SEC Investigation Raises Global Alarms Over New IMF Funds

Shortly after Banxico confirmed the reception of US$12 billion from the International Monetary Fund (IMF), Mexico began to orchestrate a plan to allocate those funds to address the country’s most important needs. These plans, however, might have to be put on hold after the US Securities and Exchange Commission (SEC) began an investigation regarding their origins.

The SEC recently began investigating the origins of the SDR funds. “I have instructed staff to review current practices and consider recommendations on whether fund managers should disclose the underlying data and criteria they use to promote themselves as such,” said SEC Chairman Gary Gensler regarding the funds. The origin of the funds and how they actually work is a matter of extreme importance to the US. “Many funds these days call themselves’ green, sustainable, low carbon, etc.,” said Gensler. This investigation started right after the IMF distributed US$650 billion to its member countries and aims to determine whether they are consistent with their description.

The findings of the investigation might impact Mexico and other members of the IMF, which provided funds to each of its member countries according to the number of shares they owned with the Fund. However, at this point it is hard to predict the outcome of this matter. Regulators in the EU are already discussing measures to regulate these types of situations, according to the Sustainable Finance Disclosure Regulation implemented in March, which “is the world’s most ambitious set of rules so far aimed at fighting greenwashing and promises to dramatically alter the way the investment management industry operates.”

President Andrés Manuel López Obrador was seeking to use the funds to pay the country’s debt, but found a complicated path to do so because of poor communication with Banxico. While the final use of the funds has not been stablished, both parties are now waiting for the final resolution of the SEC.