NEW YORK – WisdomTree, Inc., a financial services and exchange-traded fund (ETF) provider, disclosed in a regulatory filing that its subsidiary, WisdomTree Asset Management, Inc. (WTAM), has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC) on Monday.
The notice indicates a preliminary determination to recommend enforcement action against WTAM for alleged violations of federal securities laws related to its management of certain ESG-focused investment funds.
The SEC's preliminary findings suggest potential enforcement action that could include injunctions, disgorgement, pre-judgment interest, civil penalties, and other legal remedies. The investigation focuses on three ESG-focused ETFs managed by WTAM, which were liquidated in February 2024 due to low investor demand and bleak prospects for asset growth. The funds, during their operation, had an average asset under management of roughly $119 million.
The notice comes at a time when ESG investing has been under increased scrutiny, with regulators paying closer attention to how investment firms manage and market these funds.
WisdomTree, Inc. is listed on the New York Stock Exchange under the ticker symbol WT, and the company's legal counsel, Marci Frankenthaler, signed off on the SEC filing dated today, confirming the receipt of the notice.
The information in this article is based on a press release statement from the SEC filing.
In other recent news, insurance broker WTW has reported a 20% increase in Q2 profit, largely driven by demand for its risk and insurance brokerage services. The firm has raised its 2024 adjusted earnings per share forecast to a range of $16 to $17, up from the previous estimate of $15.40 to $17. Total revenue for the quarter rose by 5% to $2.27 billion, with adjusted net income reaching $263 million, or $2.55 per share.
The company also reported a substantial year-to-date net inflow of over $1.4 billion and record assets under management (AUM) of $107.2 billion for Q1 2024. WisdomTree's financial performance has been recognized as robust, with its digital business expansion strategy receiving support.
Meanwhile, WisdomTree, Inc. has received backing from Egan-Jones Ratings Co., Glass Lewis, and other proxy advisory firms for the election of its nine board members at the upcoming 2024 Annual Meeting of Stockholders.
Additionally, WisdomTree has gained approval from the UK's Financial Conduct Authority to list exchange-traded products (ETPs) based on bitcoin and ether on the London Stock Exchange. This move is expected to increase institutional adoption of cryptocurrencies.
InvestingPro Insights
As WisdomTree, Inc. navigates the challenges posed by the SEC's scrutiny, it's worth noting that the company has shown resilience in financial performance. According to recent data from InvestingPro, WisdomTree has a market capitalization of $1.48 billion and has maintained dividend payments for 11 consecutive years, underscoring its commitment to returning value to shareholders. The firm's ability to sustain dividends, especially during regulatory challenges, is a testament to its financial stability and may offer some reassurance to investors concerned about the company's future.
Moreover, WisdomTree has experienced a notable price uptick over the last six months, with a six-month price total return of approximately 45.73%, as per the latest metrics. While the company’s stock has taken a hit over the last week, declining by nearly 15%, it’s important for investors to consider the broader trajectory of WisdomTree's stock performance, which has seen a year-to-date price total return of roughly 45.94%. This suggests that despite recent volatility, the company has delivered significant returns over the longer term.
For those interested in a deeper analysis, InvestingPro offers additional insights and metrics, including a fair value estimate of $10.37 for WisdomTree's stock and an analyst target of $12.50, indicating potential upside from the previous close price of $10.04. For more InvestingPro Tips related to WisdomTree, Inc., investors can visit https://www.investing.com/pro/WT, where a total of seven additional tips are available to help inform investment decisions.
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