TechFlow news, according to Cointelegraph, asset management firm VanEck will pay a $1.75 million penalty to settle U.S. Securities and Exchange Commission (SEC) charges related to its social media-focused ETF launched in 2021.
In a statement on February 16, the SEC revealed that when VanEck launched its Social Sentiment ETF in March 2021, it did not fully disclose the involvement of a prominent social media personality in promoting the product. The ETF was designed to track an index based on "positive insights" from social media and other data sources. However, the SEC found that, in an effort to boost the fund's success through social media, VanEck partnered with an influential online figure to enhance the fund’s appeal.
The SEC criticized this undisclosed arrangement, emphasizing VanEck’s failure to inform the ETF’s board about the influencer’s intended participation. This non-disclosed agreement had a significant impact on the management contract and fund operations, violating the board’s duty to oversee financial matters during advisory contract discussions.
VanEck has agreed to the SEC’s order, acknowledging violations of the Investment Company Act and the Investment Advisers Act. The firm accepted a cease-and-desist order, censure, and the required monetary penalty, without admitting or denying the findings.
