SEC says it allows RIA endorsements by some ‘persons with regulatory history’
People who faced an enforcement order from a self-regulatory organization are still allowed to make endorsements of RIAs under certain conditions, the Securities and Exchange Commission (SEC) said in guidance issued last week.
The SEC said such an order does not disqualify someone from being able to endorse an RIA as long as it did not bar or suspend the person from the securities industry. In its guidance, issued in the form of an updated list of FAQs on the marketing rule, the SEC said any advertisement from a person who received an enforcement order must disclose the order indicating the alleged regulatory violations for 10 years following its publication.
In March of last year, the Commission issued guidance for how advisors should advertise gross performance under certain conditions. And, last month, the SEC published a risk alert unveiling frequent findings from its investigations, including a common lack of disclosure around client status, potential compensation and material conflicts of interest in testimonial disclosures.
‘Deficiencies noted in the risk alert primarily centered around a lack of, or inadequate disclosures, though the SEC also observed other marketing rule violations, including lack of written agreements with paid promoters, allowing endorsements by ineligible persons, and due diligence failures regarding third-party rankings and surveys,’ Lori Weston, head of compliance at STP Investment Services, told Citywire.
Read the full article in CityWire.
