Vaneck Fined $1.75 Million by SEC for Failure to Disclose Influencer Involvement in BUZZ ETF
Vaneck, a well-known investment fund manager and issuer of the HODL Bitcoin Spot ETF, has agreed to pay a civil penalty of $1.75 million to the United States Securities and Exchange Commission (SEC). The sanction comes after accusations that Vaneck did not properly disclose the role of an influencer in promoting its Social Sentiment ETF, BUZZ, which was launched in 2021 with the support of Barstool Sports founder Dave Portnoy.
BUZZ: An ETF Influenced by Social Media Trends
BUZZ aims to track popular stocks on social media, focusing on 75 large-cap American stocks with the highest positive investor sentiment and bullish perceptions based on aggregated content from online sources, including social media, press articles, blogs, and alternative data sets. According to the SEC, VanEck failed to disclose the planned involvement of the influencer and the variable fee structure to the ETF commission when approving the fund’s launch and management fees.
Exposure to Crypto Stocks and Fee Adjustments
Although BUZZ does not exclusively focus on crypto stocks, it holds significant exposure in this sector, including approximately 13,700 shares of Coinbase, constituting 3.6% of the fund, as well as shares of PayPal, MicroStrategy, Robinhood, and Block.
Vaneck, one of the first to receive approval for its Bitcoin Spot ETF in January, alongside BlackRock and Ark 21Shares, announced in a filing with the SEC that the sponsor fees for its Bitcoin ETF would be reduced from 0.25% to 0.20% starting February 21.
After initially experiencing outflows following the conversion of Grayscale’s Bitcoin Trust into an ETF, Bitcoin ETFs have seen a resurgence in inflows this week. Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, noted that Bitcoin ETFs accounted for only 14% of ETF launches in January but represented 83% of assets under management (AUM), highlighting the exceptional nature of these Bitcoin ETF launches.
