VanEck Fined $1.75M Over Dave Portnoy's ETF Role

VanEck Fined $1.75M Over Dave Portnoy's ETF Role

SEC said VanEck didn't disclose the role of the social media influencer when BUZZ launched in 2021.

Jeff_Benjamin
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Wealth Management Editor
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Reviewed by: etf.com Staff
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Edited by: Ron Day

VanEck Associates Corp. crossed a line in marketing its VanEck Social Sentiment ETF (BUZZ), according to regulators, and has agreed to pay a $1.75 million civil penalty.

According to the Securities and Exchange Commission, during the March 2021 launch of BUZZ, the ETF issuer failed to disclose a compensation agreement with a social media influencer that VanEck hired to help promote the ETF. According to the SEC’s press release and formal complaint, the unnamed social media influencer was taking part in a sliding scale of the ETF’s management fee.

While the influencer was not identified by the SEC, popular social media personality Dave Portnoy, founder of Barstool Sports, was promoting the launch of BUZZ in March 2021. Portnoy, who has more than three million followers on the X platform, could not be reached for comment for this story.

As the role of influencers on TikTok and Instagram explodes, boosting sales of food, fashion, healthcare and other products, ETF issuers and the broader ETF industry is figuring out how to tap into the marketing potential of social media. While their role expands, issuers must play close attention and not go afoul of SEC rules, experts said.

"It's the lack of disclosures that got VanEck into trouble, not influencer marketing per se,” said Sumit Roy, senior ETF analyst at etf.com. Roy says influencers role will only grow: "In many cases it's more effective than traditional advertising.” 

VanEck, which manages $67.2 million in 68 ETFs, didn't immediately respond to a request for comment. A spokesperson for the SEC also declined to comment. BUZZ, which uses artificial intelligence to pick stocks that are mentioned positively online, currently has $58.9 million in assets. While it's surged to nearly $20 a share this year, it's well below the $27 range it reached in 2021.

VanEck Pays for BUZZ

April Rudin, founder and chief executive of the marketing firm The Rudin Group, criticized VanEck’s efforts as poorly planned and executed.

“What’s the purpose of the influencer and what do you hope to accomplish?” she said. “Dave Portnoy might be great at influencing over pizza or sports, but I’m not sure about the connection to ETFs.”

The influencer's compensation grew as the fund expanded. 

“To incentivize the influencer’s marketing and promotion efforts, 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,” the SEC release reads in part.

VanEck appeared to have not kept itself informed of SEC rules around marketing, Rudin suggested.

“If they’re going to enter into influencer marketing, they should be aware of the regulations,” she said. “But, also, in our influencer economy, most people know that those are paid ads.”

Meanwhile, Adam Gana, a securities lawyer and partner at the law firm of Gana Weinstein LLP, believes the influence of influencers is a slippery slope leading to nowhere good.

“Social media influencers shouldn’t be involved in the promotion of ETFs,” he said. “It goes toward the continued gamification of investing, and that’s not the way investing works.”

However, as critical as Gana is of influencers infiltrating the financial sector, he thinks this is just the beginning.

“I expect to see more of it, not less,” he said. “It will be endless as long as we have social media personalities that can influence people.”

Jeff Benjamin is the wealth management editor at etf.com, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.


Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.


Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.