Last week, the Enforcement unit of the SEC’s Boston branch commenced Marketing Rule sweeps, notifying affected firms to preserve and produce records. Although I have no empirical proof thereof, I am assuming that they are using AI to comb through advisory firm web sites. I am currently addressing a few of these matters with the Boston branch. As many of you have heard me profess countless times thought the years, the use of puffery and/or statements that can’t be definitively corroborated could prove problematic, not to mention the inappropriate use of testimonials (there are clear limitations as to the use thereof). Well, that day has apparently come.
Avoid using unnecessary adjectives and/or uncorroborated laudatory/promissory statements-always add “help” “strive” “believe” as a modifier. Also avoid using the word “ensure” or other statements that connote a guarantee. Be careful when using statements touting “conflict fee” advice or services. I have yet to encounter (that doesn’t mean they don’t exist) a marketing consultant that clearly understands the marketing limitations corresponding to the investment advisory industry.
It is imperative that firms review their web sites and marketing practices to ensure that they are compliant with the new Marketing Rule that became effective in November 2022. In addition, it is also as imperative to review and update firm polices and procedures to confirm that they appropriately address the new Rule. I have recently made additions to our form Marketing Rule policy and underlying procedures consistent with recent SEC exam comments.
