“It’s been a tumultuous few months for the fund, which last year surprised investors when it changed its strategy from buying Latin American real estate to pot growers,” reports Bloomberg. “The ETF quickly gathered hundreds of millions in assets, but was plagued by questions about whether U.S. Bancorp would stick around as custodian, given the potential legal and reputational risks.”
Custodial Duties With ETF Issuers
Custodian banks have some latitude when it comes to ending relationships with ETF issuers.
“Custodians are typically allowed to terminate their contract with an ETF issuer after a notice period of about 90 days, depending on their agreement. Minus a custodian — a legal requirement under the Investment Company Act of 1940 — a fund’s board would be pushed to liquidate the ETF, with shareholders splitting the proceeds,” according to Bloomberg.
California-based broker-dealer Wedbush Securities Inc. will be MJ’s new custodian while ETFMG will act as the fund’s administrator.
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