The Securities and Exchange Commission announced that it has charged an Idaho-based investment advisor for making misleading statements and for compliance failures involving the execution of its “biblically responsible investing” strategy.
In its news release, the SEC said it has fined Inspire Investing LLC $300,000 for violating the antifraud provisions of the Investment Company Act of 1940 and Investment Advisers Act of 1940.
The SEC found that Inspire Investing represented that it used a data-driven methodology to evaluate companies and that it would not invest in companies that took part in certain business practices that Inspire determined did not align with biblical values.
In reality, the commission said, the firm relied on a manual research process from at least 2019 to March 2024, and did not typically perform research on individual companies to see whether they were eligible for its investing criteria.
The SEC’s order also said that Inspire Investing did not have written policies and procedures laying out a process for evaluating companies’ activities as part of its investment process. This at times caused its investment criteria to be applied inconsistently. As a result, Inspire Investing invested in companies engaged in activities that did not align with its criteria and in which the firm claimed that it would not invest.
“Investors must be able to rely on advisers acting consistently with their represented investment process or strategy,” said Corey Schuster, Co-Chief of the Asset Management Unit in the Division of Enforcement. “Here, Inspire Investing’s investment screening process was not what it represented to investors, resulting in it making investments that were contrary to its stated investment criteria.”
Inspire Investing did not admit or deny the charges but consented to the entry of the SEC’s order. Along with the financial penalty, the firm agreed to a censure and cease-and-desist order, and to retain an independent compliance consultant.
Inspire Investing released a statement that read in part, “We are thankful to have resolved this matter, which relates to certain historic processes, procedures, and marketing practices. We are grateful to receive guidance from the SEC on what it considers important regarding modern faith-based investment screening. We have full confidence that the enhancements we have made and will continue to make to our processes and procedures put us and our clients on solid ground in the current regulatory landscape.”
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