VanEck has been ordered to pay a $1.75 million fine by the United States Securities and Exchange Commission (SEC) due to their involvement in launching a social media-themed exchange-traded fund (ETF) in 2021.
The investment adviser was issued a civil penalty by the SEC, which was announced in a statement on February 16.
The SEC found that during the launch of the VanEck Social Sentiment ETF in March 2021, VanEck did not fully disclose the participation of a prominent social media figure in their product’s marketing.
The ETF aimed to track an index based on positive insights from social media and other data sources, but the SEC discovered that VanEck had strategically utilized social media and partnered with a well-known and controversial influencer to increase its appeal.
Despite not explicitly naming the influencer, reports from 2021 have connected Barstool Sports founder, David Portnoy, to the promotion of the VanEck ETF.
The SEC also found that there was a hidden agreement in place, where the influencer’s compensation was tied to the growth of the fund, ensuring higher payment as the fund expanded.
