The SEC staff’s January 2026 “Testimonials and Endorsements – Disqualification for Self-Regulatory Organization Final Orders” FAQ (the “Disqualification FAQ”) on endorser disqualification tackles a subtle but high-risk issue for private equity advisers: when third parties used in fundraising may be legally barred from acting as endorsers, even if they don’t look like traditional “marketers.” In doing so, the staff reinforces that the Marketing Rule’s testimonial and endorsement framework applies squarely to placement agents, consultants, and other compensated referral sources commonly used by private equity sponsors.
The core clarification: disqualification status matters at the time of endorsement
The Disqualification FAQ clarifies that an endorsement is prohibited if the endorser is subject to a “disqualifying event” at the time the endorsement is provided. This includes certain criminal convictions, SEC orders, and other “bad actor” events enumerated in the rule. Importantly, disclosure alone does not cure the problem. If the endorser is disqualified, the endorsement simply cannot be used.
For private equity firms experiencing longer fundraises and accustomed to long-standing placement agent relationships, this is a material compliance reminder.
Placement agents are endorsers—full stop
Private equity advisers often view placement agents as distribution partners rather than “endorsers.” The FAQ implicitly rejects that distinction. If a placement agent is compensated and promotes the adviser or its funds, they are an endorser under the Marketing Rule—regardless of whether the communication looks like a traditional testimonial.
Real-world application:
A buyout sponsor hires a placement agent to introduce Fund VI to institutional LPs and includes the agent’s logo and role in offering materials. If that placement agent becomes subject to a disqualifying SEC order—even unrelated to the fundraise—the adviser may not continue using that agent’s endorsement activities. The adviser cannot rely on disclosures or contractual reps alone; continued use could violate the rule.
Ongoing diligence is not optional
The Disqualification FAQ underscores that disqualification is not a one-time check. Advisers must have reasonable processes to identify whether endorsers remain eligible over time.
Real-world application:
A private equity firm signs a placement agreement for an upcoming fundraise. Midway through the fundraise, the placement agent’s affiliate becomes subject to a covered disciplinary event. Even if the agent continues operating, the adviser must reassess whether the endorsement can continue. Passive reliance on past diligence would be difficult to defend.
Consultants, operating partners, and “soft” endorsements
Private equity firms should not assume that consultants, operating partners, or former executives are “outside” the Marketing Rule. When these individuals speak favorably about the firm in a fundraising context, the SEC is likely to view those statements as endorsements or testimonials, depending on their relationship to the adviser.
The key compliance levers are:
- Careful scripting and role definition
- Understanding compensation and conflicts
- Distinguishing factual explanations from promotional praise
- Applying required disclosures and disqualification checks where needed
In short, who is speaking matters less than what is being said and why it is being said.
Former executives or portfolio company CEOs are a particularly common and risky case. If a former executive praises the sponsor’s value-add, governance, or decision-making, the SEC may treat that statement as an endorsement, even if the individual no longer works for the firm.
Compensation is key but broadly interpreted. Equity rollovers, consulting arrangements, success fees, or other economic relationships can all qualify.
Real-world application:
An operating partner who receives compensation and routinely participates in LP meetings describing the firm’s investment process may be an endorser. If that individual is subject to a disqualifying event, their participation in fundraising communications could create risk—even if they are not branded as a “placement agent.”
A former portfolio company CEO appears on a fundraising webinar stating that the PE sponsor was “the best partner I’ve ever worked with.” If that CEO receives consulting fees or carried interest participation, the statement likely constitutes an endorsement, not mere background commentary.
No grandfathering for disqualified endorsers
The FAQ also reinforces that there is no grandfathering concept for endorsements. If an endorser is disqualified, prior endorsements may need to be reassessed, and future use must stop.
Real-world application:
A private equity adviser hosts archived webinar content featuring a compensated consultant who later becomes disqualified. Continuing to distribute that content as part of fundraising materials may be problematic, even though it was compliant when originally recorded.
The practical takeaway for private equity
For private equity sponsors, the Disqualification FAQ is less about redefining the rule and more about closing perceived loopholes. Placement agents, consultants, and compensated advocates are endorsers, and their regulatory status directly affects what marketing activity is permissible. The message is clear: endorser diligence must be continuous, not episodic, and disqualification is a hard stop—not a disclosure exercise.
How Trillium Can Help
Testing and Surveillance: A core pillar of Trillium’s compliance support is rigorous testing of your firm’s practices in key risk areas—benchmarking them against policies, procedures, and disclosures to uncover gaps, mitigate risk, and drive meaningful improvement.