David R. Chase, P.A.
Call Us Now: 800-760-0912
David R. Chase, P.A.
Call Us Now: 800-760-0912


SEC Files Marketing Rule Violations Against Several Investment Advisory Firms in Second Wave of Industry Enforcement Sweep

Marketing Rule Violations

In September 2023, the United States Securities and Exchange Commission filed charges against nine investment advisory firms for violations of the Marketing Rules.

Almost eight months later, the SEC has brought a second wave of Market Rule violations filing resolved charges against several registered investment advisory firms. Each of the targeted investment advisory firms consented to settle the SEC’s rule violations and to pay $200,000 in total civil monetary penalties.

The SEC’s administrative orders contend the advisory firms advertised, via their websites, hypothetical performance to the investing public, but failed to adopt and put in place policies and procedures reasonably designed to ensure the hypothetical performance complied with the Marketing Rule; to wit, that the hypothetical compliance pertained to the probable financial scenario, as well as the investment goals of the advisory firm’s targeted audience.

Notably, two of the targeted advisory firms were assessed reduced civil monetary penalties given their remedial steps undertaken prior to the SEC making its initial enforcement contact.

Per the SEC’s administrative order, one of the advisory firms, in addition to alleged violations of the Marketing Rules, also made: (1) false and misleading representations in its advertising materials, (2) touted deceptive model performance, (3) was unable to support its advertising performance results, and (4) did not reduce to writing its endorsement compensation agreements.

Corey Schuster, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, in a public statement emphasized that the Marketing Rules’ provisions are essential to protecting investors from deceitful advertising claims. Schuster also explained that the SEC’s Enforcement Division will continue its Marketing Rule sweeps to ensure investment advisers are fully compliant, and that the SEC will reward firms that proactively initiate remedial, corrective actions before the SEC targets them.

In a typical neither admit nor deny settlement, all of the advisor firms agreed to findings alleging they violated the Investment Advisers Act of 1940 and agreed, per the SEC administrative order, to be censured and to cease-and- desist from violations of the charged provisions. As part of the SEC settlement, the firms also consented to compliance with certain undertakings.

Have You Been Charged with Marketing Rule Violations?

David Chase, Esq. is a SEC defense lawyer and former SEC Enforcement Attorney. He represents registered broker-dealers, investment advisors and licensed individuals in SEC regulatory investigations and FINRA 8210 inquiries throughout the country. You may contact him toll-free at: 800-760-0912 for a confidential consultation, or e-mail him at: david@davidchaselaw.com, and you can visit the Firm’s website for helpful content at: www.davidchaselaw.com.

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