6 SEC Compliance Gotchas in Marketing Materials—and How to Avoid Them

Year-end is fast approaching, and now’s a great time to make sure all your compliance ducks are in a row.

According to compliance expert Amy Jones, CIPM, founder and principal at Guardian Performance Solutions, LLC, “Investment advisers are constantly struggling with how to navigate the Advertising Rule and tell their story without inadvertently committing violations. The OCIE Risk Alert is a great tool for these firms so that they can see the type of problems other firms have had and to help them avoid making the same mistakes.”

In September, The SEC Office of Compliance Inspections and Examinations issued a Risk Alert highlighting the six Advertising Rule compliance issues most commonly identified in deficiency letters sent to SEC-registered investment advisers. The areas addressed in the Alert are listed below, and you can get Amy’s more detailed take on them here.

  • Misleading Performance Results
  • Misleading One-on-One Presentations
  • Misleading Claim of Compliance with Voluntary Performance Standards
  • Cherry-Picked Profitable Stock Selections
  • Misleading Selection of Recommendations
  • Inadequate Compliance Policies and Procedures

Whether the topic is benchmark performance comparisons or presenting best-performing stocks, one thing is clear:

Missing or inadequate disclosure statements are what’ll get you in hot water with the SEC.

Unless you have automated the sales and client content generation process to ensure mandatory disclosures are included, document and preserve all review notes, and prevent publication of client reports and marketing materials without prior compliance approval, here are some things to check for:

  • Are all relevant performance disclosures included in every presentation?
  • If your firm claims GIPS® compliance, is the GIPS-compliant slide current?
  • Do you have documentation for all performance calculations, including composite construction?

To learn more about how automated compliance checks and workflows can help you avoid Advertising Rule issues, visit our website.

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