VanEck has agreed to pay a $1.75 million fine to settle charges brought by the SEC related to its launch of a social media-focused ETF in 2021. The SEC found that VanEck failed to fully disclose the involvement of a prominent social media personality in marketing the ETF, which aimed to leverage “positive insights” from social media data. While the influencer’s identity was not explicitly revealed, reports suggest it may have been David Portnoy, founder of Barstool Sports. The undisclosed deal involved the influencer’s compensation being tied to the fund’s growth, raising concerns about transparency and compliance with.
The undisclosed arrangement with the influencer not only violated regulatory obligations but also undermined the integrity of the ETF’s operations and management. This case underscores the regulatory scrutiny faced by firms seeking to capitalize on the growing popularity of ETFs and highlights the need for thorough due diligence and compliance procedures when engaging in marketing activities. VanEck’s decision to accept the SEC’s order and pay the fine without admitting or denying the findings reflects a recognition of the seriousness of the violations and a desire to move forward with enhanced transparency and compliance measures.
