Australian Securities and Investments Commission v Vanguard Investments Australia Ltd

The Australian Securities and Investments Commission (ASIC) brought proceedings against Vanguard Investments Australia Ltd, alleging that the latter contravened sections 12DB and 12DF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by making false or misleading representations in relation to an investment fund described as ethically conscious. Vanguard Investments admitted to most allegations but disputed that the representations conveyed by the Product Disclosure Statements (PDSs) and on its website suggested that all securities held in the fund, rather than only securities issued by companies, were subject to research and screening against applicable environmental, social and governance (ESG) criteria.

The court was required to determine whether the representations made by Vanguard conveyed that all securities held in the fund, or only securities issued by companies, were subject to research and screening against applicable ESG criteria. This involved interpreting the impugned statements in the PDSs and on the website, which stated that securities issued by companies were researched and screened against applicable ESG criteria, and that securities that violated those criteria were excluded or removed from the Bloomberg SRI Index and therefore the Fund.

The court concluded that the impugned statements in the PDSs and on the website conveyed that securities issued by companies were researched and screened against applicable ESG criteria, and that securities that violated those criteria were excluded or removed from the Bloomberg SRI Index and therefore the Fund. The court found that the so-called contextual matters did not alter the plain meaning of the impugned statements. The court granted declaratory relief as required by section 12GBA of the ASIC Act, specifying the matters required by the section. The court noted that the grant of declaratory relief was interlocutory in nature and did not determine all the rights of the parties at issue in the proceeding.

The court reserved costs and ordered a timetable for the hearing on penalty and costs, including deadlines for the parties to file statements of agreed facts, affidavits, lists of documents, outlines of written submissions, lists of authorities, and a digital joint bundle of authorities and legislation. The court also specified the format for the Court Book and provided liberty to apply for further orders.