US SEC Requires ETFs Amplify and Reality Shares to Delete The Word “Blockchain” From Their Tickers
The U.S. Securities and Exchange Commission (SEC) has required two exchange-traded funds (ETFs) to eliminate the word “Blockchain” from their tickers. The information was released by Bloomberg a few days ago.
ETFs Have To Delete The “Blockchain” Word From Their Tickers
Exchange traded funds became very popular among investors that wanted to have access to the blockchain world. These investment tools allowed interested users to have exposure to the blockchain ecosystem.
The U.S. Securities and Exchange Commission is trying to keep under control the investment tools available in the market to investors. According to Bloomberg, more than 10 percent of the new ETFs released in 2018 were related to a specific theme.
On the matter, J. Garret Stevens, Chief Executive Officer of Exchange Traded Concepts, commented:
“We get questions more than we used to where we have to be able to defend our name. Now almost all names, they’ll come back and say ‘Can you justify, give us your explanation on why this name is OK?’”
In some cases, ETFs decide to create catchy names to receive larger attention from investors. But it seems that the U.S. SEC is being very strict about how companies handle these issues. As per the Investment Company Act of 1940, issuers cannot use “materially deceptive or misleading” names.
SEC Commissioner Hester Peirce explained that names have to match up to what the fund does. The regulatory agency has to control it and it can issue a stop order to prevent funds from offering the shares to investors if there are some concerns with it.
Two funds were encouraged to remove the word “blockchain” from their names. Citing people familiar with the matter, Bloomberg reported that the Amplify and Reality Shares ETFs referenced distributed ledger technology (DLT) when they filed their first documents to be approved. Nonetheless, they had to modify these names for the SEC to approve them later.
It is worth noting that there were some companies in the market that decided to include the word “blockchain” in their names in order to receive the attention of the market. One of these companies was Long Island Iced Tea that changed its name to Long Blockchain Corp. After it, its stock registered a price increase of 200 percent. Nonetheless, the company has been already fined.