SEC Charges VanEck For Influencer’s Hidden Role In ETF

Key Points:

• The SEC charged VanEck Associates with a $1.75 million penalty for not disclosing a social media influencer’s role in launching a new ETF.
• The undisclosed fee structure incentivized the influencer’s promotion efforts and increased the index provider’s management fee as the fund grew.

SEC charges VanEck $1.75M for not disclosing a social media influencer’s role in launching their new ETF and fee structure details.

The Securities and Exchange Commission (SEC) charged VanEck Associates Corporation, a registered investment adviser, with a $1.75 million civil penalty for failing to disclose a social media influencer’s role in the launch of its new exchange-traded fund (ETF).

SEC Charges VanEck for Non-Disclosure of Influencer’s Role

In March 2021, Van Eck Associates launched the VanEck Social Sentiment ETF to track an index based on social media insights. The index provider informed VanEck Associates about their plan to hire a social media influencer to promote the index.

The proposed licensing fee structure included a sliding scale linked to the fund’s size, incentivizing the influencer’s promotion efforts. As the fund grew, the index provider would receive a larger management fee percentage.

The SEC found that VanEck Associates did not disclose the influencer’s involvement and the sliding scale fee structure to the ETF’s board during the fund launch and management fee approval.

Readmore: VanEck Cuts Spot ETF Fee To 0.2% Following A 160% Price Rally

VanEck’s Recent Fee Rate Reduction for Bitcoin ETF

These disclosure failures limited the board’s ability to consider the economic impact of the licensing arrangement and the influencer’s involvement. Without admitting or denying the SEC’s findings, Van Eck Associates agreed to a cease-and-desist order, a censure, and the monetary penalty.

Earlier, CoinCu reported that VanEck had announced a decrease in the fee rate of its Bitcoin spot Exchange-Traded Fund (ETF) from 0.25% to 0.2%, starting from February 21st, according to documents submitted to the U.S. Securities and Exchange Commission (SEC).