The Securities and Exchange Commission (SEC) announced today that Van Eck Associates Corporation, a registered investment advisory firm, has agreed to pay a $1.75 million civil penalty to settle allegations that the firm did not disclose a social media influencer's role in the offering of its new exchange-traded fund (ETF).。

In March 2021, Van Eck Associates launched the VanEck Social Sentiment ETF (NYSE: BUZZ), which tracks "positive insights" indices based on social media and other data.。The provider of the index informed Van Eck Associates that it plans to hire a well-known and controversial social media influencer to promote the index when the ETF launches.。

To incentivize influencer marketing and promotion efforts, the proposed license fee structure includes a sliding table linked to the size of the fund, so that as the size of the fund grows, the index provider will receive a greater percentage of the management fees paid by the fund to Van Eck Associates。

However, as determined by the SEC order, Van Eck Associates did not disclose the plan participation and sliding fee structure of the influencers to the ETF board in approving the fund's issuance and management fees.。

Van Eck Associates agrees to SEC order finding it in violation of Investment Company Act and Investment Advisers Act。Van Eck Associates, who neither admitted nor denied the SEC's findings, agreed to a cease-and-desist order and censure in addition to accepting a fine.。