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Sam Resigns, Pre-Sale and Post-Wells Notices
An ETF entrepreneur stepped down last week as part of settlement discussions with regulators, even as he is selling his firm's ETF business. The regulatory action centers on the firm's "pure play marijuana ETF."
Masucci did not immediately respond to requests for comment from Citywire and ETF.com.
The filings reveal that Masucci's resignation is part of settlement discussions with the U.S. Securities and Exchange Commission (SEC). The regulatory agency sent Wells notices to ETFMG and Masucci, indicating that the SEC's staff expect to take civil action over "alleged non-disclosure of conflicts of interest" related to the securities lending program connected with the ETFMG Alternative Harvest ETF (MJ), according to the filings:
"The Recipients 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," one filing reads.
Masucci and ETFMG, without admitting or denying (a common qualification in SEC enforcement settlements), have consented to SEC findings related to the Investment Adviser's Act and Investment Company Act. The settlement will include both Masucci's resignation and "a financial component," though the size is not specified.
The ETFMG-SEC settlement discussions and Masucci's exit come as Amplify ETFs is preparing to buy ETFMG's ETF lineup. That pending Amplify-ETFMG deal, expected to close by the end of the year, is an asset-only acquisition, as previously reported: Amplify is expected to take over as the investment advisor for each of ETFMG's 17 ETFs, which will be rebranded as Amplify ETFs.
Masucci launched GENCAP Ventures in 2012, then transformed it into ETFMG in 2013. Earlier, he co-founded MacroMarkets after rising through trading positions at Bear Stearns, SBC Warburg, and Merrill Lynch. He is an alumnus of Penn State University.
MJ launched on December 3, 2015 as the Tierra XP Latin America Real Estate ETF (LARE), thanks to a partnership between ETFMG, Tierra Funds, ISE ETF Ventures, and XP Gestao de Recursos. In 2017, LARE transformed into the ETFMG Alternative Harvest ETF (MJX) and gained a new focus: companies benefiting from growing acceptance of cannabis. In 2018, the fund's ticker shortened to MJ. The index fund now has $221 million in AUM and an expense ratio of 75 basis points.
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