DWS shares plummeted on Wednesday after reports the Securities and Exchange Commission (SEC) and BaFin are investigating the German asset manager amid claims it misrepresented its ESG credentials to clients.

DWS shares are down over 13.5% since Wednesday after the Wall Street Journal revealed the SEC was looking into allegations the firm overstated sustainability metrics on some investments.

The issue came to light after former group sustainability officer Desiree Fixler told the WSJ earlier this month that DWS was painting a rosier-than-reality picture to investors.

Fixler was the first person appointed to this role at the firm in September 2020, however, was dismissed in April this year. Her dismissal is currently being investigated by an employee tribunal.

She first raised concerns in November 2020 to the DWS management board claiming the ESG risk management system used by the firm was highly flawed as it relied on outdated technology.

German regulator BaFin has also launched an investigation into the claims made by Fixler that there were misleading statements in the firm’s annual report in 2020.

DWS responded by claiming it does not comment on questions “relating to litigation or regulatory matters”, however, does want to address “unfounded allegations being reported…on its ESG disclosures”.

A DWS spokesperson said in a statement: “DWS stands by its annual report disclosures. We firmly reject the allegations being made by a former employee. DWS will continue to remain a steadfast proponent of ESG investing as part of its fiduciary role on behalf of its clients.

“At DWS, we differentiated between “ESG Integrated AUM” and “ESG AUM” when presenting the assets under management in our annual report 2020 and reported both classifications.”