SEC Announces Settlements for Marketing Rule Violations, Releases Marketing Rule Risk Alert

On April 12, the SEC announced that it had settled charges against five registered investment advisers for violations of the Marketing Rule, including hypothetical performance presentations that were inapt and reflected deficient policies and procedures, among other violations. On April 18, the SEC Division of Examinations issued a Risk Alert regarding the staff’s observations from its Marketing Rule examinations to date. The SEC examination staff highlighted deficiencies that included, among others, untrue or unsubstantiated statements of material fact regarding advisory products and services and omission of material facts or misleading statements, such as performance claims that did not include adequate share class disclosure or the use of lower fees in presented performance than those offered to investors.  While the disclosure in question did not relate to registered funds, registered investment company directors should be mindful that procedures are in place to monitor the accuracy of fund disclosure.

Click here to read the SEC press release regarding the enforcement action.
Click here to read the April SEC risk alert.