Inspire Investing positioned itself as a firm dedicated to applying biblical values to its investment strategy, but regulators claim it fell short of living up to its promises.
The Idaho-based registered investment advisor has agreed to pay a $300,000 settlement following accusations that it did not consistently adhere to the "biblically responsible investing" strategy it marketed to clients.
Inspire promoted a screening process designed to exclude companies whose operations did not align with biblical values from clients’ portfolios. The firm’s advisory brochures and the prospectuses for its eight exchange-traded funds outlined several “prohibited activities” that would disqualify companies from its investment universe. These activities included gambling, pornography, in vitro fertilization, abortion, cannabis, and businesses identified as “state-owned enterprises,” according to the SEC.
However, the SEC’s settlement order claims that in practice, Inspire misrepresented its research process and failed to consistently apply its investment criteria. As a result, the firm invested in companies that should have been excluded under its stated guidelines, and its research process did not prevent these deviations from occurring.
Inspire agreed to settle the matter without admitting or denying the SEC’s findings. Along with the monetary penalty, the firm also consented to a censure and pledged to engage an external compliance consultant to review its processes.
Molly Blakeman, Inspire’s senior marketing specialist, expressed relief at the resolution of the case, characterizing the issue as one involving “certain historic processes.”
“We are thankful for the guidance provided by the SEC regarding the importance of faith-based investment screening in the current landscape,” Blakeman says. “We are confident that the improvements we’ve made and will continue to make to our processes will place us and our clients on firm footing.”
The SEC’s action against Inspire highlights a common theme in regulatory enforcement: advisors must align their practices with the values they promote. When a firm offers a thematic investing strategy—whether based on environmental, social, or religious principles—advisors are obligated to ensure that their actions consistently reflect the values they represent.
“Investors must trust that advisors are acting in line with the investment process they present,” says Corey Schuster, co-chief of the asset-management unit in the SEC’s Division of Enforcement. “In this case, Inspire’s investment screening process did not match what it had communicated to investors, leading to investments that contradicted its stated criteria.”
Inspire, based in Meridian, Idaho, promotes itself as a wealth management firm staffed by “Christian financial advisors” who aim to help clients “glorify God in their financial lives.” The firm claims to apply its biblically responsible investing (BRI) approach to both retail investor advisory services and the management of ETFs. According to its most recent Form ADV regulatory filing, Inspire manages nearly $2.6 billion in assets.
Inspire’s marketing materials described its investment process as “objective,” using a “rules-based, scientifically rigorous methodology” to develop what it called the Inspire Impact Score. This metric was presented as a consistent way to measure how companies aligned with the firm’s BRI criteria.
However, the SEC claims that Inspire’s actual process was far from the data-driven model it advertised. Instead, the firm relied on manual research conducted by a small team of employees. This research largely involved cross-referencing company names with donor and sponsor lists from prominent national organizations that Inspire had associated with prohibited activities.
As a result, many companies that engaged in practices contrary to Inspire’s stated values ended up in the portfolios it managed, either for clients or within the funds it advised.
The SEC noted that Inspire cooperated with the investigation and took steps to improve its due diligence process. The firm has since made changes aimed at ensuring its investment practices are more closely aligned with the commitments it makes to clients.
