American Investment Advisers VanEck Associates Penalized by SEC for Transparency Violations
VanEck Associates, an American investment advisory firm, has been fined by the United States Securities and Exchange Commission (SEC) for failing to comply with transparency laws. The company has agreed to pay a substantial penalty fee due to its failure to disclose information about the involvement of a prominent influencer in the launch of its Spot Bitcoin Exchange Traded Fund (ETF).
SEC Charges Van Eck Associates
The SEC issued a press release on February 16, announcing formal charges against Van Eck Associates. These charges stem from an order issued by the SEC in 2021, alleging that the investment advisers had launched their ETF based on positive sentiment from social media and other sources.
The SEC claims that Van Eck Associates knew about the index provider’s plan to use a popular influencer for promoting its Social Sentiment ETF. Furthermore, the SEC states that Van Eck proposed a licensing fee structure that increased as the ETF grew, incentivizing the influencer’s marketing efforts.
According to the SEC, Van Eck failed to disclose the influencer’s involvement and the associated licensing fee structure to the ETF board deliberately. As a result, the SEC imposed a penalty fee of $1.7 million.
Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit, criticized Van Eck for disregarding transparency laws and limiting the board’s ability to assess the economic impact of the licensing arrangement.
Van Eck Associates Agree To $1.7M Settlement
Vaneck Associates has consented to pay the $1.7 million settlement charge without admitting or denying the allegations. In addition to the penalty settlement, they have issued a “cease and desist order” and received an official censure.
As of February 16, VanEck’s ETF has reached approximately $76 million in total assets under management. The company has also seen significant inflows into its ETF since its launch.
Matthew Siegel, Van Eck’s head of digital asset research, predicts that the recently approved Spot Bitcoin ETF will attract over $2.4 billion in inflows in the first quarter of 2024.
Featured image from Adobe Stock, chart from TradingView
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