The Securities and Exchange Commission (SEC) has charged VanEck Associates Corporation for concealing a social media influencer's role in the launch of a new exchange-traded fund (ETF).
In March 2021, Van Eck introduced the VanEck Social Sentiment ETF (NYSE: BUZZ), designed to track an index based on positive insights from social media and other data sources. However, an investigation by the regulator found that VanEck had failed to disclose crucial information regarding a prominent social media influencer's planned involvement and the fee structure tied to the launch of the ETF.
Regulatory Consequences
Andrew Dean, the Co-Chief of the Enforcement Division’s Asset Management Unit at the SEC, mentioned: "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."
According to the press release, the SEC emphasized the importance of accurate disclosures in the financial industry, particularly concerning issues that could affect advisory contracts and the launch of funds. According to the regulator, Van Eck Associates has consented to the SEC's order. As part of the settlement , the firm agreed to pay a civil penalty of USD $1.75 million and accepted a cease-and-desist order and censure.
Despite not admitting or denying the SEC's findings, Van Eck has committed to rectifying the lack of disclosure and complying with regulatory standards.
VanEck Expands ETF Products
Last month, VanEck made a significant commitment to the Bitcoin community. The asset management firm plans to allocate 5% of profit from its spot Bitcoin ETF to support Bitcoin developers. VanEck is among the asset managers that received the SEC's approval to launch a spot Bitcoin ETF.
Additionally, VanEck is expanding its offerings to include Ethereum blockchain. With the launch of the VanEck Ethereum Strategy ETF (EFUT) last year, the company aims to enable investors to access a tax-efficient avenue for participating in Ethereum's futures contracts.
VanEck's EFUT ETF has diverged from traditional cryptocurrency investment strategies by focusing on Ethereum futures contracts. The company mentioned that the fund provides investors with a tax advantage.
