Performance Advertising Reviews
The Investment Advisers Act contains a broad proscription against "any… practice… which operates… as a fraud or deceit upon any client or prospective client." This language has provided little guidance for investment advisers throughout the United States for more than 75 years. Firms often only learn what is permissible through specific responses made in no-action letters or through the regulatory exam process. This clearly makes compliance more difficult and complex.
Performance Advertising Disclosures And Compliance Marketing Reviews
At Jacko Law Group (JLG) our counsel have years of experience in developing disclosures in accordance with performance advertising regulations. We help firms understand the "do's and don'ts" of performance advertising and marketing, and provide disclosures based on regulatory guidance and best practices.
Our securities attorneys are nationally recognized in the area of performance advertising compliance. In fact, our Firm Managing Partner, Michelle L. Jacko, gives frequent lectures on performance advertising, has been published on this subject and stays current on regulatory policy changes.
JLG can review your client newsletters, marketing collateral, social media, and firm advertisements in accordance with the following:
- Investment Advisers Act of 1940
- Securities Exchange Act of 1934
- Rule 206(4)-1 (SEC advertising rule)
- SEC No-action letters and guidance statements
- Financial Industry Regulatory Authority (FINRA) broker-dealer regulations
- Global Investment Performance Standards (GIPS®)
We also counsel firms to develop internal controls for the marketing review process and assist in submitting requests for no-action relief compliance through disclosure.
Recent SEC enforcement actions and noted deficiencies have involved:
- Failure to disclose material information relating to investments
- Not providing fair and balanced presentations
- Failure to show net-of-fee performance returns to retail investors
- Inaccurate professional experience or designations
- Noncompliance with the past specific recommendation rule
- Showing model and/or hypothetical data without sufficient disclosures
- Use of testimonials in digital marketing
JLG's professionals have years of experience in performing advertising and marketing reviews and are ready to help.
Social Media And Electronics Communications
The world is changing, and potentially the way we conduct business, because of social media. There are, however, many regulatory compliance challenges to consider before using social media. As the use of social media by investment firms continues to grow, so does regulatory scrutiny over financial firms' risk management controls. At JLG, we provide guidance for developing internal controls to mitigate potential risks surrounding a financial institution's use of social media.
To learn more about performance advertising regulations from an experienced securities lawyer, call our law office directly at 619.298.2880 or contact us online.
Legal Risk Management Tips
- National Society of Compliance Professionals (NSCP) Currents , 03.2019
- Wolters Kluwer: Practical Compliance & Risk Management For the Securities Industry, 01.2019
- Wolters Kluwer: Practical Compliance & Risk Management For the Securities Industry, 07.2012
- Thomson Reuters Accelus , 11.2011
- Journal of Securities Law, 05.2010
- Washington, D.C., 03.25.2010
- Philadelphia, PA, 09.21.2009
- Securities Law & Corporate Counsel Blog, 03.18.2020