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September 19, 2024 at 02:54 PM
What You Need to Know
- Inspire Investing, with eight faith-based ETFs and SMAs, has won numerous accolades as an up-and-coming RIA firm.
- The RIA invested in companies engaged in activities that did not align with its own stated criteria.
- The SEC fined the firm $300,000.
The Securities and Exchange Commission said Thursday that it has fined Idaho-based investment advisor Inspire Investing LLC $300,000 for making misleading statements and for compliance failures related to the execution of its “biblically responsible investing” strategy.
According to the SEC’s order, Inspire Investing represented that it used a data-driven methodology to evaluate companies and that it would not invest in companies that had “any degree of participation” in certain enumerated business practices that Inspire determined did not align with biblical values.
However, the SEC’s order finds, from at least 2019 to March 2024, “Inspire Investing in fact relied on a manual research process and did not typically perform research on individual companies to evaluate them for eligibility under its investing criteria.”
Largest Provider of Faith-Based ETFs
Known as the world’s largest provider of faith-based ETFs, Inspire was ranked by USA Today and Statista as a top RIA for 2024 based on asset growth and recommendations by financial advisors, clients and industry experts — the second year in a row.
Inspire currently advises eight exchange-traded funds and separately managed accounts that employ what it refers to as a “biblically responsible investing” strategy, according to the SEC.
Inspire has gained recognition by FA Magazine seven times since 2017, making the Top 50 Fastest Growing Firms list three times in a row. Inspire was recognized in The Financial Times’ “Americas’ Fastest Growing Companies” three of the last four years and the Inc. 5000 list of fastest-growing private companies in America four years running.
Research Process
Inspire stated that it used a science- and data-driven proprietary methodology to provide a positive or negative score for companies based on their business practices.
From at least 2019 to March 2024, Inspire represented in its Form ADV Part 2A Brochure and the Inspire ETFs’ prospectuses “that the Inspire ETFs and SMAs it advised would not invest in companies that ‘ha[ve] any degree of participation in’ certain enumerated activities or products that Inspire determined did not align with biblical values,” according to the SEC order.
“In practice, however, Inspire misrepresented its research process, did not apply its investment criteria consistently, invested in companies that should have been excluded based on Inspire’s stated investment criteria, and had a research process that failed to prevent departures from its stated investment criteria,” the SEC states.
