On September 9, 2024, the Securities and Exchange Commission settled charges against nine registered investment advisers for violations of the Marketing Rule (Press Release). The fines ranged from $60,000 to $325,000.
Key Takeaways: The most notable thing with each of the nine charges is the granularity of violations alleged by the SEC. The SEC found the following violations.
- Untrue statements about third-party ratings
- Claiming membership of an organization that did not exist
- Claiming to provide “conflict free advisory services” which the firms were unable to substantiate
- Unsubstantiated awards received by a firm’s principal
- Testimonials that did not come from current clients
- An advertisement containing an endorsement that did not have disclosure about the compensation received.
- The endorsement appeared on videos, social media and on physical objects.
- Out-dated or undated third-party ratings without proper disclosures around the dates the ratings were from
The specificity of the SEC’s alleged violations show how granular examiners are getting in the review of advertisements under the Marketing Rule. It is important to scrutinize all advertisements to ensure information can be substantiated, remains true and includes the proper disclosures when necessary.
Marketing Material Review and Process: Marketing material review and commentary is included as part of Trillium’s comprehensive ongoing compliance support. An independent review of advertisements helps draw attention to information that SEC examiners are spending more time scrutinizing.