German prosecutors raided the offices of DWS asset management and Deutsche Bank in Frankfurt this morning (31 May), concerning allegations of greenwashing and misleading investments.

The raid, first reported by Bloomberg, involved around 50 officers who arrived at the offices with members of the German regulator BaFin present among the officers.

According to the public prosecutor's office, the search is connected to greenwashing allegations against DWS. Reuters reported that a statement made by the authorities said they were following up from reports and a whistleblower claiming that DWS sold investments as "greener" or "more sustainable" than they actually were.

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According to the Financial Times, DWS said it had continuously co-operated with relevant regulators and authorities on this matter and will continue to do so. Both parties deny the allegations.

Greenwashing has become a buzzword in the investment industry as the trend of sustainable and environmentally, socially responsible investing has picked up in recent years.

While many firms have pledged to invest in line with these ideas, many have been criticised for trying to cash in on this popular space with disingenuous ESG products.

Just last week, BNY Mellon's investment adviser arm was fined $1.5m (£1.2m) by the US Securities and Exchange Commission (SEC) following "misstatements and omissions" about its ESG approach to managing funds. This prompted new rule changes from the government body to try and prevent greenwashing, reflecting the fact that it is becoming a growing concern.

This is not the first time DWS has faced allegations over this type of misconduct.

Desiree Fixler, the former head of sustainability at the firm, claimed that the firm had overstated its ESG credentials in its 2020 annual report.

Her claims at the time triggered investigations by the US Securities and Exchange Commission and BaFin. At the time, DWS said in a statement that these allegations were "unfounded".

Fixler left the role after less than a year but took DWS to court over unfair employment termination, but a German labour court dismissed the lawsuit in January of this year.

Since markets opened today, DWS' share price is down 4.7% and Deutsche Bank's is down 2.6%.