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The weekly news source for investment management legal and compliance professionals

Topic: Advertising

Advertising Rule Violations: OCIE Lets Advisers Know Which Get Cited Most

September 22, 2017
Advisers now have even less of an excuse for violations of Rule 206(4)-1, the Advertising Rule, than they did before. With the Office of Compliance Inspections and Examinationsí issuance of a risk alert listing the most frequent Advertising Rule compliance issues identified during examinations, the agency is leaving little doubt as to what may constitute a violation.

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SEC Crackdown on Misleading Marketing Nets Another Adviser

March 17, 2017
Use of hypothetical and/or backtested performance results in marketing is a surefire way to draw attention from SEC staff. A new settlement with an advisory firm should serve as a potent reminder to anyone who may have forgotten.

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Share All Risks and Costs with Investors When Selling Securities

February 17, 2017
Sometimes even the big players need to learn a lesson about disclosure. Morgan Stanley Smith Barney and Citigroup Global Markets found this out the hard way when they each settled charges from the SEC that they made false and misleading statements about a foreign exchange trading program they sold to investors.

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Protect Your Firm from Investment Performance Scrutiny

December 8, 2016
The SEC has made no secret about its focus on how advisers and their sub-advisers represent investment performance. Recent agency settlements with advisory firms highlight the need for advisers to take necessary steps so they do not find themselves in the crosshairs.

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Bill Loosening Advertising Prohibitions in Dire Straits

October 7, 2016
The U.S. House of Representatives last month passed a bill that would, among other things, ease the prohibition against use of testimonials and past specific recommendations in advertisements. But donít make plans to change your marketing materials anytime soon. The chances of the Senate acting on the pending legislation, as well as the President signing it, in the remaining months of 2016 appear to be slim to none.

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Advisers Misrepresenting Advertising Returns Should Expect SEC Attention

June 10, 2016
Advertising returns are what they are. Advisers that seek to make them appear greater than what they are risk running afoul of the SEC enforcement police.

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General Solicitation Under Rule 506(c): SEC Investigations Underway

March 4, 2016
When the SEC in July 2013 adopted Rule 506(c), allowing general solicitation of private offerings, there were a number of concerns, including whether the new rule would open the door to fraudulent offerings, as well as whether advisers to private funds would use the rule at all, given the conditions attached to it. Now we have some answers.

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SEC Considers Changes to Definition of Accredited Investor

January 8, 2016
Just who can invest in hedge funds, private equity funds and other investments seen as risky may change in the near future. The SEC is collecting public comments on staff recommendations that would change the definition of an "accredited investor" in Regulation D of the Securities Act of 1933.

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Advertising Past Performance and Recommendations Draws SEC Interest

December 10, 2015
The SEC has made no secret that adviser advertising is an area it pays close attention to. The agency is always looking for advertising practices it feels may mislead investors. High on the list of such practices are how an adviser presents past performance and past recommendations.

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Dissent: Backtesting Requirements Should Not Be Set by Commission Opinion

October 9, 2015
How do you define performance backtesting in advertising? Not through a Commission Opinion on an enforcement appeal, according SEC commissioners Michael Piwowar and Daniel Gallagher. The two commissioners on dissented from a Commission Opinion that upheld an administrative law judgeís ruling against an adviser accused of providing fraudulent misrepresentations to prospective clients.

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Inflated AUM and Claims of High Returns May Lure Investors … and the SEC

October 2, 2015
Donít think the SEC wonít notice a firm that puffs up its assets under management and/or any exaggerated returns it promises investors. Puffery in such cases will likely result in exposure and enforcement action.

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Major ETF Manager Pays $35 Million to Settle Performance Advertising Charges

January 1, 2015
A lie backed by an algorithm is still a lie.

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Performance Results: Avoid Mistakes When Using Them in Advertising

August 22, 2014
Past performance is a powerful tool in advertising. It draws in new investors, helps new client acquisition and adds gloss to your firmís reputation.

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Adviser Who Pursued Unsophisticated Investors Wasn’t So Smart

June 6, 2014
Just because some prospective investors lack sophistication doesnít mean advisers will be successful in fraudulently enticing them. Itís more likely that the SEC will answer that siren call.

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Adviser Reviews on Third-Party Sites: Walk Through the Door Carefully

May 2, 2014
Expect to hear increasing noise in the months ahead about ways you can now call attention to your firm by linking to client reviews on independent web sites in the wake of the SEC staffís March guidance (ACA Insight 4/7/14) on testimonials and social media.

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False Claims are Misleading Even When Published in Adviser’s Own Newsletter

February 13, 2014
A false claim is a false claim, wherever it is published.

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SEC Staff Warns Against Misleading Fund Names

November 15, 2013


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SEC Extends Timeline as Comments on Reg D, Form D, Rule 156 Amendments Roll In

October 4, 2013


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Presence Exams Focus on Marketing, Conflicts of Interest

September 27, 2013


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Get Ready for 506(c) Questions From Examiners

September 27, 2013


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