The SEC has issued a risk alert regarding marketing rule compliance for investment advisers, highlighting the staff’s findings following the implementation of the new Marketing Rule in November 2022.
Published on April 17 2024, the alert summarized the regulator’s observations from multiple examinations of firms’ marketing and advertising practices, and whether investment advisers had adequately deployed policies and procedures “reasonably designed to prevent violations” of the Advisers Act and the Marketing Rule. It highlighted the most common deficiencies for investment advisers in this area, which included failures to:
- fully codify the new rule in the firm’s compliance policies and procedures
- maintain appropriate books and records, including information posted to social media
- correctly identify the firm’s marketing activities on its Form ADV.
Additionally, the risk alert emphasizes a laundry list of common substantive violations of the rule. In particular, the staff noted frequent untrue statements of material fact or unsubstantiated claims. This most often results from a failure to update marketing materials in a timely way or by including over exaggerated statements. The alert also noted that, despite requiring all marketing materials to be ‘fair and balanced’, many advisers still fail to adequately do so in their advertisements.
This latest risk alert presents an opportune moment to review your practices and use the regulator’s guidance as a roadmap in your annual review. With no indication of the Commission reducing its scrutiny of marketing materials, you should continue being vigilant and carefully examine all public facing marketing materials for compliance. A commitment to compliance is the best way to avoid being named in an enforcement action.
We can help
Our team of compliance specialists include former SEC examiners who understand exactly what’s currently required and what might be coming down the line. Our tailored mock exams can assess both the investment and operational aspects of your business to make sure you’re prepared for interviews, and can confidently navigate document production and forensic testing.
We also conduct annual reviews, draft new policies, assist with operational compliance or can provide your teams with bespoke training to guarantee our compliance systems are robust.
