Post contributions from Ara Jabrayan

On April 17, 2024, the SEC provided Registered Investment Advisers (RIAs) with observations regarding firms’ compliance with the Marketing Rule. According to the announcement from the SEC’s Division of Examinations, the alert details the Division’s initial observations of investment adviser compliance with the following Rules:

  1. The Compliance Rule (Advisers Act Rule 206(4)-7)
  2. The Books and Records Rule (Advisers Act Rule 204-2)
  3. General Prohibitions of the Marketing Rule

Obeservations on deficiencies related to the Marketing Rule’s General Prohibitions include:

  1. Untrue statements of material fact and unsubstantiated statements of material fact
  2. Omission of material facts or misleading inference
  3. Fair and balanced treatment of material risks or limitations
  4. References to specific investment advice that were not presented in a fair and balanced manner
  5. Inclusion or exclusion of performance results or time period in matters that were not fair and balanced

By sharing these observations in the risk alert, the SEC’s Division of Examinations is strongly encouraging investment advisers “to reflect upon their own practices, policies, and procedures and to implement any appropriate modifications to their training, supervisory, oversight, and compliance programs.” Chief Compliance Officers should use risk alerts to evaluate their supervisory, compliance, and other risk management systems.

Always remember that the strongest policies and procedures are meaningless if they are not fully implemented by the RIA.

Download the Division’s Compliance Alert

To learn more, watch this video from RIA Compliance Group below.


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