Top 3 ETFs Rejected by the SEC

Albeit a lot of people are keeping a close eye on the bitcoin ETF, the SEC has built up somewhat of a reputation to reject exchange traded fund proposals in the past. We have listed some of the more notorious rejections people should take notice of. Although it includes one bitcoin ETF rejection, it goes to show the SEC is not biased towards cryptocurrency.

3. Huntington Asset Advisors ETF

Most ETF proposals have to go through a very lengthy process, without knowing for sure whether or not they will receive approval by the SEC. In the case of the Huntington Asset Advisors, they were hoping to have their existing mutual fund converted into a brand new ETF. Unfortunately, things did no go as planned, as the SEC ultimately rejected their proposal after two years of review.

The original plan for Huntington revolves around launching not one, but two separate ETFs. There is the Huntington Ecological Strategy Fund, followed by the Huntington Rotating Strategy Fund. Filing to launch these ETFs began in June of 2010, yet the SEC rejected both in June of 2012. In the end, Huntington Asset Advisors launched an active ETF on their own to complement their mutual fund. It remains unclear why the SEC declined the request, as that information was never made public.

2. Precidian Investments

The year 2015 was an interesting year for the entire ETF concept. Precidian Investments wanted to launch non-transparent active exchange-traded funds and sought approval from the SEC. Considering how Eaton Vance Corp received their approval for a similar ETF not too long before Precidian Investments filed for approval the second time, the team was quite optimistic.

However, things have a habit of not always working out as planned. The SEC rejected the second appeal. The reason was quite simple; this particular ETF by Precidian Investments did not disclose holdings daily. Daily transparency is not advised for actively managed funds by any means. Additionally, the SEC also stated how such funds pose “new regulatory concerns”. The rejection was made public in 2015, yet Precidian filed a new proposal a few months later, which is still awaiting review.

1. Winklevoss Bitcoin ETF

It is impossible to discuss ETFs and not talk about the filing by the Winklevoss twins. The SEC just now issued a statement rejecting the Winklevoss’ ETF. In their statement the SEC disapproved the prosoal because it did not find it to be consistend with Section 6(b)(5) of the Exchange Act. This Act requires the rules of national securities to be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.

The SEC believes that the Bitcoin market is still not regulated enough and that the exchanges do not have the proper surveillance-sharing agreements. As expected Bitcoin’s price dropped over 20% in just a few minutes as traders responded to the decision.

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