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VanEck fined by SEC for error in ETF promotion.

This sends an important signal to other market players to comply with regulations and regulatory standards, ensuring fairness and transparency in operations.

Date: 2024-02-19 Author: Marek Stiller
VanEck fined by SEC for error in ETF promotion.

The Securitiesand Exchange Commission (SEC) fined VanEck $1.75 million after the company failed to disclose the role of a social media influencer in launching an ETF fund.

Van Eck launched the “Social Sentiment” ETF trading under the symbol “BUZZ” in March 2021 . According to the US SEC, the ETF tracks an index based on “positive insights” from social media and other data, but does not give access to it.

The commission said Van Eck did not disclose to the ETF’s board the influencer’s “planned involvement” or the variable scale fee structure in connection with his approval of the fund’s launch and management fee.

Van Eck agreed to the publication of the SEC’s order, which states that the Investment Advisers Act and the Investment Company Act violated each other. The investment company neither admitted nor denied the SEC’s findings and agreed to a cease-and-desist order and reprimand, in addition to a fine.

According to Andrew Dean, co-chair of the Asset Management Unit in the SEC’s Division of Enforcement, “Fund boards rely on advisors to provide accurate disclosures, especially for issues that may affect the advisory agreement, which is known as the 15(c) process.”

Dean said: “Van Eck Associates’ disclosure failures in connection with the launch of this high-profile fund limited the board’s ability to consider the economic impact of licensing arrangements and the involvement of a social media influencer when evaluating Van Eck Associates’ advisory agreement for the fund.”

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In recent years, a handful of celebrities such as Kim Kardashian, Lindsay Lohan, Floyd Mayweather, Jake Paul and Matt Damon have promoted cryptocurrency projects and faced displeasure from regulators in the United States.

An increasing number of celebrities are getting involved in promoting financial products and cryptocurrencies. Apparently, this is due to the financial opportunities they bring in profit. Advertising and branding are other popular reasons why celebrity is important in today’s world.

As competition in the market has intensified, VanEck last week reduced the fees on the VanEck Bitcoin Trust, a HODL Exchange Traded Fund (ETF), to 0.20% from 0.25%. For the first twelve months, or until it reaches its first five billion dollars in assets under management, BlackRock has set its fee for the iShares ETF at 0.12%. Later it plans to increase it to 0.25%.

Other issuers, such as ARK Invest and Bitwise, charge 0.21%. Mainstream investors are increasingly choosing bitcoin ETFs. They solve problems such as holding assets and dealing with fraudulent service providers.

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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