Inspire Investing pretended to do “Biblically Responsible Investing” but it was a thin facade.
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Transcript:
00:00:00:00 - 00:00:28:12
Bennett Tomlin
Finance is brutal. Even the folks who are supposed to be on your side end up screwing you over. But what if you had the Bible to help guide your investments. Inspire Investing a registered investment advisor promoted that it had a unique ability to offer “Biblically responsible investing” through its ETFs and its management accounts, which basically all went into its ETFs.
00:00:28:14 - 00:00:58:18
Bennett Tomlin
Unfortunately, the SEC now alleges that it was doing a bad job of being biblically responsible and actually its failure to be biblically responsible potentially represents compliance violations. Does this mean that the US government insists that investment advisors need to be biblically responsible? Of course not. But if you do promise you are using a certain methodology, then you need to actually use that.
00:00:58:20 - 00:01:37:17
Bennett Tomlin
So what did Inspire pretend it was doing and what was it actually doing? They pretended they were using data science for the collection, organization, and analysis of faith based screening data to generate an Inspire impact score. If your company was associated with heathenly things like abortion, alcohol, cannabis, embryonic stem cells, exploitation, gambling, IVF, LGBT activism, pornography, state owned enterprises, or tobacco, then your company was negative and it was unrecoverable.
00:01:37:19 - 00:02:04:10
Bennett Tomlin
Some other mostly boring things could potentially make it positive. Were they actually using data science and a rigorous way to do this? It does not seem so. The order details how Inspire employees research was primarily limited to cross-referencing company names with donor and sponsor lists of well known national organizations that it determined were associated with prohibited activities.
00:02:04:12 - 00:02:35:18
Bennett Tomlin
Despite its representations to clients Inspire did not typically conduct research at an individual company level to determine whether a company engaged in any of the prohibited activities. That's right. They just looked up if the company made some donations. You know, rather than looking up what the company actually did to this order. This resulted in excluding certain companies from the investment universe for engaging in prohibited activities.
00:02:35:20 - 00:03:17:01
Bennett Tomlin
Well, it's manual research process failed to identify and exclude other companies that engaged in those same prohibited activities. The company claimed to do one thing and was not doing it. At least you might think that at least they had to have some kind of repeatable methodology for doing this manual research, but actually, according to this order, Inspire lacked written policies and procedures, setting forth a process for evaluating companies activities in spire will need to pay a total fine of $300,000 and fix some of these problems. Inspire’s
00:03:17:01 - 00:03:48:07
Bennett Tomlin
response to this entire situation is to say, we are grateful to receive guidance from the SEC on what it considers important, and we have learned many lessons and inspire hopes they'll continue seeing you investing for the glory of God anyways. It is easier for a camel to pass through the eye of a needle than it is for a rich man to enter the kingdom of heaven.
