SEC Rule Cracks Down on Misleading ESG, Growth Fund Labels (2)

The world’s biggest investment firms are getting much tougher rules for naming funds, as the US Securities and Exchange Commission clamps down on labels it says can be misleading.

The SEC voted on Wednesday to impose the most sweeping overhaul for fund-labeling regulations in more than two decades. Backers say the measures in particular will help rein in overblown claims about environmental, social or governance investments.

During the Biden administration, the regulator has grown increasingly concerned that funds billboard certain buzzwords to attract investors, even if they don’t accurately reflect their actual strategies. One focus has been on a lack ...