Key Insights
- SEC fines VanEck $1.75M for not properly disclosing influencer deal tied to ETF launch
- VanEck admits limited details given to board around payment terms and economic impact
- Settlement follows launch of BUZZ ETF tracking social media sentiment last year
NEW YORK (MarketsXplora) – U.S. regulators on Friday said they fined asset manager VanEck Associates $1.75 million for failing to properly disclose an agreement with a social media influencer hired to promote a new exchange-traded fund tracking social media sentiment.
The Securities and Exchange Commission (SEC) said VanEck did not provide its board with full details around hiring an unnamed “prominent” influencer to drum up interest when it launched the VanEck Social Sentiment ETF in March 2021.
VanEck kept board in dark on aspects of ETF influencer deal
According to the charges, VanEck admitted it did not inform directors about payment terms in the agreement that could impact revenue projections relevant to deliberations over the ETF’s advisory deal.
The lapses “limited the board’s ability to consider the economic impact” of the arrangement as it evaluated the advisory contract, the SEC said.
As part of the settlement, in which it did not admit or deny the findings, VanEck agreed to pay the penalty and comply with cease-and-desist provisions, the regulator said.
The firm has significantly grown its ETF business focused heavily on gold and cryptocurrency markets, attracting strong investor interest toward newer products.
Its planned bitcoin futures ETF won U.S. regulatory approval last year, while VanEck has also expanded offerings to cover ethereum derivatives contracts.
In a statement, VanEck’s general counsel said the omissions around the influencer deal were unintentional and that it has enhanced policies to properly vet marketing agreements.