VanEck Fined by SEC for ETF Marketing Blunder
VanEck has been fined $1.75 million by the Securities and Exchange Commission (SEC) after failure to disclose a social media influencer’s role in the launch of an exchange-traded fund (ETF).
In March 2021, Van Eck launched a “Social Sentiment ETF” trading under the ticker “BUZZ.” The ETF tracks an index based on “positive insights” from social media and other data and failed to disclose this, according to the US SEC.
The SEC said Van Eck failed to disclose an influencer’s “planned involvement” and the sliding scale fee structure to the ETF’s board in connection with its approval of the fund launch and of the management fee.
Van Eck consented to the entry of the SEC’s order finding that it violated the Investment Company Act and Investment Advisers Act. The investment firm did not admit or deny the SEC’s findings and agreed to a cease-and-desist order and a censure in addition to the monetary penalty.
“Fund boards rely on advisers to provide accurate disclosures, especially when involving issues that can impact the advisory contract, known as the 15(c) process,” said Andrew Dean, co-chief of the Enforcement Division’s Asset Management Unit at the SEC.
“Van Eck Associates’ disclosure failures concerning this high-profile fund launch limited the board’s ability to consider the economic impact of the licensing arrangement and the involvement of a prominent social media influencer as it evaluated Van Eck Associates’ advisory contract for the fund,” added Dean.
In recent years, a handful of celebrities such as Kim Kardashian, Lindsay Lohan, Floyd Mayweather, Jake Paul and Matt Damon have promoted cryptocurrency projects and faced the wrath of the regulators in the United States.
There are many reasons why an increasing number of
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