Advertising

SEC Issues Risk Alert Regarding Third-Party Ratings

January 27, 2026 | Steve Parker

On December 16, 2025, the SEC Division of Examinations released a Risk Alert containing observations regarding investment advisers’ compliance with Rule 206(4)-1 (the “Marketing Rule”). The Division provides risk alerts to inform and remind investment advisers and their stakeholders of advisers’ compliance requirements. Regarding third-party ratings in investment advisers’ advertisements, the Division noted that it has observed common deficiencies regarding compliance with the requirements relating to due diligence and disclosures.

The Marketing Rule prohibits the use of third-party ratings in advertisements unless the adviser has a reasonable basis for believing that any questionnaire or survey used in the preparation of the third-party ratings meet certain criteria, and that either the rating or the adviser discloses certain information related to the ratings. Continue reading ›

SEC Releases Risk Alert Regarding Investment Adviser Testimonials

December 30, 2025 | JP Dakak

On December 16^th, the SEC released a Risk Alert containing observations of investment advisers’ compliance with Rule 206(4)-1 (the “Marketing Rule”). The Commission provides risk alerts such as this to inform and remind investment advisers and stakeholders of advisers’ compliance requirements. Regarding testimonials and endorsements, the Commission observed common deficiencies in the following requirements: (1) clear and prominent disclosures, (2) disclosure of material terms of compensation arrangements, (3) disclosure of material conflicts, (4) oversight and compliance, (5) ineligible persons, and (6) promoter affiliated with the adviser. Continue reading ›

SEC Announces Enforcement Activity Under New Marketing Rule

September 19, 2024 | Charlie Jarrett

Last week, the SEC announced a series of enforcement actions tied to its ongoing sweep of investment adviser compliance with the new Marketing Rule. In total, nine firms settled claims that they violated Advisers Act Rule 206(4)-1, the “new Marketing Rule,” resulting in $1,240,000 in civil penalties.

We have previously written about the implementation of the new Marketing Rule, the announcement of the corresponding examination sweep program, and the subsequent enforcement actions that have resulted. While the previous enforcement actions have largely centered around investment advisers who have failed to adopt policies and procedures designed to prevent violations of the new Marketing Rule, the recent enforcement actions give greater insight into the real-world application of the new Marketing Rule. Namely, the actions detail marketing violations due to the use of third-party ratings by the investment advisers.

First Circuit Ruling Gives SEC Victory in Long Fought Case

August 8, 2024 | Charlie Jarrett

Earlier this month, the United States Court of Appeals for the First Circuit issued a unanimous decision upholding a circuit court’s ruling in SEC v. Navellier & Associates, Inc.[i] This ruling granted the SEC summary judgment finding that Navellier & Associates, a Nevada based investment adviser, violated Section 206 of the Adviser’s Act.

For the past ten years, we have written about a series of SEC enforcement actions centered around the advertisement of performance returns tied to F-Squared, previously the U.S. largest marketer of ETF-based index products. The F-Squared and related cases not only established the SEC’s position regarding the publication of performance advertising but also recognized an investment adviser’s fiduciary duty when adopting statements made by third parties in advertisements. The SEC’s positions were codified under the new Marketing Rule adopted in 2021.

SEC Fines 9 RIAs for Marketing Rule Violations

September 19, 2023 | Steve Parker

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 ›

SEC Fines Adviser Under New Marketing Rule

September 5, 2023 | Katherine Oberlies

On August 21, 2023, the U.S. Securities and Exchange Commission (“SEC”) issued an order imposing civil monetary penalties against Titan Global Capital Management USA LLC (“Titan”) for violations of the new investment adviser Marketing Rule, Rule 206(4)-1. The new rule had a mandatory compliance date of November 4, 2022, but advisers could voluntarily adopt the rule sooner.

Titan elected to comply with the new rule in June 2021; however, the firm did not adopt new policies and procedures or adapt its practices as required by the new rule. Between August 2021 and October 2022, Titan violated the new Marketing Rule by advertising hypothetical performance without adopting policies and procedures reasonably designed to ensure the hypothetical performance was relevant to client’s or prospective client’s financial situation and investment objectives and also by failing to provide information underlying the hypothetical performance as required by the new rule. Continue reading ›

SEC Announces Examinations Under New Marketing Rule

September 22, 2022 | Charlie Jarrett

While it comes with little surprise, on Monday the SEC’s Division of Examinations officially announced the areas of focus regarding compliance with the New Marketing Rule. The recently released Risk Alert was expected as the compliance date for the New Marketing Rule is quickly approaching.

Initially introduced in December 22, 2020 the modernized Marketing Rule allowed for an 18-month transition period ending with a compliance date of November 4, 2022. Since adoption, we have previously written about the passage of the New Marketing Rule and some of the significant areas impacted by the new rule. The newest announcement shows that the SEC is going to initially focus on some of the top-level issues under the New Marketing Rule: policies and procedures, substantiation, and performance advertising.

When reviewing policies and procedures, the SEC will look that the investment adviser has adopted and implemented a compliance program that is reasonably designed to prevent violations of the New Marketing Rule by the firm and its supervised persons. The Risk Alert mirrors sections of the Adopting Release and states that the SEC expects a thorough New Marketing Rule compliance program should include objective and testable means to prevent violations. Testing includes some documentable review process for advertisements for compliance with the policies and procedures.

RIA Advertising Rules May Impact New Client Presentations

April 19, 2022 | Steve Parker

With the date for compliance with the new Investment Adviser Marketing Rule approaching, now is the time for registered investment advisers to consider how the new rule impacts many facets of their regular practices. One area that should be carefully evaluated is the use of “hypothetical performance.” The new rule expands the definition of an “advertisement” to include many one-on-one presentations that were not covered by the former advertising rule. Now, any one-on-one presentation that contains “hypothetical performance” is subject to the general anti-fraud provisions of the new rule, as well as to several specific conditions and limitations on the use of hypothetical performance.

The definition of “hypothetical performance” is “performance results that were not actually achieved by any portfolio of the investment adviser.” That definition expressly encompasses “targeted or projected performance returns.” The illustration of “targets” or “projections” in one-on-one presentations was previously covered by the general anti-fraud rules, but the new regime imposes more onerous requirements and may indeed prevent RIAs from using the types of illustrations they are currently routinely using with new clients and prospects.

A common approach to acquiring new clients involves presenting an illustration of how a proposed portfolio will perform. This is frequently done through the use of reporting software or publishing services such as Morningstar, Riskalyze, and others, although the adviser may have the ability to customize the inputs and the contents of the final report. Sometimes specific returns are projected, while at other times the projections will show a range or band of returns coupled by a specific probability range.

SEC Modernizes Marketing and Solicitation Rules

December 23, 2020 | Steve Parker

The U.S. Securities and Exchange Commission yesterday issued long-anticipated changes to the rules governing marketing for RIAs, including managers of private funds. The changes are designed to modernize the rules to account for the era of digital communication and other marketplace “evolutions.” The rule changes also impact firms’ uses of testimonials and paid solicitors.

By a 5-0 vote, the amendments will replace prior separate rules into a single comprehensive rule that deals with advertising and solicitation. The replaced rules date back to the 1970s and earlier.

By and large, the rules allow for more flexibility. For instance, instead of a blanket prohibition of testimonials, the new rule permits testimonials if certain disclosures are made. These disclosure requirements dovetail with the emphasis on preventing conflicts of interests that was the focus of last year’s IA Release 5248, relating to advisers’ fiduciary duty. The rules also create additional questions related to marketing on Form ADV Part 1.

RIAs Mull SEC’s Proposed Changes to Cash Solicitation Rule

November 15, 2019 | Parker MacIntyre

As discussed in our most recent posting on this blog, the SEC has proposed a wholesale rewrite of its existing advertising and cash solicitation rules. While that last post delved into the specifics of the SEC’s proposed amendment of its advertising rule, in this installment, we take up the Commission’s plans for revamping its cash solicitation rule.

The SEC’s Release No. IA-5407, published on November 4^th, aims to modernize both rules to reflect the dramatic changes seen in technology and the advisory industry since the initial adoption of these rules decades ago. While just a proposal for now, it offers the best view into what any ultimate final rules will probably look like. At this stage, RIAs and other industry participants are closely reviewing both proposed rules, and many will be submitting public comments to the SEC as permitted pursuant to the Commission’s public comment process. While the public comment process runs a fixed 60 days, the ultimate publication of final rules is at the SEC’s discretion.