Last week, the SEC brought and simultaneously settled nine (9) administrative enforcement actions against separate RIAs for violating Rule 206(4)-1, the “Marketing Rule,” and specifically the restrictions relating to the use of hypothetical performance. The firms were Artemis Wealth Advisors, LLC; Trowbridge Capital Partners, LLC; MRA Advisory Group; McElhenny Sheffield Capital Management, LLC; Macroclimate, LLC; Linden Thomas Advisory Services, LLC; Hansen & Associates Financial Group, Inc.; Elm Partners Management, LLC; BTS Asset Management Inc. and Banorte Asset Management, Inc.
The sanctioned advisory firms all continued to advertise the returns of model portfolios beyond the November 2022 mandatory compliance date without implementing procedures reasonably designed to achieve compliance with the new rule. For instance, the firms failed to implement policies and procedures designed to ensure that the performance was relevant to the likely financial situation and investment objectives of the intended audience. Continue reading ›