The Securities and Exchange Commission said Friday that registered investment adviser Van Eck Associates Corp. has agreed to pay a $1.75 million civil penalty to settle charges that it failed to disclose a social media influencer's role in the launch of its new exchange-traded fund.
According to the SEC's order, in March 2021, Van Eck Associates launched the VanEck Social Sentiment ETF (BUZZ) to track an index based on "positive insights" from social media and other data.
"The provider of that index informed Van Eck Associates that it planned to retain a well-known and controversial social media influencer to promote the index in connection with the launch of the ETF," the order states.
To incentivize the influencer's marketing and promotion efforts, according to the SEC, "the proposed licensing fee structure included a sliding scale linked to the size of the fund so, as the fund grew, the index provider would receive a greater percentage of the management fee the fund paid to Van Eck Associates."
