Investment adviser Van Eck hit with $1.75M penalty for ETF disclosure misstep


  • Lack of influencer disclosure impacts ETF integrity, drawing SEC scrutiny.
  • Van Eck’s omission of fee structure crucial during ETF board approval process.
  • Transparency lapse highlights need for stringent disclosure standards in financial industry.

The U.S. Securities and Exchange Commission (SEC) has imposed a civil penalty of $1.75 million on registered investment adviser Van Eck Associates Corporation. This fine stems from allegations that Van Eck neglected to disclose a social media influencer’s involvement in the launch of its new exchange-traded fund (ETF).

Van Eck failure to disclose influencer’s role

Van Eck Associates unveiled the VanEck Social Sentiment ETF, which aimed to track an index based on positive insights gleaned from social media and other data sources. Despite the ETF’s innovative premise, Van Eck failed to disclose the intended participation of a prominent social media influencer in promoting the index alongside the fund launch.

According to the SEC’s order, the index provider had planned to enlist the influencer’s services to enhance the index’s visibility. The compensation structure for the influencer was tied to the ETF’s size, with the index provider slated to receive a larger percentage of the management fee as the fund expanded. 

Crucially, Van Eck Associates omitted these pertinent details about the influencer’s involvement and the fee arrangement from the ETF’s board during the approval process for both the fund launch and the management fee.

Regulatory response and acknowledgement

Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit, emphasized the significance of accurate disclosures, particularly concerning matters impacting advisory contracts. He highlighted that Van Eck Associates’ oversight impeded the board’s ability to thoroughly evaluate the situation during a critical juncture for advisory contracts. 

Van Eck Associates has since consented to the SEC’s order, acknowledging violations of the Investment Company Act and Investment Advisers Act. As part of the settlement, the company has agreed to a cease-and-desist order, a censure, and payment of the $1.75 million civil penalty.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Emman Omwanda

Emmanuel Omwanda is a blockchain reporter who dives deep into industry news, on-chain analysis, non-fungible tokens (NFTs), Artificial Intelligence (AI), and more. His expertise lies in cryptocurrency markets, spanning both fundamental and technical analysis.

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