The Securities and Exchange Commission (SEC) has penalized Van Eck, an exchange-traded fund (ETF) and mutual fund manager, for not disclosing the role of an “influencer” in the launch of a new ETF. The specific ETF was the VanEck Social Sentiment (VEAC) ETF (NYSE:BUZZ).
Van Eck consented to the entry of the SEC’s order, finding that it violated the Investment Company Act and Investment Advisers Act. Without admitting or denying the SEC’s findings, Van Eck has agreed to pay a $1.75 million civil penalty to settle charges.
VEAC seeks to track the “BUZZ index, which aims to – “track the performance of the 75 large-cap U.S. stocks that exhibit the highest degree of positive investor sentiment and bullish perception based on content aggregated from online sources, including social media, news articles, blog posts, and other alternative datasets..”
The SEC does not mention the influencer by name, but accordingVan Eck to Kiplinger, Dave Portnoy announced the launch on Twitter.
As of today, the ETF has around $75 million in net assets, with YTD returns of 7.33%.
Andrew Dean, Co-Chief of the SEC’s Enforcement Division’s Asset Management Unit, said “Van Eck Associates’ disclosure failures concerning the 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.”
