WisdomTree Asset Management Inc. has agreed to pay a $4 million fine to the U.S. Securities and Exchange Commission (SEC) after allegedly failing to adhere to its commitment to create exchange-traded funds (ETFs) that excluded investments in fossil fuels and tobacco.

The SEC's cease and desist order revealed that from March 2020 to November 2022, WisdomTree promoted three funds under an environmental, social, and governance (ESG) strategy that claimed to avoid certain controversial products and activities. However, the regulator found that the funds included investments in companies engaged in coal mining, natural gas extraction, and the retail sale of tobacco products, contradicting the firm's stated investment criteria.

This settlement highlights the ongoing scrutiny of ESG claims and the importance of transparency in investment strategies.