ETF Managers CEO Masucci Resigns Amid SEC Investigation
The ETFMG founder’s departure is tied to a potential probe into nondisclosure of conflicts of interest.
ETF Managers Group CEO Samuel Masucci has resigned as part of an effort to settle an SEC probe into the company he founded, barely a month after the firm announced the sale of its entire fund lineup.
The resignation could help conclude the Securities and Exchange Commission’s probe into alleged nondisclosure of conflicts of interest by Masucci, according to an ETFMG document filed with the agency. The document stated that the nondisclosure was related to the cannabis ETF, the ETFMG Alternative Harvest ETF (MJ), and participation in the securities lending program administered by the fund’s prior custodian.
Masucci, who couldn’t be reached for comment, was at the center of an earlier ETF industry controversy. In 2019, his firm was ordered to pay $80 million to Nasdaq for breach of contract, settling a dispute over the ETFMG Prime Cyber Security ETF (HACK) and four other ETFs with combined assets of $2.1 billion.
“The SEC has a wide range of tools in its arsenal, and typically insisting upon the resignation of an individual is one that they would use where they believe that an individual is at the crux of the wrongdoing,” said Brian Hamburger, a lawyer who focuses on regulatory compliance as the chief counsel at Hamburger Law. “If that's a component of those undertakings, then that is certainly indicative of SEC sentiment.”
Masucci consented to the SEC’s findings without admitting or denying them, according to the filing.
ETF Manager’s Group on June 12 announced it was selling its 17 exchange-traded funds to Amplify ETFs, with assets valued at $3.5 billion. An ETFMG spokesperson confirmed the firm will no longer be in the ETF space after the acquisitions are finalized later this year.
Masucci’s exit is effective July 15, the filing stated.
ETFMG is also implementing a wider restructuring, the document said. It named Terry Loebs as chairman, Michael Minella as president and Matthew Bromberg has been appointed as secretary.
Wells Notice
Masucci had been given a so-called Wells notice by the SEC, an indication that the agency intended to take legal action against him following an investigation, the document said. Masucci and the firm said it cooperated with the investigation and claimed his behavior was appropriate.
According to the filing, the discussions with the SEC could include “a financial component” along with Masucci's departure as trustee and CEO.
The details of the conflict of interest with MJ aren’t detailed in the filing.
According to Hamburger, when the SEC and the firm agree on the terms of settlement, there is likely no other action left to be taken in the matter.
Corrections: An earlier version of this story characterized the document as an SEC document. The document was filed by ETFMG with the agency.
Contact Lucy Brewster at [email protected] or follow her on Twitter at @lucyrbrewster
