The Securities and Exchange Commission has released a new risk alert on its areas of focus regarding compliance with its Marketing Rule, according to ThinkAdvisor.
The rule is designed to comprehensively and efficiently regulate advisers’ marketing communications, and was updated by the SEC in December 2020 with amendments.
Last September, the SEC’s Division of Examinations published a risk alert describing initial areas of review related to examining advisers for compliance with the rule, including policies and procedures, substantiation requirement, performance advertising requirements, and books and records.
The latest risk alert, issued last week, said the SEC will be increasing its focus on other marketing rule-related areas during examinations.
The commission said its staff will examine whether advisers have disseminated advertisements that violate various prohibitions, including an untrue statement of a material fact, or omitting a material fact necessary to make the statement not misleading.
The staff will also conduct focused examinations for compliance with other aspects of the marketing rule regarding the use of testimonials and endorsements in an advertisement. These include whether disclosures are provided, oversight conditions are met, and written agreements are entered into.
Another area of focus involves compliance with the use of third-party ratings in advertisements with clear and prominent disclosure of the date the rating was given, the identity of the third party, and compensation provided by the adviser in connection with the rating.
In addition, the staff will review whether advisers accurately completed questions regarding their marketing practices in their annual Form ADV amendments.
The SEC said its Division of Examinations “encourages advisers to reflect upon their own practices, policies, and procedures and to implement any appropriate modifications to their training, supervisory, oversight, and compliance programs.”
The attorneys at Lewitas Hyman regularly monitor SEC, FINRA and other self-regulatory organizations’ rule-making activities to help ensure that our clients are aware of any new policies, while assisting them in implementing any recommended changes. Our clients include broker-dealers, RIAs, banks, investment companies and hedge funds, along with registered representatives and other individuals participating in the securities industry. Should you be in need of experienced counsel regarding a matter involving a regulatory agency, please contact Lewitas Hyman at (888) 655-6002 or through our online contact form.