STUDY FOR THE SERIES 66 EXAM

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 R...

From time to time, we use this blog to talk about the Record-Keeping Rule that requires both investment advisers and broker/dealers to create and maintain written records of all communications received from and directed to retail customers and clients. Record-Keeping is certainly reflected in NASAA's Test Specifications for the Series 66 Exam. See Section IV (G), especially Subsection 5 (5.1 through 5.3) which covers communications with customers through social media, e-mail, digital messaging, and all other website and internet platforms. (These communications are known as "off channel.") That this is an important topic on the Series 66 Exam is underscored by an SEC Press Release dated February 9, 2024 announcing that the SEC has discovered serious violations of the Record-Keeping Rule by 16 firms, and the names of the firms which the SEC has fined more than $81 million in total. Here's what the SEC stated about these 16 firms: "The SEC’s investigations uncovere...