SEC fines VanEck $1.75M over ETF finfluencer promotion

SEC fines VanEck $1.75M over ETF finfluencer promotion
While the SEC doesn't name the influencer, Dave Portnoy, founder of the website Barstool Sports, partnered with VanEck during the fund's launch.
FEB 16, 2024

The SEC announced a $1.75 million civil penalty against VanEck over its failure to reveal a social media influencer’s role in marketing a new ETF.

An investigation by Securities and Exchange Commission revealed Van Eck Associates failed to inform the board overseeing the VanEck Social Sentiment ETF – launched on the New York Stock Exchange under the ticker BUZZ in March 2021 – about the influencer’s role or the unique fee structure tied to the fund's growth.

According to VanEck, BUZZ tracks an index of “75 large cap U.S. stocks which exhibit the highest degree of positive investor sentiment … based on content aggregated from online sources including social media, news articles, blog posts and other alternative datasets.”

The SEC says VanEck, aiming to enhance the ETF's visibility and success, contracted a well-known social media personality known for their polarizing views. This marketing strategy included a variable licensing fee structure, directly correlating the index provider's compensation with the ETF's asset size.

While the SEC does not name the influencer, Dave Portnoy, the finfluencer and founder of the popular sports and pop culture website Barstool Sports, who helped kick-start the day-trading revolution, partnered with VanEck during the March 2021 launch of BUZZ.

Andrew Dean, co-chief of the SEC's enforcement division's asset management unit, emphasized the importance of full disclosure in such arrangements.

"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," Dean said in a statement.

He pointed out that the lack of transparency in this case hampered the board's ability to fully assess the economic implications of the influencer's engagement and its effect on the fund's management contract.

In settling the charges, Van Eck Associates has agreed to cease and desist from further violations of the Investment Company Act and the Investment Advisers Act. The firm did not admit or deny the SEC’s findings of the SEC's order.

Here's why financial advisors should hire military spouses for their practices

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave