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Inspire also lacked written policies and procedures setting forth a process for evaluating companies’ activities as part of its investment process, which at times resulted in inconsistent application of its investment criteria.
As a result, Inspire Investing “invested in companies engaged in activities that did not align with Inspire Investing’s own stated criteria and in which the advisory firm represented 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.”
Without admitting or denying the SEC’s findings, Inspire agreed to a censure and cease-and-desist order, to pay the $300,000 penalty and to retain an independent compliance consultant.
Inspire Responds
Inspire said in a statement that it is ”pleased to have resolved” the SEC’s inquiry into the firm’s historical screening policies and procedures.
“In recent years, the SEC has investigated a significant number of investment firms offering screened investments, including secular firms with ESG or similar strategies, as well as faith-based firms,” Inspire said. “As a prominent provider of faith-based investing solutions, Inspire Investing was included in this process with a non-public fact-finding inquiry beginning in September 2022.”
The SEC matter “relates to certain historic processes, procedures, and marketing practices,” Inspire said.
“We are grateful to receive guidance from the SEC on what it considers important regarding modern faith-based investment screening,” Inspire added. ”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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