VanEck Acknowledges Breaching ETF Marketing Regulations, Settles with SEC for Fine.

VanEck has agreed to pay a fine of $1.75 million to settle charges brought by the United States Securities and Exchange Commission (SEC) in relation to the launch of its social media-focused exchange-traded fund (ETF) in 2021.
The SEC imposed a civil penalty on the investment adviser following an investigation. In a statement released on February 16, the SEC revealed that VanEck had failed to fully disclose the involvement of a prominent social media personality in the marketing of the product during the launch of the VanEck Social Sentiment ETF in March 2021.
The ETF aimed to track an index utilizing positive insights from social media and other data sources. However, it was discovered that VanEck had sought to increase the fund’s success through social media and had collaborated with an influential and controversial online personality to enhance its appeal.
Although the SEC did not mention the influencer by name, reports from 2021 had previously connected David Portnoy, the founder of Barstool Sports, to the promotion of the VanEck ETF. The regulator identified an undisclosed detail: the influencer’s fee was tied to the growth of the fund, ensuring higher compensation as the fund expanded.
The SEC criticized this undisclosed arrangement, focusing on VanEck’s failure to inform the ETF’s board about the intended involvement of the influencer. This undisclosed agreement had significant implications for the management contract and fund operations, as it violated the board’s responsibility to oversee financial aspects during discussions about the advisory contract.
Andrew Dean, co-chief of the SEC Enforcement Division’s Asset Management Unit, emphasized the importance of transparency from advisers. He highlighted that the failure to provide accurate disclosures hampers the board’s ability to properly evaluate the advisory contract and understand the economic impact of licensing agreements.
VanEck accepted the SEC’s order, acknowledging its violation of the Investment Company Act and the Investment Advisers Act. The company agreed to a cease and desist order, censure, and the required financial penalty without admitting or denying the findings.
This announcement comes after VanEck’s decision to terminate one of its ETF products, the Bitcoin Strategy ETF, a month ago following a comprehensive performance evaluation. In an apparent effort to boost the popularity of its dedicated spot Bitcoin (BTC) ETF, which carries the ticker HODL, VanEck indicated on February 15 that it would lower its fees from 0.25% to 0.20% starting from February 21.
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