Approving Advertising & Marketing Materials for an Investment Advisor
Does your registered investment advisor have strong supervisory and compliance procedures designed to approve and monitor adverting and marketing materials?
Did you know that an the advertising and marketing materials of an investment advisor registered with the U.S. Securities and Exchange Commission ("SEC") fall under the anti-fraud provision of the Investment Advisers Act of 1940? This means it may be deemed a fraudulent, deceptive, or manipulative act to publish marketing materials that do not comply with SEC Rule 206(4)-1 under the Advisers Act and the various no-action letters issued by the SEC. Federally registered investment advisors are routinely cited examination deficiencies for issuing non-compliant advertising materials. Much less, investment advisor firms have been cited for simply not establishing reasonably designed compliance policies and procedures for the creation, review and approval of advertising materials.
For many SEC registered investment advisors, advertising materials can generate increased risk exposure. Using advertising claims that cannot be supported or proven, that are promissory, that are misleading or materially inaccurate must be avoided. You can be certain that during an examination, the SEC will thoroughly review advertising materials issued during the inspection period. Specifically prohibited are: testimonials; the use of past specific recommendations that were profitable, unless the adviser includes a list of all recommendations made during the past year; a representation that any graph, chart, or formula can in and of itself be used to determine which securities to buy or sell; and advertisements stating that any report, analysis, or service is free, unless it really is free. An advertisement could include both a written publication (such as a website, blog newsletter or marketing brochure) as well as oral communications (such as an announcement made on radio or television).
All SEC registered investment advisors need to have detailed policies and procedures for advertising materials memorialized within their compliance program. Further, we highly recommend the pre-approval of all marketing materials. When conducting a firm's annual compliance program assessment, the Chief Compliance Officer needs to be sure to analyze and test the sufficiency of marketing compliance procedures.
The importance of strong compliance controls for advertising and marketing materials is not limited to SEC registered investment advisor firms. In a September 29, 2009 release, the North American Securities Administrators Association (NASAA) once again included advertising as one of the common deficiencies noted during investment advisor examinations conducted by state securities regulators. As part of a strong compliance culture, NASAA recommends that state registered investment advisors review all advertisements, including websites and performance advertising, for accuracy.
On Thursday, May 13, RIA Compliance Consultants will host a webinar focused on compliance policies and procedures related to advertising. The webinar, "Approving Marketing Materials", will focus on SEC no-action letters and enforcement actions related to marketing materials used by investment advisors. Our consultants will also discuss best practices and sample disclosures. Take this opportunity to purchase your seat to this webinar for only $59.95.
Did you know that an the advertising and marketing materials of an investment advisor registered with the U.S. Securities and Exchange Commission ("SEC") fall under the anti-fraud provision of the Investment Advisers Act of 1940? This means it may be deemed a fraudulent, deceptive, or manipulative act to publish marketing materials that do not comply with SEC Rule 206(4)-1 under the Advisers Act and the various no-action letters issued by the SEC. Federally registered investment advisors are routinely cited examination deficiencies for issuing non-compliant advertising materials. Much less, investment advisor firms have been cited for simply not establishing reasonably designed compliance policies and procedures for the creation, review and approval of advertising materials.
For many SEC registered investment advisors, advertising materials can generate increased risk exposure. Using advertising claims that cannot be supported or proven, that are promissory, that are misleading or materially inaccurate must be avoided. You can be certain that during an examination, the SEC will thoroughly review advertising materials issued during the inspection period. Specifically prohibited are: testimonials; the use of past specific recommendations that were profitable, unless the adviser includes a list of all recommendations made during the past year; a representation that any graph, chart, or formula can in and of itself be used to determine which securities to buy or sell; and advertisements stating that any report, analysis, or service is free, unless it really is free. An advertisement could include both a written publication (such as a website, blog newsletter or marketing brochure) as well as oral communications (such as an announcement made on radio or television).
All SEC registered investment advisors need to have detailed policies and procedures for advertising materials memorialized within their compliance program. Further, we highly recommend the pre-approval of all marketing materials. When conducting a firm's annual compliance program assessment, the Chief Compliance Officer needs to be sure to analyze and test the sufficiency of marketing compliance procedures.
The importance of strong compliance controls for advertising and marketing materials is not limited to SEC registered investment advisor firms. In a September 29, 2009 release, the North American Securities Administrators Association (NASAA) once again included advertising as one of the common deficiencies noted during investment advisor examinations conducted by state securities regulators. As part of a strong compliance culture, NASAA recommends that state registered investment advisors review all advertisements, including websites and performance advertising, for accuracy.
On Thursday, May 13, RIA Compliance Consultants will host a webinar focused on compliance policies and procedures related to advertising. The webinar, "Approving Marketing Materials", will focus on SEC no-action letters and enforcement actions related to marketing materials used by investment advisors. Our consultants will also discuss best practices and sample disclosures. Take this opportunity to purchase your seat to this webinar for only $59.95.
Labels: Advertising, Webinar
posted by bhill at 7:53 PM
Beyond the Privacy Notice - Safeguarding Confidential Client Information
Has your registered investment adviser firm gone beyond developing a privacy policy under Regulation S-P and established internal controls to protect confidential client information?
This is the emerging expectation of state and federal securities regulators. For instance, the State of Massachusetts recently adopted a comprehensive and restrictive set of requirements to prevent client data security breaches, which must be met by any investment adviser with a client residing in Massachusetts. Under the this new regulation, an investment adviser firm with a client residing in Massachusetts must develop, implement, maintain and monitor a comprehensive written information security program and ensure that confidential client information stored on portable devices is encrypted.
Likewise, the U.S. Securities and Exchange Commission ("SEC") has heightened its focus upon how investment adviser firms are safeguarding confidential client information. This increased attention upon the protection of confidential client data has manifested itself in an SEC enforcement action under Regulation S-P against a broker-dealer/investment adviser that was a victim of hacking and a proposal by the SEC to amend Regulation S-P with more specific safeguards for protecting confidential client information.
If you would like to learn more about the proposed and recently passed requirements for protecting confidential client data and best practices, please join us for our webinar, Beyond the Privacy Notice, on Thursday, April 15, 2010, from 12:00 - 1:00 p.m. Central. You can purchase your seat for $59.95 by clicking here.
This is the emerging expectation of state and federal securities regulators. For instance, the State of Massachusetts recently adopted a comprehensive and restrictive set of requirements to prevent client data security breaches, which must be met by any investment adviser with a client residing in Massachusetts. Under the this new regulation, an investment adviser firm with a client residing in Massachusetts must develop, implement, maintain and monitor a comprehensive written information security program and ensure that confidential client information stored on portable devices is encrypted.
Likewise, the U.S. Securities and Exchange Commission ("SEC") has heightened its focus upon how investment adviser firms are safeguarding confidential client information. This increased attention upon the protection of confidential client data has manifested itself in an SEC enforcement action under Regulation S-P against a broker-dealer/investment adviser that was a victim of hacking and a proposal by the SEC to amend Regulation S-P with more specific safeguards for protecting confidential client information.
If you would like to learn more about the proposed and recently passed requirements for protecting confidential client data and best practices, please join us for our webinar, Beyond the Privacy Notice, on Thursday, April 15, 2010, from 12:00 - 1:00 p.m. Central. You can purchase your seat for $59.95 by clicking here.
posted by bhill at 10:44 AM
