The U.S. Securities and Exchange Commission (SEC) fined exchange-traded fund (ETF) issuer Van Eck $1.75 million.
Investment adviser VanEck agreed to pay a fine without admitting or denying charges that it failed to disclose the role of social media influencers in the 2021 launch of the VanEckSocial Sentiment ETF, which trades on NYSE Arca under the ticker BUZZ.
According to VanEck, BUZZ is intended to track 75 large-cap securities with “the highest levels of positive investor sentiment and optimistic perceptions,” based on content extracted from social media, news articles and blog posts. As of this writing, the BUZZ portfolio includes Coinbase (COIN), Paypal (PYPL), Tesla (TSLA), and MicroStrategy (MSTR).
The SEC alleged that VanEck used anonymous social media influencers to promote the fund but failed to disclose this to investors.
“To encourage influencers’ marketing and promotional efforts, the proposed license fee structure included a sliding scale based on fund size. Therefore, as a fund grows, the index provider will receive a larger percentage of the management fees paid by the fund to Van. You will receive: Eck Associates,’ the SEC said in a statement.
“However, according to the SEC’s order, Van Eck Associates failed to disclose to the ETF’s board the planned involvement of influencers and its differential fee structure in connection with fund launches and management fee approvals.”
Dave Portnoy, president of sports and pop culture blog Barstool Sports, was heavily involved in the fund’s launch, but the SEC did not name him in the complaint. decryption Attempts to contact him through his media company did not receive an immediate response. barstool sports.
VanEck is one of many popular Bitcoin ETF issuers. The fund manager’s Bitcoin Trust launched in January alongside nine other funds, giving investors exposure to the largest cryptocurrency by market capitalization.
The company also proposed a spot Ethereum ETF to the SEC. Regulators have until May 23 to approve or reject the proposed product.
Edited by Stacey Elliott.
