The U.S. Securities and Exchange Commission (SEC) continues its “ongoing sweep to ensure that investment advisers comply with the Marketing Rule”.
On September 11, 2023, the SEC announced charges against nine registered investment advisers for violations of the new marketing rule. These new marketing rule enforcement actions come less than a month after the very first enforcement action under the new marketing rule on August 21, 2023.
According to the press release, all nine investment advisers published materials on their respective websites that were determined to be advertisements. These advertisements contained hypothetical performance figures that were intended for a mass audience (e.g, both current clients as well as new prospective clients).
All nine investment advisers were charged with violating the new marketing rule by:
(1) making misleading statements regarding the hypothetical performance; and
(2) failing to adopt and/or implement policies and procedures to maintain compliance with the new marketing rule – specifically, the requirement that investment adviser firms create written policies and procedures reasonably designed to ensure that advertising materials are relevant to the investment objectives of their intended audience.
Click here to view the Press Release: https://lnkd.in/etRjbu82
As stated in the press release:
“’Because of their attention-grabbing power, hypothetical performance advertisements may present an elevated risk for prospective investors whose likely financial situation and investment objectives don’t match the advertised investment strategy,’ said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. ‘It is therefore crucial that investment advisers implement policies and procedures to ensure their compliance with the rule. Until that is the case, we will remain vigilant and continue our ongoing sweep to ensure that investment advisers comply with the Marketing Rule, including the requirements for hypothetical performance advertisements.’”
The SEC’s Director of the Division of Enforcement, Gurbir S. Grewal, made it very clear in his statement that the “ongoing sweep to ensure that investment advisers comply with the Marketing Rule” is going to continue. With this higher likelihood of an SEC examination, investment advisers should consider partnering with an outsourced compliance consulting firm in order to reduce their risk of enforcement actions.
Whether it be a one-time project or ongoing regulatory compliance services (such as reviewing all of your firm’s marketing materials), our team at Adviser Solutions Group is dedicated to finding a solution that is tailored to your specific situation.
Let ASG show you how outsourced compliance services can help satisfy your regulatory burdens while also allowing you to focus on growing your business.