The SEC has sued ETF Managers Group founder Sam Masucci and his firm with manipulating trustees in order to acquire $20 million in funding to escape bankruptcy.According to a Securities and Exchange Commission (SEC) decision issued on Tuesday, Masucci, ETFMG, and its parent firm agreed to pay a total of $4.4 million to settle the …
The SEC has sued ETF Managers Group founder Sam Masucci and his firm with manipulating trustees in order to acquire $20 million in funding to escape bankruptcy.
According to a Securities and Exchange Commission (SEC) decision issued on Tuesday, Masucci, ETFMG, and its parent firm agreed to pay a total of $4.4 million to settle the accusations.
While neither admitting nor rejecting the findings, Masucci paid a $400,000 penalty, agreed to a cease-and-desist order, and agreed to a bar under the Advisers Act and a prohibition under the Investment Company Act. According to the regulator, he has three years to reapply.
Masucci’s resignation was originally reported by ETFMG in an SEC filing on July 14. The SEC probe was disclosed in the document to be related to the ETFMG Alternative Harvest ETF (MJ) and its involvement in the securities lending program run by the fund’s prior custodian.
According to the SEC, Mascucci harmed investors by agreeing to a deal with the fund’s securities-lending broker that provided the firm with $20 million to possibly avoid bankruptcy, despite the fact that better terms were available from other brokers.
“Investment advisers cannot mislead clients or leverage client assets for their own benefit,” said Corey Schuster, co-chief of the SEC Enforcement Division’s Asset Management Unit, in a press statement, adding that the move demonstrates the SEC’s commitment to holding both corporations and people accountable.
However, the firm announced it was selling off all of its 17 ETFs to Amplify ETFs. An ETFMG spokesperson confirmed that the firm is shutting down its ETF shop.
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