Products July 6, 2023

Investment Product and Service Launches

BlackRock Debuts First Buffer ETFs; SMArtX Adds 15 Investment Strategies; Fidelity Refiles Spot Bitcoin ETF Application.

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BlackRock Debuts First Buffer ETFs With Launch of 2 Funds

BlackRock debuted its first buffer exchange-traded funds with the launch of the iShares Large Cap Moderate Buffer ETF and the iShares Large Cap Deep Buffer ETF.

iShares buffer ETFs seek to track the share price return of the iShares Core S&P 500 ETF (IVV) up to an approximate upside cap, while mitigating market downturns by seeking to provide an approximate buffer against IVV losses within target ranges.

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“iShares buffer ETFs unlock access to institutional-quality risk management solutions in the convenience of the ETF wrapper, helping investors play defense and, importantly, stay invested during turbulent market conditions,” Dominik Rohe, head of Americas ETF and index investments business at BlackRock, said in a statement.

SMArtX Adds 15 Investment Strategies

SMArtX Advisory Solutions announced it has added 15 strategies to its managed accounts platform. The platform now features 1,232 strategies from 294 asset management firms.

Among the new strategies are three from Blue Sky Asset Management’s Genfolio model portfolios, designed for active multi-asset allocation exposure, and ST Capital’s mid-cap value model portfolio. Stansberry Asset Management added seven strategies that collectively target a wide range of exposures across market capitalization and asset classes.

The SMArtX platform also now includes four additional strategies from existing asset management firms Argent Capital Management, Miller/Howard Investments, Scarecrow and T. Rowe Price.

Fidelity Refiles Spot Bitcoin ETF Application With SEC

Fidelity has refiled its Wise Origin Bitcoin Trust spot bitcoin exchange-traded fund with the Securities and Exchange Commission.

“To this point, the lack of a Spot Bitcoin [exchange-traded product] exposes U.S. investor assets to significant risk because investors that would otherwise seek crypto asset exposure through a Spot Bitcoin ETP are forced to find alternative exposure through generally riskier means,” the filing stated.

Fidelity first applied for a Bitcoin ETF in 2021 but was rejected. Last year, the firm announced the launch of a product that allowed workers to save 20% of retirement funds in Bitcoin.

BlackRock Inc. kicked off the refiling and amendments to Bitcoin ETFs from Fidelity and a number of other asset managers with its own refiling on June 15. Other asset managers that either refiled or amended applications were Ark Investment Management LLC, Invesco Ltd., WisdomTree Inc., Bitwise Asset Management and Valkyrie Funds.

Compliance July 6, 2023

Fake Silver Coin Scheme Penalized by CFTC

The companies involved were penalized over $100 million and its main organizer was arrested on June 10.

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The U.S. District Court for the District of Delaware imposed a default judgement of $145.7 million on an investment company and depository for selling silver coins fraudulently, the Commodity Futures Trading Commission announced on Monday.

Argent Asset Group LLC, First State Depository Co. LLC and Robert Leroy Higgins, the owner of both, sold American Silver Eagle coins to investors, according to the CFTC. Higgins and the companies then leased those same coins from the investors and paid investors monthly payments. They told the investors the coins were fully insured and under the custody of First State Depository.

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However, the coins were not custodied or insured. Additionally, Higgins misappropriated “tens of millions of dollars” worth of coins from more than 200 customers, according to the CFTC’s release.

The scheme began in January 2014 and was known as the “Maximus Program.” Investors had the option of transferring their own coins to the defendants in exchange for monthly payments or buying them from Higgins.

The CFTC complaint from September 2022 explained that, “To the extent that defendants even obtained ASEs for customers in the first place, defendant’s typical practice was for FSD to systematically transfer all of the customer’s ASEs to Argent and Higgins, and for Higgins to sell those ASEs to third parties. This was typically done by moving metal from FSD’s vault to Argent’s offices at FSD, but on occasion it was simply accomplished by having metal delivered directly to Argent without ever being physically placed in FSD’s vault.”

The complaint says that no assets of equal value were used to replace customers’ ASEs, and “very little, if any, of the leased silver was actually stored in customer accounts at FSD.” It goes on to say that the “Defendants misappropriated the Leased Silver, simply taking it and diverting it for their own use.”

The CFTC brought charges in October 2022. The CFTC claimed it served the defendants and that they never responded. The judge therefore issued a default judgement of $112.7 million in restitution to their victims, as well as $33 million in civil penalties.

The District Court established a receivership for First State Depository. A website made by the court-appointed receiver states that $78 million in precious metals is unaccounted for in FSD’s vaults and that Higgins was arrested on June 10.

No information on how to contact the defendants was readily available.

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