The chief executive of Germany’s leading asset manager DWS said on Wednesday he would step down next week, a day after prosecutors raided allegations the company misled investors about “green” investments. “.
The raids and the departure of DWS CEO Asoka Woehrmann mark another setback for Deutsche Bank, majority owner of DWS, which has attempted to circumvent regulatory offenses including money laundering and securities mis-selling, resulting in billions in fines.
DWS has been dogged by the charges for months, prompting German prosecutors to raid DWS and the headquarters of Deutsche Bank on Tuesday.
German and US officials have investigated reports and allegations by a whistleblower that DWS exaggerated the green credentials of investments it sold – a practice known as greenwashing. DWS has repeatedly denied misleading investors.
The DWS leadership change had been in the works for some time but was finally carried out in meetings late Tuesday following the raids, a person with direct knowledge of the matter said.
Woehrmann told employees in a memo that it’s been a joy to see DWS thrive, but “the allegations…however unsubstantiated or indefensible they may be, have left a mark.”
“To quote Charles Dickens: It was the best of times, it was the worst of times,” he said in the memo, which was seen by Reuters.
Deutsche Bank, which retained the majority stake in DWS after its IPO, has marketed itself as a bank that banking companies can turn to when looking for a greener future.
Desiree Fixler, the whistleblower involved in the investigation, told Reuters the resignation was positive but did not go far enough.
“It’s not just a change of a man,” she said.
“There is greenwashing, and there is concealment. It’s a huge cultural issue at Deutsche Bank,” she said.
DWS and Deutsche Bank declined to comment on Fixler’s remarks.
On Tuesday, German prosecutors said “sufficient factual evidence has emerged” to show that environmental, social and governance factors were considered in a minority of investments “but were not considered at all. in a large number of investments”, contrary to statements in the sales prospectuses of the DWS funds.
The Securities and Exchange Commission and German financial watchdog BaFin launched separate investigations into the whistleblowing allegations last year.
The whistleblower, Fixler, a former head of sustainability at DWS, said the company had exaggerated the way it used sustainable investing criteria to manage investments.
In February, Deutsche Bank agreed with the Justice Department to extend a special monitor’s stay at the bank after it failed to report allegations involving DWS in a timely manner.
Shares of DWS have fallen 24% since the SEC and BaFin investigations were made public in August last year. They were down about 5% on Wednesday night.
The charges show that “greenwashing is not a trivial offence,” said Magdalena Senn of German consumer group Finanzwende.
“The raid and the resignation will have a signal effect for other asset managers,” she said.
Credit Suisse analysts said Woehrmann’s departure was a disappointment as he successfully implemented the reform and turnaround of DWS.
“We see the management change heralding a period of uncertainty for DWS’ strategy – and may even raise questions about its future as an independent asset management company,” Credit Suisse said.
DWS and Deutsche Bank said on Tuesday that the asset manager had cooperated with regulators and authorities in the past and would continue to do so.
Woehrmann has come under pressure on multiple fronts since the greenwashing allegations surfaced.
Deutsche Bank conducted an internal investigation into the possible use of Woehrmann’s private email for business purposes, and the European Central Bank also looked into corporate governance issues surrounding it.
He also received threatening letters, including one in December with a red crosshair, white powder and a racial slur.
Asked about the allegations during a DWS earnings call with analysts, Woehrmann said he emphatically rejects all allegations.
Deutsche Bank CEO Christian Sewing publicly supported Woehrmann in January and thanked him on Wednesday for “his impressive work and performance.”
Stefan Hoops, who has overseen Deutsche Bank’s corporate banking division since 2019, will replace Woehrmann from June 10, the bank said.
Woehrmann’s resignation takes effect on June 9, the day of his annual general meeting.