fund. A penalty hearing will proceed later in 2024.

CASE DOCUMENTS

ASIC media release
Australian Securities and Investments Commission v Vanguard Investments Australia Ltd [2024] FCA 308
Australian Securities and Investments Commission v Vanguard Investments Australia Ltd (No 2) [2024] FCA 1086