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.
The Wall Street giant has blasted data middlemen as digital freeloaders, but tech firms and consumer advocates are pushing back.
Research reveals a 4% year-on-year increase in expenses that one in five Americans, including one-quarter of Gen Xers, say they have not planned for.
Raymond James also lured another ex-Edward Jones advisor in South Carolina, while LPL welcomed a mother-and-son team from Edward Jones and Thrivent.
MyVest and Vestmark have also unveiled strategic partnerships aimed at helping advisors and RIAs bring personalization to more clients.
Wealth management unit sees inflows of $23 billion.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
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.
