VanEck fined $1.8M over influencer promo nondisclosure

Van Eck Associates Corp. was faulted for not implementing policies and procedures reasonably designed to prevent the violations of the Advisers Act related to the nondisclosure, the SEC announced in a press release Friday.

The details: The March 2021 launch of the VanEck Social Sentiment ETF included plans to retain a popular social media influencer to aid in promotion. The involvement of the influencer led to changes VanEck agreed to in the proposed licensing fee structure to “incentivize the influencer’s marketing and promotion efforts,” the SEC said in its order.

The plan was not disclosed to the independent trustees of the VanEck ETF Trust, which learned about the individual’s involvement days before the fund’s launch, per the order.

“Van Eck Associates’ disclosure failures concerning this high-profile fund launch limited the board’s ability to consider the economic impact of the licensing arrangement and the involvement of a prominent social media influencer as it evaluated Van Eck Associates’ advisory contract for the fund,” said Andrew Dean, co-chief of the SEC Enforcement Division’s Asset Management Unit, in the release.

Compliance considerations: From December 2020 until June 2021, VanEck misrepresented material information to the board concerning the licensing arrangement and the involvement of the influencer, their compensation, and their controversies, the SEC said.

The agency found the firm “did not have adequate written policies and procedures about furnishing the board with accurate information reasonably necessary for the board to evaluate the terms of the advisory contract, as well as material information related to a proposed fund launch.”

VanEck offered no comment. The firm neither admitted nor denied the SEC’s findings.