Investment advisers must be cautious when it comes to the statements and claims used in advertising and marketing materials and this does not just pertain to performance claims. Investment advisers must avoid all statements or claims that are unsubstantiated or that cannot be proven with material facts. Investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) must ensure that all advertising and marketing material complies with Rule 206(4)-1 under the Investment Advisers Act of 1940 (“Investment Advisers Act”). Many state investment adviser regulations follow similar regulatory guidelines as those outlined in Rule 206(4)-1. Under SEC Rule 206(4)-1(a)(5), investment advisers are expressly prohibited from publishing, circulating and distributing any advertisement, “which contains any untrue statement of a material fact, or which is otherwise false or misleading
Category Archives: Advertising
Investment adviser marketing materials and advertisements are regulated by Rule 206(4)-1 of the Investment Advisers Act of 1940 (“Investment Advisers Act”) and similar state regulations. Under Rule 206(4)-1, an SEC registered investment adviser’s website is considered a form of advertisement under the following circumstances:
Marketing materials can be very helpful in attracting business for an investment advisor, but investment advisors should be aware of the regulatory requirements that apply to the use of marketing materials. Common issues with investment advisory marketing materials include using marketing materials that include testimonials (which investment advisors are generally prohibited from using); publishing past recommendations (without following the restrictions and disclosure requirements for publishing past recommendations); using language that makes promises or guarantees; and making untrue or misleading statements.
Complimentary Sample Advertising/Marketing Review Form
April 18, 2012
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Guidance for Advertising and Marketing
March 07, 2012
Advertising by investment advisors can generate significant risk exposure depending upon the advertising materials and circumstances.
Performance Advertising for Investment Advisers
February 22, 2012
Although not specifically prohibited, investment advisers should be cautious when using performance data in advertising as the securities regulator may claim that the performance advertisement contains untrue statements of a material fact or is otherwise false or misleading. The U.S. Securities and Exchange Commission (“SEC”) has explained that advertisements shall be considered false or misleading depending on the facts and circumstances involved in its use, including:
SEC Gives Further Guidance on Social Media Use by Advisers
January 17, 2012
On January 4, 2012, the U.S. Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations released a regulatory alert discussing the use of social media by investment advisers.
In March, the U.S. Securities and Exchange Commission (“SEC”) charged a Houston based investment adviser firm with fraudulent conduct related to offerings made to the clients of firm. The SEC alleged that the Houston based investment adviser advised clients to invest in promissory notes issued by a financial media company also owned by the owner of the investment adviser firm.
When holding itself out to the public, an investment adviser should not imply that the U.S. Securities and Exchange Commission (SEC), a state securities regulator or another governmental agency has sponsored, recommended or approved the firm, based upon its registration. For example, an investment advisor should not use the term “Registered Investment Adviser” to imply that as an investment advisor, it has a level of professional competence, education or special training. The term should not be used after an individual’s name unless the individual is registered as an investment advisor (i.e. the registered entity is a sole proprietor). The same is true for the acronym “RIA” which should not be used after a person’s name because using initials after a name usually indicates a degree or a licensed professional designation for which there are certain qualifications; however, there are no federal qualifications for becoming an SEC-registered investment adviser.
Does your registered investment advisor have strong supervisory and compliance procedures designed to approve and monitor adverting and marketing materials?
