The Securities and Exchange Commission (SEC) has taken action against VanEck Associates Corporation for withholding information regarding a social media influencer’s involvement in the launch of its new exchange-traded fund (ETF).
In March 2021, Van Eck unveiled the VanEck Social Sentiment ETF (NYSE:BUZZ), designed to monitor an index based on positive sentiments from social media and other data sources.
However, an inquiry by the regulator revealed that VanEck had neglected to reveal crucial details concerning the planned participation of a prominent social media influencer and the fee structure linked to the ETF’s launch.
Andrew Dean, the Co-Chief of the Enforcement Division’s Asset Management Unit at the SEC, remarked: “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.”
The SEC, in its press release, stressed the significance of precise disclosures in the financial sector, particularly regarding matters that could influence advisory contracts and fund inaugurations.
Van Eck Associates, according to the regulators, has consented to the SEC’s directive.
As part of the resolution, the company has concurred to pay a civil penalty of $1.75 million and abide by a cease-and-desist order and censure.
While not confessing or refuting the SEC’s conclusions, Van Eck has pledged to rectify the deficiency in disclosure and adhere to regulatory standards.
In recent weeks, VanEck demonstrated a significant commitment to the Bitcoin community.
The asset management firm intends to allocate 5% of the fund’s proceeds to support Bitcoin developers. VanEck is one of the asset managers that obtained the SEC’s endorsement to launch a spot Bitcoin ETF.
Moreover, VanEck is broadening its offerings to encompass the Ethereum blockchain.
With the inauguration of the VanEck Ethereum Strategy ETF (EFUT) last year, the company aims to provide investors with a tax-efficient means of participating in Ethereum’s future contracts.
VanEck’s EFUT ETF diverges from conventional cryptocurrency investment strategies by concentrating on Ethereum futures contracts, offering investors a tax benefit.