Since the Marketing Rule (Rule 206(4)-1) became mandatory on November 4, 2022, the SEC's Division of Enforcement has brought a series of targeted sweeps assessing investment adviser compliance, with particular focus on testimonials, performance advertising, and third-party ratings disclosures.
In September 2023, the SEC charged nine investment advisers with Marketing Rule violations, resulting in $850,000 in combined civil penalties — primarily for advertising hypothetical performance to the general public without the policies and procedures the rule requires.
In September 2024, the SEC announced a second sweep charging nine advisers, with roughly $1.24 million in combined penalties, for similar violations involving untrue or unsubstantiated statements, testimonials, endorsements, and third-party ratings.
Common deficiencies across these actions include inadequate substantiation for performance claims, missing disclosures in testimonial and endorsement advertisements, and failure to adopt or update written policies and procedures to reflect the rule's requirements.
Firms should maintain substantiation files for all material claims, ensure written agreements with promoters are in place, and conduct periodic self-assessments of their marketing materials and advertising review procedures.