Intentional false statements about sustainable investments? DWS is not willing to accept this accusation nearly two years after the greenwashing raid on its offices in May 2022. „We continue to stand by our financial disclosures and prospectuses", said CEO Stefan Hoops in March, a stance he has maintained for almost two years. Impatience is now growing. "We are dependent on the timing of the public prosecutor's office“, he went on to say in April, implying that from the fund company's perspective, there is little substance to the accusation of prospectus fraud, i.e., an intentional false statement.

The stalemate is now damaging the authority of the investigators. The longer the public prosecutor delays, the more it seems they have little to go on. The material may be complex, the issues multifaceted. But two years without a decision? Even the Munich public prosecutor didn't take that long with the Wirecard accounting fraud investigation, which led to charges against former CEO Markus Braun and other ex-managers in March 2022. In the case of DWS, it might only result in a fine, if anything. The prolonged period requires an explanation. The prosecutor's office remains silent on the proceedings.

And so, speculation persists. It's possible that the investigators do have evidence of widespread misconduct. In that case, they should have enough to impose a significant fine on the publicly listed Deutsche Bank subsidiary, or even bring charges against individuals. But nothing is happening. Are the violations less serious or the evidence weak? Then the case should be dropped! One way or another, a decision is needed.

The stalemate is also a burden for former executives. Nearly a year ago, former DWS CEO Asoka Wöhrmann had to read in the press that the public prosecutor had initiated a formal investigation against him – although there has been no public confirmation of this. Lengthy investigations take a toll. They damage the reputation not only of companies but also of individuals. This is another reason why a decision from the public prosecutor is overdue. Wöhrmann is now the CEO of the Augsburg investment firm Patrizia, which has repeatedly supported him in public statements, and denied any misconduct. Such strong backing for the former DWS CEO is not always seen at corporate level. Even the mere prospect of criminal proceedings is often viewed as too much of a burden.

The investigators are also under public pressure – not only because the demand for decisive prosecution in the finance industry has grown louder since the cum-ex scandal. In the greenwashing case, the US Securities and Exchange Commission (SEC) has already imposed a 19 million dollars fine on DWS. The company failed to practically implement ESG principles in its investment processes, while conveying something different to clients. In this context, the SEC was critical of the grand promise that sustainability was in the DNA of the company – a common but empty phrase that is hardly evidence of prospectus fraud. Nonetheless, a mark has been set. German investigators would also likely want to impose a multi-million dollar fine.

Now, courage is needed. Negotiations with the public prosecutor are continuing to resolve the case, as DWS noted in its 2023 annual report. There is great temptation to end the troublesome procedure with a fine, as in the US. But is that the right thing to do? If it is found that there has been no wrongdoing at DWS, as it confidently suggests, it would undermine its credibility by agreeing to a fine. On the other hand, the investigators must also make a move. An endless process makes everyone look bad – DWS, Wöhrmann, and the public prosecutor.