In re WISDOMTREE ASSET

 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6753 / October 21, 2024 
 
INVESTMENT COMPANY ACT OF 1940 
Release No. 35364 / October 21, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22268 
  
 
In the Matter of 
 
WISDOMTREE ASSET 
MANAGEMENT, INC.,   
 
Respondent. 
 
 
 
 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS, 
PURSUANT TO SECTIONS 203(e) AND 
203(k) OF THE INVESTMENT ADVISERS 
ACT OF 1940, AND SECTION 9(f) OF THE 
INVESTMENT COMPANY ACT OF 1940, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER  
   
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”), and Section 9(f) of the Investment Company Act of 1940 (“Investment Company 
Act”), against WisdomTree Asset Management, Inc. (“WisdomTree” or “Respondent”).   
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of the 
Investment Advisers Act of 1940, and Section 9(f) of the Investment Company Act of 1940, 
Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 
set forth below. 
 

 
2 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that 
Summary 
1. From March 2020 until November 2022 (the “Relevant Period”), WisdomTree, a 
registered investment adviser to three exchange-traded funds (the “ESG Funds”) that it marketed 
as incorporating environmental, social, and governance (“ESG”) factors, misstated to the ESG 
Funds’ board of trustees (“Board”) and investors that the ESG Funds would not invest in 
companies that were “involved in certain controversial products or activities,” including “fossil 
fuels” and “tobacco.”  In reality, the ESG Funds invested in the securities of companies during 
the Relevant Period that were involved in such activities, including coal mining and the 
transportation of coal, natural gas extraction and distribution, and the retail sale of tobacco 
products.      
2. In September 2019, in seeking approval to create the ESG Funds as part of a 
strategy change for three existing funds, WisdomTree represented to the Board that the model it 
was developing would have the capability to screen out the securities of companies that had “any 
involvement” in fossil fuels and tobacco.  The ESG Funds’ prospectuses further stated that 
WisdomTree’s model excluded the securities of such companies “regardless of revenue 
measures.”  In advance of the launch of the ESG Funds, however, the data WisdomTree 
purchased from a third-party vendor (“Vendor A”) only identified a subset of companies 
involved in fossil fuels, and WisdomTree failed to purchase supplemental data that would have 
identified additional such companies.  WisdomTree attempted to augment its screening process 
with additional data from a second third-party vendor (“Vendor B”), but since at least September 
2020, WisdomTree was aware, through its preparation of reports, that its investment process was 
still not removing all securities of companies involved in fossil fuels.   
3. WisdomTree’s model also failed to exclude all securities of companies involved 
in tobacco-related activity during the Relevant Period.  Among other things, WisdomTree was 
informed that Vendor A’s data identifying issuers involved in tobacco retail sales had not 
captured certain retailers who derived less than 10% of their revenues from retail sales of 
tobacco products.  WisdomTree did not inform the Board or revise the ESG Funds’ prospectuses 
until November 2022 concerning these issues with respect to fossil fuels and tobacco screening.   
4. In addition, WisdomTree did not adopt and implement written policies and 
procedures reasonably designed to prevent violations of the Advisers Act in connection with the 
investment process for the ESG Funds, including concerning the manner in which WisdomTree’s 
model excluded the securities of certain companies from the portfolios of the ESG Funds as 
described in its statements to the Board and the ESG Funds’ disclosures.   
                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  

 
3 
5. By November 2022, WisdomTree updated its existing disclosures and risk factors 
in the ESG Funds’ prospectuses to address the data its model used in its investment process to 
exclude securities involved in fossil fuels and tobacco, among others.  On February 5, 2024, after 
obtaining Board approval, WisdomTree liquidated the ESG Funds.  
Respondent 
6. WisdomTree, incorporated in Delaware, is an investment adviser registered with 
the Commission since 2006 and headquartered in New York, New York.  Among other things, 
WisdomTree advises exchange-traded funds (“ETFs”) including, until their liquidation on February 
5, 2024, the ESG Funds.  As of March 28, 2024, WisdomTree had approximately $73 billion in 
regulatory assets under management.    
Other Relevant Entities 
7. WisdomTree Trust (the “Trust”) is a Delaware statutory trust.  The ESG Funds 
were series of the Trust, over which the Board had oversight responsibility.  
8. WisdomTree International ESG Fund, one of the ESG Funds, was registered as 
an investment company under the Investment Company Act and organized as an ETF in the Trust.  
The fund was formerly the WisdomTree Dynamic Currency Hedged International Quality 
Dividend Growth Fund until March 16, 2020, when the Fund’s name, investment objective, and 
principal investment strategies were changed.  As of March 31, 2020, the Fund had approximately 
$27 million in assets under management. 
9. WisdomTree Emerging Markets ESG Fund, one of the ESG Funds, was 
registered as an investment company under the Investment Company Act and organized as an ETF 
in the Trust.  The fund was formerly the WisdomTree Emerging Markets Dividend Fund until 
March 16, 2020, when the Fund’s name, investment objective, and principal investment strategies 
were changed.  As of March 31, 2020, the Fund had approximately $38 million in assets under 
management. 
10. WisdomTree U.S. ESG Fund, one of the ESG Funds, was registered as an 
investment company under the Investment Company Act and organized as an ETF in the Trust.  
The fund was formerly the WisdomTree U.S. Total Market Fund until March 16, 2020, when the 
Fund’s name, investment objective, and principal investment strategies were changed.  As of 
March 31, 2020, the Fund had approximately $73 million in assets under management. 
WisdomTree’s Representations to the Board 
11. Beginning in 2017, WisdomTree began a process to consider ESG investing and the 
creation of ETFs that incorporated ESG considerations.   
12. In September 2019, prior to the ESG Funds’ inception, WisdomTree representatives 
met on several occasions with the full Board or the Board’s investment committee to seek approval 
to change the strategy for three ETFs and adopt the ESG Funds’ investment objectives and 
principal investment strategies.  In recommending the revisions, including proposing that the funds 

 
4 
use “ESG” in their names, WisdomTree conveyed to the Board rising investor demand for ESG 
investment products at the time.     
13. In connection with the September 2019 meetings, WisdomTree prepared and 
distributed to the Board and its investment committee written materials that contained 
representations about the proposed investment process for the ESG Funds.  For example, a 
memorandum provided by WisdomTree stated that the ESG Funds would use a “model-based 
approach” to invest in the securities of companies with “certain characteristics that [WisdomTree] 
believes to be indicative of positive future returns as well as positive Environmental, Social, and 
Governance . . . characteristics based on a model developed by WisdomTree,” and that, as part of 
the investment process, “[s]ecurities of companies involved in certain controversial products or 
activities,” such as fossil fuels and tobacco, would be “excluded.”  
14. Other WisdomTree materials provided to the Board’s investment committee in 
September 2019 further described this investment process, including the exclusionary screening 
portion of that process.  In one slide of a presentation entitled “WisdomTree’s Methodology 
Incorporating ESG,” WisdomTree stated that it would “Screen Out Companies Involved in Certain 
Activities.”  Similarly, a subsequent slide in the presentation stated that “WisdomTree screens 
companies with any involvement in,” among other activities, “Fossil Fuels” and “Tobacco.”   
15. On September 13, 2019, the Board voted to approve the proposal to revise the 
investment objectives and principal investment strategies for the ESG Funds, which revisions were 
effective as of March 16, 2020.   
16. Following the inception of the ESG Funds in March 2020, WisdomTree provided to 
the Board an “educational presentation” concerning ESG investment products that was discussed 
in a Board meeting on September 29, 2020.  In three places in that presentation, WisdomTree 
stated that it was excluding companies involved in, among other activities, “Fossil fuels” and 
“Tobacco,” including, in one of those instances, specifying that it was excluding companies “with 
exposure to” any such activities.  In discussing portfolio-level metrics concerning the ESG Funds 
on which WisdomTree was reporting via “ESG Characteristics Reports” prepared using data from 
a third party, WisdomTree told the Board that it had selected involvement in “fossil fuels” and 
“tobacco,” among others, to report on “because they are widely viewed by ESG investors as the 
least attractive from a sustainability perspective.”   
17. Later, in a presentation to the Board on June 6, 2022, WisdomTree made similar 
representations that the ESG Funds were excluding companies involved in fossil fuels and tobacco.   
18. Neither during any of these presentations to the Board nor in any other Board 
meetings did WisdomTree describe any limitations on its ability to conduct this exclusionary 
screening or otherwise describe its interpretation of terms such as “fossil fuels” or “tobacco.” 
Prospectus Disclosures for the ESG Funds 
19. During the Relevant Period, WisdomTree prepared and filed prospectuses for the 
ESG Funds with the Commission (the “Prospectuses”), which were publicly available on the 

 
5 
Commission’s website.  Throughout the Relevant Period, the then-current prospectuses were also 
available on WisdomTree’s website.   
20. The Prospectuses for the ESG Funds stated that each fund’s investment objective 
was “capital appreciation” and the funds were “actively managed using a model-based approach.”  
The prospectuses also stated in the “Principal Investment Strategies of the Fund” section that the 
ESG Funds sought “to achieve [their] investment objective by investing primarily in equity 
securities . . . that exhibit certain characteristics that [WisdomTree] believes to be indicative of 
positive future returns as well as incorporating favorable environmental, social, and governance . . . 
characteristics based on a model developed by WisdomTree . . . .”  More specifically, as it relates 
to ESG, the Prospectuses stated that WisdomTree “seeks to identify equity securities with positive 
ESG characteristics as determined by a company’s Sustainability score, which is a composite score 
based on independent third party ESG research and data and measures a company’s ESG impact 
along with its exposure to potential controversies.”  The Prospectuses further stated that 
“[s]ecurities of companies involved in certain controversial products or activities,” including 
“fossil fuels” and “tobacco,” “are excluded regardless of revenue measures.”  (Emphasis added.) 
21. The Prospectuses also stated that the portfolios for the ESG Funds would generally 
be rebalanced on a quarterly basis according to WisdomTree’s model, “although a more active 
approach may be taken depending on factors such as market conditions and investment 
opportunities.”   
22. WisdomTree used this language in the Prospectuses for the ESG Funds from their 
inception in March 2020 until November 1, 2022, for the WisdomTree International ESG Fund and 
the WisdomTree Emerging Markets ESG Fund, and until November 2, 2022, for the WisdomTree 
U.S. ESG Fund. 
Investment Practices Regarding Fossil Fuels 
23. In order to exclude the securities of certain companies from the ESG Funds’ 
portfolios, WisdomTree in May 2019 contracted with Vendor A, a third-party ratings, research, 
and analytics firm, which offered research that identified companies’ involvement in providing 
certain products or services.  Vendor A informed WisdomTree that it updated this research 
monthly and made the updated data available to subscribers for access and download.  Vendor A 
provided WisdomTree with information about the methodology it employed for that research, 
which included a list of the various data sets that covered different products and services that 
subscribers could purchase.  Vendor A also provided information about the scope and limitations 
of each data set.   
24. Vendor A did not offer to subscribers like WisdomTree a single data set that 
encompassed or otherwise was described as “fossil fuels.”  Instead, Vendor A offered several data 
sets that addressed different aspects of fossil fuels activities that were described as:  “Arctic Oil and 
Gas Exploration,” “Thermal Coal,” “Oil Sands,” “Shale Energy,” and “Oil and Gas.”  WisdomTree 
did not subscribe to the latter two data sets and WisdomTree’s agreement with Vendor A did not 
include them.  As reflected by the names of the three data sets WisdomTree did subscribe to and in 

 
6 
the related methodology documents Vendor A sent to WisdomTree, these data sets did not purport 
to identify all companies involved in fossil fuels-related businesses.       
25. Shortly before the inception of the ESG Funds in March 2020, WisdomTree 
became aware that the three fossil fuels-related data sets that it ordered from Vendor A had failed 
to capture certain companies involved in fossil fuels.  In response, WisdomTree incorporated data 
from an additional vendor, Vendor B, another ratings, research, and analytics firm, in an attempt to 
further exclude the securities of certain companies involved in fossil fuels from the ESG Funds’ 
portfolios.  Vendor B’s data used by WisdomTree classified companies by their primary business 
sector.   
26. Like the data from Vendor A, the data from Vendor B had certain limitations, as it 
did not offer data for an industry sector that encompassed all fossil fuels-related businesses.  
Instead, Vendor B’s delineation of industry sectors meant that multiple sectors had involvement in 
fossil fuels.  Information concerning the Vendor B data (including the limitations of that data) was 
publicly available on Vendor B’s website. 
27. WisdomTree only used Vendor B’s “Energy Sector” data to exclude the securities 
of companies from the portfolios of the ESG Funds, even though other Vendor B industry-sector 
classifications included companies involved in fossil fuels.  For example, the “Utilities Sector” 
included utility companies that distributed natural gas to residential and industrial customers that 
were not identified in Vendor B’s “Energy Sector” data.  
28. In some situations, Vendor A did not provide research to indicate whether a 
company was involved in fossil fuels activities.  In those situations, WisdomTree did not conduct 
further research to make this determination.  Instead, the model that WisdomTree used in 
managing the ESG Funds’ portfolios deemed those securities as eligible for inclusion into the ESG 
Funds unless Vendor B’s “Energy Sector” data flagged them. 
29. In its representations to the Board and in the ESG Funds’ Prospectuses, 
WisdomTree did not describe the limitations of the data sets it used from Vendor A and Vendor B 
in its screening process or otherwise define the term “fossil fuel.”  Instead, WisdomTree stated that 
it would screen out the securities of companies “involved in” fossil fuels regardless of revenue 
measures.  
30. The limitations regarding the data sets WisdomTree used in its screening process 
led to the ESG Funds regularly holding the securities of certain companies involved in fossil fuel 
related activities, including companies involved in the transport of coal or the extraction, 
distribution, or sale of natural gas.  For example: 
a. the WisdomTree International ESG Fund held the securities of: (i) a freight 
company with a substantial coal-transport business from fund inception in March 2020 until 
December 2021; (ii) a major natural gas distributor that has also had ownership interests in shale 
gas extraction projects from fund inception in March 2020 to December 2023; and (iii) a specialty 
chemical company that provides chemicals for use in offshore and onshore drilling as well as for 

 
7 
pipelines from June to September 2021 and from June 2022 until the fund was liquidated on 
February 5, 2024; 
b. the WisdomTree Emerging Markets ESG Fund held the securities of: (i) a 
company that owns natural gas distributors and has also been involved in building natural gas 
pipelines and operating a natural gas terminal from fund inception in March 2020 until the fund 
was liquidated on February 5, 2024; (ii)  a natural gas distributor from fund inception in March 
2020 until March 2021; and (iii) a firm that holds a 25% stake in an oil refining, distribution, and 
marketing company from December 2020 to September 2021; and 
c. the WisdomTree U.S. ESG Fund held the securities of: (i) multiple utility 
holding companies that owned natural gas distribution utilities from March 2020 until the fund was 
liquidated on February 5, 2024; (ii) a  utility holding company that owns a large natural gas 
distribution utility and also has an operating division engaged in the extraction of shale gas from 
June 2022 until March 2023; (iii) a steelmaker that owned a 49% stake in a company that 
maintained properties with oil and gas reserves from June 2021 until the fund was liquidated on 
February 5, 2024; and (iv) a  freight railroad that hauled coal, fracking sand, petroleum coke, and 
crude oil from June to September 2020 and again from December 2020 to December 2021. 
31. In addition to being aware of the limitations of the data sets WisdomTree used from 
Vendor A and Vendor B, WisdomTree learned in approximately September 2020, when preparing 
ESG Characteristics Reports, that data from an investment research firm that owned Vendor A 
identified that the ESG Funds held positions in companies involved in activities related to fossil 
fuels.    
32. WisdomTree provided a screenshot of one page of an ESG Characteristics Report 
to the Board for the September 29, 2020 Board meeting, with the heading “Sample Report.”  
Although WisdomTree also placed the marketing materials on its website, they were only available 
to investment professionals.  Later versions of the ESG Characteristics Reports, generated at the 
same time as reports for other ETFs WisdomTree advised, showed the ESG Funds’ exposure only 
to companies involved in thermal coal activities.      
Investment Practices Regarding Tobacco 
33. The Prospectuses for the ESG Funds stated that the securities of companies 
“involved in . . . tobacco . . . are [also]excluded regardless of revenue measures.”  WisdomTree’s 
disclosures to the Board similarly conveyed that WisdomTree would exclude companies with 
“any” tobacco involvement.     
34. As part of its investment process, WisdomTree used a data set made available by 
Vendor A called “Tobacco.”  Prior to the inception of the ESG Funds, and during WisdomTree’s 
due diligence process to evaluate Vendor A’s data, Vendor A provided documentation to 
WisdomTree concerning its methodology for the Tobacco data set.  The documentation stated that 
Vendor A would not capture a company’s tobacco retail sales if those sales comprised less than 
10% of such company’s revenues.  WisdomTree did not disclose to the Board or in the ESG 
Funds’ Prospectuses the information it received from Vendor A concerning these limitations.  By 

 
8 
the time the ESG Funds reorganized in March 2020, Vendor A’s monthly updates to its Tobacco 
data set attempted to capture companies with retail tobacco sales that were less than 10% of 
revenue.  However, this data did not capture all such companies. 
35. On June 25, 2020, Vendor A informed WisdomTree that it was “implementing an 
improved . . . process” for researching companies’ product involvements, including changing its 
methodology for its Tobacco data set to incorporate “manual checks” to its research process, which 
resulted in the data set identifying companies with retail tobacco sales of less than 10% of their 
revenue that had not been flagged previously.  As a result, when WisdomTree accessed Vendor 
A’s updated data, WisdomTree’s model directed the ESG Funds to divest 35 investment positions 
at the next quarterly portfolio rebalancing on September 11, 2020.  The ESG Funds had held 
positions in most of these companies since the ESG Funds’ March 2020 inception.   
36. WisdomTree continued to invest in companies that Vendor A identified as being 
involved in retail tobacco sales during the Relevant Period.  For example, from March 2020 to 
June 2021, and from March 2022 through November 2022, the WisdomTree Emerging Markets 
ESG Fund held a position in a large overseas internet retailing concern that sold tobacco products 
among many others.   
WisdomTree Updates the Prospectuses for the ESG Funds in Late 2022 
37. In response to an examination of WisdomTree conducted by the SEC’s Division of 
Examinations, WisdomTree updated the prospectuses for the ESG Funds effective November 1, 
2022, and November 2, 2022.  Among other things, the revised prospectuses provided a definition 
of “fossil fuels-related activities” that included only “Arctic Oil Gas, Oil Sands, or Thermal Coal.”  
The prospectuses also no longer stated that WisdomTree screened out all companies involved with 
fossil fuels or tobacco regardless of revenue measures.  
38. In addition, the ESG Funds’ prospectuses incorporated additional risk factor 
language stating that “the successful implementation of the [ESG] Fund[s’] strategy is therefore 
dependent in large part on the ESG factors considered and research methodologies employed by its 
third-party ESG data providers . . .”, that “the methodologies and criteria used by [its data vendors] 
are continuously evolving and subject to ongoing refinement,” and that WisdomTree “does not 
undertake to, and does not, independently test or verify the factors used or data provided by such 
firms.”   
39. The revised prospectuses supplemented prior risk factor disclosures by stating that 
it “is possible that the Fund may invest in securities of companies that are later determined to be 
inconsistent with the Fund’s model investment criteria . . . because relevant information about that 
company was not known or was inaccurate at the time of investment or because the third-party 
ESG data and research firm now considers additional information that causes the company to no 
longer meet the investment criteria.” 

 
9 
Policies and Procedures 
40. WisdomTree did not adopt and implement any written policies and procedures 
concerning the process for excluding the securities of certain companies from the ESG Funds’ 
portfolios and, more broadly, for its ESG investment process. 
Violations 
41. As a result of the conduct described above, WisdomTree willfully
2
 violated Section 
206(2) of the Advisers Act, which prohibits an investment adviser, directly or indirectly, from 
engaging “in any transaction, practice, or course of business which operates as a fraud or deceit 
upon any client or prospective client.”  Scienter is not required to establish a violation of Section 
206(2), which may rest on a finding of simple negligence.  SEC v. Steadman, 967 F.2d 636, 643 
n.5 (D.C. Cir. 1992) (citing SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 195 
(1963)). 
42. As a result of the conduct described above, WisdomTree willfully violated Section 
206(4) of the Advisers Act and Rule 206(4)-8 thereunder, which provides in relevant part that it is 
unlawful for any investment adviser to a pooled investment vehicle to “make any untrue statement 
of a material fact or to omit to state a material fact necessary to make the statements made, in light 
of the circumstances under which they were made, not misleading, to any investor or prospective 
investor in the pooled investment vehicle.”  A violation of Section 206(4) of the Advisers Act and 
the rules thereunder does not require scienter and may rest on a finding of simple negligence.  
Steadman, 967 F.2d at 647. 
43. As a result of the conduct described above, WisdomTree willfully violated Section 
34(b) of the Investment Company Act.  Section 34(b) of the Investment Company Act makes it 
unlawful for any person to make any untrue statement of material fact in any registration statement 
or other document filed with the Commission under the Investment Company Act, or for any 
person so filing or transmitting to omit to state therein any fact necessary in order to prevent the 
statements made therein, in light of the circumstances under which they were made, from being 
materially misleading.  Establishing a violation of Section 34(b) of the Investment Company Act 
does not require proof of scienter.  In the Matter of Fundamental Portfolio Advisors, Inc., Advisers 
Act Rel. No. 2146, 2003 WL 21658248, at *8 (July 15, 2003) (Comm. Op.). 
44. As a result of the conduct described above, WisdomTree willfully violated Section 
206(4) of the Advisers Act and Rule 206(4)-7 promulgated thereunder, which require a registered 
investment adviser to adopt and implement written compliance policies and procedures reasonably 
designed to prevent violations of the Advisers Act and the rules thereunder.  
                                                 
2
  “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act, 
“‘means no more than that the person charged with the duty knows what he is doing.’”  Wonsover 
v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 
1949)).  There is no requirement that the actor “also be aware that he is violating one of the Rules 
or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965).  

 
10 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in WisdomTree’s Offer. 
 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, and Section 9(f) 
of the Investment Company Act, it is hereby ORDERED that: 
 A. Respondent WisdomTree cease and desist from committing or causing any 
violations and any future violations of Sections 206(2) and 206(4) of the Advisers Act and Rules 
206(4)-7 and 206(4)-8 promulgated thereunder, and Section 34(b) of the Investment Company Act. 
 B. Respondent WisdomTree is censured. 
C. WisdomTree shall, within ten days of the entry of this Order, pay a civil money 
penalty in the amount of $4,000,000 to the Securities and Exchange Commission for transfer to the 
general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   
Payment must be made in one of the following ways:   
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
Payments by check or money order must be accompanied by a cover letter identifying 
WisdomTree as a Respondent in these proceedings, and the file number of these proceedings; a 
copy of the cover letter and check or money order must be sent to Lee A. Greenwood, Assistant 
Regional Director, Division of Enforcement, Securities and Exchange Commission, 100 Pearl 
Street, Suite 20-100, New York, NY 10004.   
 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

 
11 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 By the Commission. 
 
Vanessa A. Countryman 
        Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 
 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6753 / October 21, 2024 

 

INVESTMENT COMPANY ACT OF 1940 

Release No. 35364 / October 21, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22268 

  

 

In the Matter of 

 

WISDOMTREE ASSET 

MANAGEMENT, INC.,   

 

Respondent. 

 

 

 

 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTIONS 203(e) AND 

203(k) OF THE INVESTMENT ADVISERS 

ACT OF 1940, AND SECTION 9(f) OF THE 

INVESTMENT COMPANY ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER  

   

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”), and Section 9(f) of the Investment Company Act of 1940 (“Investment Company 

Act”), against WisdomTree Asset Management, Inc. (“WisdomTree” or “Respondent”).   

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of the 

Investment Advisers Act of 1940, and Section 9(f) of the Investment Company Act of 1940, 

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 

set forth below. 

 



 
2 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that 

Summary 

1. From March 2020 until November 2022 (the “Relevant Period”), WisdomTree, a 

registered investment adviser to three exchange-traded funds (the “ESG Funds”) that it marketed 

as incorporating environmental, social, and governance (“ESG”) factors, misstated to the ESG 

Funds’ board of trustees (“Board”) and investors that the ESG Funds would not invest in 

companies that were “involved in certain controversial products or activities,” including “fossil 

fuels” and “tobacco.”  In reality, the ESG Funds invested in the securities of companies during 

the Relevant Period that were involved in such activities, including coal mining and the 

transportation of coal, natural gas extraction and distribution, and the retail sale of tobacco 

products.      

2. In September 2019, in seeking approval to create the ESG Funds as part of a 

strategy change for three existing funds, WisdomTree represented to the Board that the model it 

was developing would have the capability to screen out the securities of companies that had “any 

involvement” in fossil fuels and tobacco.  The ESG Funds’ prospectuses further stated that 

WisdomTree’s model excluded the securities of such companies “regardless of revenue 

measures.”  In advance of the launch of the ESG Funds, however, the data WisdomTree 

purchased from a third-party vendor (“Vendor A”) only identified a subset of companies 

involved in fossil fuels, and WisdomTree failed to purchase supplemental data that would have 

identified additional such companies.  WisdomTree attempted to augment its screening process 

with additional data from a second third-party vendor (“Vendor B”), but since at least September 

2020, WisdomTree was aware, through its preparation of reports, that its investment process was 

still not removing all securities of companies involved in fossil fuels.   

3. WisdomTree’s model also failed to exclude all securities of companies involved 

in tobacco-related activity during the Relevant Period.  Among other things, WisdomTree was 

informed that Vendor A’s data identifying issuers involved in tobacco retail sales had not 

captured certain retailers who derived less than 10% of their revenues from retail sales of 

tobacco products.  WisdomTree did not inform the Board or revise the ESG Funds’ prospectuses 

until November 2022 concerning these issues with respect to fossil fuels and tobacco screening.   

4. In addition, WisdomTree did not adopt and implement written policies and 

procedures reasonably designed to prevent violations of the Advisers Act in connection with the 

investment process for the ESG Funds, including concerning the manner in which WisdomTree’s 

model excluded the securities of certain companies from the portfolios of the ESG Funds as 

described in its statements to the Board and the ESG Funds’ disclosures.   

                                                 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.  



 
3 

5. By November 2022, WisdomTree updated its existing disclosures and risk factors 

in the ESG Funds’ prospectuses to address the data its model used in its investment process to 

exclude securities involved in fossil fuels and tobacco, among others.  On February 5, 2024, after 

obtaining Board approval, WisdomTree liquidated the ESG Funds.  

Respondent 

6. WisdomTree, incorporated in Delaware, is an investment adviser registered with 

the Commission since 2006 and headquartered in New York, New York.  Among other things, 

WisdomTree advises exchange-traded funds (“ETFs”) including, until their liquidation on February 

5, 2024, the ESG Funds.  As of March 28, 2024, WisdomTree had approximately $73 billion in 

regulatory assets under management.    

Other Relevant Entities 

7. WisdomTree Trust (the “Trust”) is a Delaware statutory trust.  The ESG Funds 

were series of the Trust, over which the Board had oversight responsibility.  

8. WisdomTree International ESG Fund, one of the ESG Funds, was registered as 

an investment company under the Investment Company Act and organized as an ETF in the Trust.  

The fund was formerly the WisdomTree Dynamic Currency Hedged International Quality 

Dividend Growth Fund until March 16, 2020, when the Fund’s name, investment objective, and 

principal investment strategies were changed.  As of March 31, 2020, the Fund had approximately 

$27 million in assets under management. 

9. WisdomTree Emerging Markets ESG Fund, one of the ESG Funds, was 

registered as an investment company under the Investment Company Act and organized as an ETF 

in the Trust.  The fund was formerly the WisdomTree Emerging Markets Dividend Fund until 

March 16, 2020, when the Fund’s name, investment objective, and principal investment strategies 

were changed.  As of March 31, 2020, the Fund had approximately $38 million in assets under 

management. 

10. WisdomTree U.S. ESG Fund, one of the ESG Funds, was registered as an 

investment company under the Investment Company Act and organized as an ETF in the Trust.  

The fund was formerly the WisdomTree U.S. Total Market Fund until March 16, 2020, when the 

Fund’s name, investment objective, and principal investment strategies were changed.  As of 

March 31, 2020, the Fund had approximately $73 million in assets under management. 

WisdomTree’s Representations to the Board 

11. Beginning in 2017, WisdomTree began a process to consider ESG investing and the 

creation of ETFs that incorporated ESG considerations.   

12. In September 2019, prior to the ESG Funds’ inception, WisdomTree representatives 

met on several occasions with the full Board or the Board’s investment committee to seek approval 

to change the strategy for three ETFs and adopt the ESG Funds’ investment objectives and 

principal investment strategies.  In recommending the revisions, including proposing that the funds 



 
4 

use “ESG” in their names, WisdomTree conveyed to the Board rising investor demand for ESG 

investment products at the time.     

13. In connection with the September 2019 meetings, WisdomTree prepared and 

distributed to the Board and its investment committee written materials that contained 

representations about the proposed investment process for the ESG Funds.  For example, a 

memorandum provided by WisdomTree stated that the ESG Funds would use a “model-based 

approach” to invest in the securities of companies with “certain characteristics that [WisdomTree] 

believes to be indicative of positive future returns as well as positive Environmental, Social, and 

Governance . . . characteristics based on a model developed by WisdomTree,” and that, as part of 

the investment process, “[s]ecurities of companies involved in certain controversial products or 

activities,” such as fossil fuels and tobacco, would be “excluded.”  

14. Other WisdomTree materials provided to the Board’s investment committee in 

September 2019 further described this investment process, including the exclusionary screening 

portion of that process.  In one slide of a presentation entitled “WisdomTree’s Methodology 

Incorporating ESG,” WisdomTree stated that it would “Screen Out Companies Involved in Certain 

Activities.”  Similarly, a subsequent slide in the presentation stated that “WisdomTree screens 

companies with any involvement in,” among other activities, “Fossil Fuels” and “Tobacco.”   

15. On September 13, 2019, the Board voted to approve the proposal to revise the 

investment objectives and principal investment strategies for the ESG Funds, which revisions were 

effective as of March 16, 2020.   

16. Following the inception of the ESG Funds in March 2020, WisdomTree provided to 

the Board an “educational presentation” concerning ESG investment products that was discussed 

in a Board meeting on September 29, 2020.  In three places in that presentation, WisdomTree 

stated that it was excluding companies involved in, among other activities, “Fossil fuels” and 

“Tobacco,” including, in one of those instances, specifying that it was excluding companies “with 

exposure to” any such activities.  In discussing portfolio-level metrics concerning the ESG Funds 

on which WisdomTree was reporting via “ESG Characteristics Reports” prepared using data from 

a third party, WisdomTree told the Board that it had selected involvement in “fossil fuels” and 

“tobacco,” among others, to report on “because they are widely viewed by ESG investors as the 

least attractive from a sustainability perspective.”   

17. Later, in a presentation to the Board on June 6, 2022, WisdomTree made similar 

representations that the ESG Funds were excluding companies involved in fossil fuels and tobacco.   

18. Neither during any of these presentations to the Board nor in any other Board 

meetings did WisdomTree describe any limitations on its ability to conduct this exclusionary 

screening or otherwise describe its interpretation of terms such as “fossil fuels” or “tobacco.” 

Prospectus Disclosures for the ESG Funds 

19. During the Relevant Period, WisdomTree prepared and filed prospectuses for the 

ESG Funds with the Commission (the “Prospectuses”), which were publicly available on the 



 
5 

Commission’s website.  Throughout the Relevant Period, the then-current prospectuses were also 

available on WisdomTree’s website.   

20. The Prospectuses for the ESG Funds stated that each fund’s investment objective 

was “capital appreciation” and the funds were “actively managed using a model-based approach.”  

The prospectuses also stated in the “Principal Investment Strategies of the Fund” section that the 

ESG Funds sought “to achieve [their] investment objective by investing primarily in equity 

securities . . . that exhibit certain characteristics that [WisdomTree] believes to be indicative of 

positive future returns as well as incorporating favorable environmental, social, and governance . . . 

characteristics based on a model developed by WisdomTree . . . .”  More specifically, as it relates 

to ESG, the Prospectuses stated that WisdomTree “seeks to identify equity securities with positive 

ESG characteristics as determined by a company’s Sustainability score, which is a composite score 

based on independent third party ESG research and data and measures a company’s ESG impact 

along with its exposure to potential controversies.”  The Prospectuses further stated that 

“[s]ecurities of companies involved in certain controversial products or activities,” including 

“fossil fuels” and “tobacco,” “are excluded regardless of revenue measures.”  (Emphasis added.) 

21. The Prospectuses also stated that the portfolios for the ESG Funds would generally 

be rebalanced on a quarterly basis according to WisdomTree’s model, “although a more active 

approach may be taken depending on factors such as market conditions and investment 

opportunities.”   

22. WisdomTree used this language in the Prospectuses for the ESG Funds from their 

inception in March 2020 until November 1, 2022, for the WisdomTree International ESG Fund and 

the WisdomTree Emerging Markets ESG Fund, and until November 2, 2022, for the WisdomTree 

U.S. ESG Fund. 

Investment Practices Regarding Fossil Fuels 

23. In order to exclude the securities of certain companies from the ESG Funds’ 

portfolios, WisdomTree in May 2019 contracted with Vendor A, a third-party ratings, research, 

and analytics firm, which offered research that identified companies’ involvement in providing 

certain products or services.  Vendor A informed WisdomTree that it updated this research 

monthly and made the updated data available to subscribers for access and download.  Vendor A 

provided WisdomTree with information about the methodology it employed for that research, 

which included a list of the various data sets that covered different products and services that 

subscribers could purchase.  Vendor A also provided information about the scope and limitations 

of each data set.   

24. Vendor A did not offer to subscribers like WisdomTree a single data set that 

encompassed or otherwise was described as “fossil fuels.”  Instead, Vendor A offered several data 

sets that addressed different aspects of fossil fuels activities that were described as:  “Arctic Oil and 

Gas Exploration,” “Thermal Coal,” “Oil Sands,” “Shale Energy,” and “Oil and Gas.”  WisdomTree 

did not subscribe to the latter two data sets and WisdomTree’s agreement with Vendor A did not 

include them.  As reflected by the names of the three data sets WisdomTree did subscribe to and in 



 
6 

the related methodology documents Vendor A sent to WisdomTree, these data sets did not purport 

to identify all companies involved in fossil fuels-related businesses.       

25. Shortly before the inception of the ESG Funds in March 2020, WisdomTree 

became aware that the three fossil fuels-related data sets that it ordered from Vendor A had failed 

to capture certain companies involved in fossil fuels.  In response, WisdomTree incorporated data 

from an additional vendor, Vendor B, another ratings, research, and analytics firm, in an attempt to 

further exclude the securities of certain companies involved in fossil fuels from the ESG Funds’ 

portfolios.  Vendor B’s data used by WisdomTree classified companies by their primary business 

sector.   

26. Like the data from Vendor A, the data from Vendor B had certain limitations, as it 

did not offer data for an industry sector that encompassed all fossil fuels-related businesses.  

Instead, Vendor B’s delineation of industry sectors meant that multiple sectors had involvement in 

fossil fuels.  Information concerning the Vendor B data (including the limitations of that data) was 

publicly available on Vendor B’s website. 

27. WisdomTree only used Vendor B’s “Energy Sector” data to exclude the securities 

of companies from the portfolios of the ESG Funds, even though other Vendor B industry-sector 

classifications included companies involved in fossil fuels.  For example, the “Utilities Sector” 

included utility companies that distributed natural gas to residential and industrial customers that 

were not identified in Vendor B’s “Energy Sector” data.  

28. In some situations, Vendor A did not provide research to indicate whether a 

company was involved in fossil fuels activities.  In those situations, WisdomTree did not conduct 

further research to make this determination.  Instead, the model that WisdomTree used in 

managing the ESG Funds’ portfolios deemed those securities as eligible for inclusion into the ESG 

Funds unless Vendor B’s “Energy Sector” data flagged them. 

29. In its representations to the Board and in the ESG Funds’ Prospectuses, 

WisdomTree did not describe the limitations of the data sets it used from Vendor A and Vendor B 

in its screening process or otherwise define the term “fossil fuel.”  Instead, WisdomTree stated that 

it would screen out the securities of companies “involved in” fossil fuels regardless of revenue 

measures.  

30. The limitations regarding the data sets WisdomTree used in its screening process 

led to the ESG Funds regularly holding the securities of certain companies involved in fossil fuel 

related activities, including companies involved in the transport of coal or the extraction, 

distribution, or sale of natural gas.  For example: 

a. the WisdomTree International ESG Fund held the securities of: (i) a freight 

company with a substantial coal-transport business from fund inception in March 2020 until 

December 2021; (ii) a major natural gas distributor that has also had ownership interests in shale 

gas extraction projects from fund inception in March 2020 to December 2023; and (iii) a specialty 

chemical company that provides chemicals for use in offshore and onshore drilling as well as for 



 
7 

pipelines from June to September 2021 and from June 2022 until the fund was liquidated on 

February 5, 2024; 

b. the WisdomTree Emerging Markets ESG Fund held the securities of: (i) a 

company that owns natural gas distributors and has also been involved in building natural gas 

pipelines and operating a natural gas terminal from fund inception in March 2020 until the fund 

was liquidated on February 5, 2024; (ii)  a natural gas distributor from fund inception in March 

2020 until March 2021; and (iii) a firm that holds a 25% stake in an oil refining, distribution, and 

marketing company from December 2020 to September 2021; and 

c. the WisdomTree U.S. ESG Fund held the securities of: (i) multiple utility 

holding companies that owned natural gas distribution utilities from March 2020 until the fund was 

liquidated on February 5, 2024; (ii) a  utility holding company that owns a large natural gas 

distribution utility and also has an operating division engaged in the extraction of shale gas from 

June 2022 until March 2023; (iii) a steelmaker that owned a 49% stake in a company that 

maintained properties with oil and gas reserves from June 2021 until the fund was liquidated on 

February 5, 2024; and (iv) a  freight railroad that hauled coal, fracking sand, petroleum coke, and 

crude oil from June to September 2020 and again from December 2020 to December 2021. 

31. In addition to being aware of the limitations of the data sets WisdomTree used from 

Vendor A and Vendor B, WisdomTree learned in approximately September 2020, when preparing 

ESG Characteristics Reports, that data from an investment research firm that owned Vendor A 

identified that the ESG Funds held positions in companies involved in activities related to fossil 

fuels.    

32. WisdomTree provided a screenshot of one page of an ESG Characteristics Report 

to the Board for the September 29, 2020 Board meeting, with the heading “Sample Report.”  

Although WisdomTree also placed the marketing materials on its website, they were only available 

to investment professionals.  Later versions of the ESG Characteristics Reports, generated at the 

same time as reports for other ETFs WisdomTree advised, showed the ESG Funds’ exposure only 

to companies involved in thermal coal activities.      

Investment Practices Regarding Tobacco 

33. The Prospectuses for the ESG Funds stated that the securities of companies 

“involved in . . . tobacco . . . are [also]excluded regardless of revenue measures.”  WisdomTree’s 

disclosures to the Board similarly conveyed that WisdomTree would exclude companies with 

“any” tobacco involvement.     

34. As part of its investment process, WisdomTree used a data set made available by 

Vendor A called “Tobacco.”  Prior to the inception of the ESG Funds, and during WisdomTree’s 

due diligence process to evaluate Vendor A’s data, Vendor A provided documentation to 

WisdomTree concerning its methodology for the Tobacco data set.  The documentation stated that 

Vendor A would not capture a company’s tobacco retail sales if those sales comprised less than 

10% of such company’s revenues.  WisdomTree did not disclose to the Board or in the ESG 

Funds’ Prospectuses the information it received from Vendor A concerning these limitations.  By 



 
8 

the time the ESG Funds reorganized in March 2020, Vendor A’s monthly updates to its Tobacco 

data set attempted to capture companies with retail tobacco sales that were less than 10% of 

revenue.  However, this data did not capture all such companies. 

35. On June 25, 2020, Vendor A informed WisdomTree that it was “implementing an 

improved . . . process” for researching companies’ product involvements, including changing its 

methodology for its Tobacco data set to incorporate “manual checks” to its research process, which 

resulted in the data set identifying companies with retail tobacco sales of less than 10% of their 

revenue that had not been flagged previously.  As a result, when WisdomTree accessed Vendor 

A’s updated data, WisdomTree’s model directed the ESG Funds to divest 35 investment positions 

at the next quarterly portfolio rebalancing on September 11, 2020.  The ESG Funds had held 

positions in most of these companies since the ESG Funds’ March 2020 inception.   

36. WisdomTree continued to invest in companies that Vendor A identified as being 

involved in retail tobacco sales during the Relevant Period.  For example, from March 2020 to 

June 2021, and from March 2022 through November 2022, the WisdomTree Emerging Markets 

ESG Fund held a position in a large overseas internet retailing concern that sold tobacco products 

among many others.   

WisdomTree Updates the Prospectuses for the ESG Funds in Late 2022 

37. In response to an examination of WisdomTree conducted by the SEC’s Division of 

Examinations, WisdomTree updated the prospectuses for the ESG Funds effective November 1, 

2022, and November 2, 2022.  Among other things, the revised prospectuses provided a definition 

of “fossil fuels-related activities” that included only “Arctic Oil Gas, Oil Sands, or Thermal Coal.”  

The prospectuses also no longer stated that WisdomTree screened out all companies involved with 

fossil fuels or tobacco regardless of revenue measures.  

38. In addition, the ESG Funds’ prospectuses incorporated additional risk factor 

language stating that “the successful implementation of the [ESG] Fund[s’] strategy is therefore 

dependent in large part on the ESG factors considered and research methodologies employed by its 

third-party ESG data providers . . .”, that “the methodologies and criteria used by [its data vendors] 

are continuously evolving and subject to ongoing refinement,” and that WisdomTree “does not 

undertake to, and does not, independently test or verify the factors used or data provided by such 

firms.”   

39. The revised prospectuses supplemented prior risk factor disclosures by stating that 

it “is possible that the Fund may invest in securities of companies that are later determined to be 

inconsistent with the Fund’s model investment criteria . . . because relevant information about that 

company was not known or was inaccurate at the time of investment or because the third-party 

ESG data and research firm now considers additional information that causes the company to no 

longer meet the investment criteria.” 



 
9 

Policies and Procedures 

40. WisdomTree did not adopt and implement any written policies and procedures 

concerning the process for excluding the securities of certain companies from the ESG Funds’ 

portfolios and, more broadly, for its ESG investment process. 

Violations 

41. As a result of the conduct described above, WisdomTree willfully2 violated Section 

206(2) of the Advisers Act, which prohibits an investment adviser, directly or indirectly, from 

engaging “in any transaction, practice, or course of business which operates as a fraud or deceit 

upon any client or prospective client.”  Scienter is not required to establish a violation of Section 

206(2), which may rest on a finding of simple negligence.  SEC v. Steadman, 967 F.2d 636, 643 

n.5 (D.C. Cir. 1992) (citing SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 195 

(1963)). 

42. As a result of the conduct described above, WisdomTree willfully violated Section 

206(4) of the Advisers Act and Rule 206(4)-8 thereunder, which provides in relevant part that it is 

unlawful for any investment adviser to a pooled investment vehicle to “make any untrue statement 

of a material fact or to omit to state a material fact necessary to make the statements made, in light 

of the circumstances under which they were made, not misleading, to any investor or prospective 

investor in the pooled investment vehicle.”  A violation of Section 206(4) of the Advisers Act and 

the rules thereunder does not require scienter and may rest on a finding of simple negligence.  

Steadman, 967 F.2d at 647. 

43. As a result of the conduct described above, WisdomTree willfully violated Section 

34(b) of the Investment Company Act.  Section 34(b) of the Investment Company Act makes it 

unlawful for any person to make any untrue statement of material fact in any registration statement 

or other document filed with the Commission under the Investment Company Act, or for any 

person so filing or transmitting to omit to state therein any fact necessary in order to prevent the 

statements made therein, in light of the circumstances under which they were made, from being 

materially misleading.  Establishing a violation of Section 34(b) of the Investment Company Act 

does not require proof of scienter.  In the Matter of Fundamental Portfolio Advisors, Inc., Advisers 

Act Rel. No. 2146, 2003 WL 21658248, at *8 (July 15, 2003) (Comm. Op.). 

44. As a result of the conduct described above, WisdomTree willfully violated Section 

206(4) of the Advisers Act and Rule 206(4)-7 promulgated thereunder, which require a registered 

investment adviser to adopt and implement written compliance policies and procedures reasonably 

designed to prevent violations of the Advisers Act and the rules thereunder.  

                                                 
2  “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act, 

“‘means no more than that the person charged with the duty knows what he is doing.’”  Wonsover 

v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 

1949)).  There is no requirement that the actor “also be aware that he is violating one of the Rules 

or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965).  



 
10 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in WisdomTree’s Offer. 

 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, and Section 9(f) 

of the Investment Company Act, it is hereby ORDERED that: 

 A. Respondent WisdomTree cease and desist from committing or causing any 

violations and any future violations of Sections 206(2) and 206(4) of the Advisers Act and Rules 

206(4)-7 and 206(4)-8 promulgated thereunder, and Section 34(b) of the Investment Company Act. 

 B. Respondent WisdomTree is censured. 

C. WisdomTree shall, within ten days of the entry of this Order, pay a civil money 

penalty in the amount of $4,000,000 to the Securities and Exchange Commission for transfer to the 

general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   

Payment must be made in one of the following ways:   

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

Payments by check or money order must be accompanied by a cover letter identifying 

WisdomTree as a Respondent in these proceedings, and the file number of these proceedings; a 

copy of the cover letter and check or money order must be sent to Lee A. Greenwood, Assistant 

Regional Director, Division of Enforcement, Securities and Exchange Commission, 100 Pearl 

Street, Suite 20-100, New York, NY 10004.   

 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

http://www.sec.gov/about/offices/ofm.htm


 
11 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 By the Commission. 

 

Vanessa A. Countryman 

        Secretary 


	UNITED STATES OF AMERICA
	1. From March 2020 until November 2022 (the “Relevant Period”), WisdomTree, a registered investment adviser to three exchange-traded funds (the “ESG Funds”) that it marketed as incorporating environmental, social, and governance (“ESG”) factors, misst...
	2. In September 2019, in seeking approval to create the ESG Funds as part of a strategy change for three existing funds, WisdomTree represented to the Board that the model it was developing would have the capability to screen out the securities of com...
	3. WisdomTree’s model also failed to exclude all securities of companies involved in tobacco-related activity during the Relevant Period.  Among other things, WisdomTree was informed that Vendor A’s data identifying issuers involved in tobacco retail ...
	4. In addition, WisdomTree did not adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act in connection with the investment process for the ESG Funds, including concerning the manner in which ...
	5. By November 2022, WisdomTree updated its existing disclosures and risk factors in the ESG Funds’ prospectuses to address the data its model used in its investment process to exclude securities involved in fossil fuels and tobacco, among others.  On...
	Respondent
	Other Relevant Entities
	WisdomTree’s Representations to the Board