SEC Issues New Risk Alert on Marketing Rule Compliance: Key Findings for Investment Advisers
The Alert provides examination-based observations regarding compliance with Rule 206(4)-1 (the “Marketing Rule”) under the Investment Advisers Act of 1940.
The Risk Alert highlights deficiencies observed during examinations related to advisers’ use of:
- Third-Party Ratings
- Endorsements (including those provided by social media influencers and other third-party promoters)
- Testimonials.
This Risk Alert builds on prior Marketing Rule guidance and reflects areas where examination staff continue to identify weaknesses in compliance programs, disclosure practices, and supervisory oversight. While the Alert does not establish new regulatory requirements, it provides important insight into current SEC examination priorities and expectations.
Investment Advisers
The Division continues to maintain a strong focus on registered investment advisers, particularly those marketing advisory services through websites, social media platforms, influencer relationships, referral programs, and third-party marketing arrangements.
Examination staff observed recurring compliance issues, including:
Testimonial Statements and Endorsements
Advisers frequently failed to satisfy the Marketing Rule’s conditions when using testimonials and endorsements, including content disseminated by social media influencers, referral partners, or brand ambassadors. Common deficiencies included:
- Missing or incomplete disclosures regarding whether the endorser was a client, whether compensation was provided, and the existence of material conflicts of interest
- Disclosures that were not clear and prominent at the time the testimonial or endorsement was disseminated (e.g., disclosures buried in influencer captions, hashtags, or hyperlinks)
- Lack of documentation demonstrating a reasonable basis for believing influencer content complied with the Marketing Rule.
Promoter and Influencer Oversight
Examiners observed advisers that did not maintain compliant written agreements with compensated promoters or influencers, or failed to adequately assess promoter eligibility, including whether the influencer was an ineligible person under the rule.
Third-Party Ratings
Advisers often lacked sufficient due diligence regarding the methodology used to generate third-party ratings promoted directly by the adviser or indirectly through influencers or marketing partners. Required disclosures related to ratings were also frequently missing or not prominently displayed.
Implementation Gaps
In several instances, advisers adopted Marketing Rule policies but did not consistently implement them in practice, particularly with respect to influencer marketing conducted outside traditional compliance review workflows.
Compliance Programs
Marketing Rule compliance remains a core component of the SEC’s focus on the effectiveness of advisers’ compliance programs, especially where marketing activities involve third parties, digital platforms, or influencer-driven outreach.
Areas of focus include:
- Policies and procedures that are reasonably designed to address the firm’s actual marketing practices, including testimonials, endorsements, and third-party ratings
- Consistent review and approval processes for marketing materials across all platforms, including firm-created and third-party disseminated content
- Oversight of third-party promoters, referral arrangements, and other compensated marketing relationships
- Documentation supporting reasonable basis determinations for compliance with the Marketing Rule’s disclosure, oversight, and due diligence requirements
- Training and accountability for personnel involved in marketing, compliance review, and third-party relationship management.
The SEC continues to emphasize that written policies alone are insufficient; firms must demonstrate that Marketing Rule controls are implemented, monitored, and supported by contemporaneous records.
Key Risk Alerts
The Risk Alert identifies the following areas as presenting heightened regulatory risk based on recurring examination findings:
- Failure to provide clear and prominent disclosures in connection with testimonials and endorsements, including disclosures related to compensation and material conflicts of interest
- Inadequate oversight of third-party promoters, including insufficient documentation of eligibility assessments and required written agreements
- Gaps between adopted policies and actual practices, particularly where marketing activities occur outside centralized compliance workflows
- Insufficient due diligence and disclosure related to third-party ratings, including methodology review, compensation disclosures, and presentation of rating information
- Weak documentation practices, limiting the adviser’s ability to demonstrate a reasonable basis for believing marketing materials complied with the rule.
These risk areas reflect sustained SEC examination attention and should be treated as priority governance and compliance matters.
Action Steps for Compliance Teams
Compliance teams should consider the following actions in response to the SEC’s Marketing Rule Risk Alert:
Conduct a targeted review of marketing practices
Identify where testimonials, endorsements, and third-party ratings are used across all marketing channels, including websites, pitch materials, social media, and third-party platforms.
Assess disclosure adequacy and presentation
Evaluate whether required disclosures are accurate, complete, and presented clearly and prominently at the time marketing materials are disseminated.
Review third-party relationships and compensation arrangements
Confirm that all promoter, referral, and marketing relationships are documented, eligibility has been assessed, and compensation arrangements are appropriately disclosed.
Evaluate third-party rating governance
Review due diligence processes supporting the use of third-party ratings, including documentation of methodology reviews and compensation-related disclosures.
Test policy implementation, not just design
Validate that Marketing Rule policies are operating as intended in practice, including review workflows, escalation procedures, and recordkeeping.
Enhance documentation and exam readiness
Ensure contemporaneous records exist to support reasonable basis determinations, oversight activities, and compliance reviews in anticipation of SEC examinations.
Reinforce training and accountability
Provide targeted training to personnel involved in marketing and compliance oversight, with clear accountability for adherence to Marketing Rule requirements.
Read the press release here.
How Waystone Can Help
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If you have any questions about strengthening your compliance program or want to learn more about how Waystone can help you meet SEC expectations, please contact your usual Waystone representative or reach out to our US Compliance Solutions team below.