Second SEC risk alert on marketing rule released

You are advised to ensure that your disclosures around use of testimonials and endorsements are sound, according to a new risk alert from the SEC’s Division of Examinations.

DOE released its second risk alert tied to the new marketing rule on June 8. The document reminds advisers that examiners will be scrutinizing their policies and procedures around the marketing rule, along with checking to see that firms can substantiate marketing claims. These items were cited in the first risk alert around the marketing rule, affiliate title Regulatory Compliance Watch reported last September.

New topics

This new risk alert raises new topics that will attract examiner interest, specifically compliance around use of testimonials and endorsements, third-party ratings and whether firms have updated their Form ADV to comply with the new rule.

Besides checking disclosures related to testimonials and endorsements, the alert vows examiners will look into firms’ oversight with these new marketing elements, along with whether written agreements with promoters comply with the rule and to check if ineligible “persons have been compensated for testimonials or endorsements.”