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July 18, 2023 at 02:09 PM
What You Need to Know
- SEC staff had sent a Wells notice to Samuel Masucci and the firm.
- The investigation relates to alleged non-disclosure of conflicts of interest.
- ETF Managers Group recently agreed to sell its ETFs to Amplify ETFs.
ETF Managers Group founder and CEO Samuel Masucci recently resigned from the chief executive post and related positions as part of a settlement with the Securities and Exchange Commission, which had notified him of its preliminary decision to bring a civil action stemming from a probe into the firm’s cannabis industry exchange-traded fund.
The move comes weeks after ETFMG announced it was selling its ETF lineup to Amplify ETFs in a deal expected to close this year. The firm also recently announced two ETF closures.
The anticipated regulatory settlement involves “alleged non-disclosure of conflicts of interest” connected to the ETFMG Alternative Harvest ETF’s participation in the securities lending program administered by its prior custodian, according to a recent filing with the SEC.
Masucci and the firm received Wells notices advising them the SEC staff planned to bring a civil action against them, the filing says.
They ”cooperated with the investigation and during the Wells process each recipient demonstrated to the SEC staff why it believes its conduct was appropriate, in keeping with industry standards, and that no action should be taken,” according to the document.
ETFMG, an issuer of thematic ETFs including the ETFMG Prime Cyber Security ETF (HACK), calls the Alternative Harvest ETF (MJ) the first U.S. cannabis exchange-traded fund.
Masucci, who has been in settlement talks with SEC staff, agreed to resign as CEO and as trustee of ETF Managers Trust as part of the agreement, which will also have a financial component, according to the filing. He and the firm consented to SEC staff findings without admitting or denying them, according to the filing.
