SEC PENALIZES FIVE INVESTMENT ADVISORY FIRMS FOR VIOLATING PROVISIONS OF THE SEC MARKETING RULE

Here's an interesting release from the SEC on penalizing five investment advisory firms for violations of the Marketing Rule. All five investment advisers published hypotheticals on their websites "without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of each advertisements intended audience, as required by the Marketing Rule." 

One advisory firm was also penalized for "including false and misleading statements in advertisements, advertising misleading model performance, being unable to substantiate performance shown in its advertisements, and failing to enter into written agreements with people it compensated for endorsements."

FOR IMMEDIATE RELEASE

2024-46

Washington D.C., April 12, 2024 —

The Securities and Exchange Commission today announced settled charges against five registered investment advisers for Marketing Rule violations. All five firms have agreed to settle the SEC’s charges and to pay $200,000 in combined penalties.

The five advisory firms are:

• GeaSphere LLC
• Bradesco Global Advisors Inc.
• Credicorp Capital Advisors LLC
• InSight Securities Inc.
• Monex Asset Management Inc.

The SEC’s orders found that the five firms advertised hypothetical performance to the general public on their websites without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of each advertisement’s intended audience, as required by the Marketing Rule. Bradesco, Credicorp, InSight, and Monex received reduced penalties because of the corrective steps they undertook in advance of being contacted by the SEC staff.

According to the order, GeaSphere also violated other regulatory requirements, including by making false and misleading statements in advertisements, advertising misleading model performance, being unable to substantiate performance shown in its advertisements, and failing to enter into written agreements with people it compensated for endorsements. The order further finds that GeaSphere committed recordkeeping and compliance violations and made misleading statements about its performance to a registered investment company client and that the misleading statements were included in the client’s prospectus filed with the Commission.

https://www.sec.gov/news/press-release/2024-46

Here is the link to NASAA's Test Specifications for the Series 66 Exam. See Section IV (G) (5) (1-5) covering Communications with Clients and Required Disclosures.

Bob Eder discusses the SEC Marketing Rule and required Disclosures to Clients in his Study for the Series 66 Exam.

The SEC Marketing Rule is important for those planning to sit for the Series 66 Exam. NASAA publishes Series 66 Test Specifications, and you can find the provisions of the Marketing Rule in Section IV (G) & (H).

Study for the Series 66 Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's Series 66 book on Amazon. 

For questions about Bob Eder's Series 66 Manual, Study for the Series 66 Exam, or questions in general about the Series 66 Exam, or about the SEC Marketing Rule and required Disclosures to Clients, feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001. 

See Bob Eder's Author Page on Amazon.com.

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