The SEC’s Division of Examinations (the Division) released its fourth risk alert focused on compliance with the Advisers Act Marketing Rule. It is the most significant update since the 2020 amendments. The alert does not introduce new interpretations, but it enforces examiners’ continued focus on recurring deficiencies, particularly in the areas of testimonials, endorsements, and third-party ratings.
For advisers, the message is clear: operational discipline and disclosure precision remain critical, and the SEC is finding many firms still falling short of the rule’s detailed requirements.
Deficiencies in the Use of Testimonials and Endorsements
Examiners continue to identify weaknesses in how advisers are presenting and supervising testimonials and endorsements. The most frequent issues relate to incomplete, unclear, or insufficiently prominent disclosures, including failures to state whether the person providing a testimonial or endorsement is a current client, is compensated, or has a material conflict of interest.
- Disclose material details about any compensation paid in connection with the testimonial or endorsement.
- Make required disclosures at the moment the testimonial or endorsement is disseminated.
- Ensure disclosures appear on the same page, using same-size and similar-weight font as the testimonial or endorsement itself.
- Disclose promoter affiliations when such relationships are not obvious to investors at the time of dissemination.
- Recognize that lead-generation firms, social media influencers, adviser referral networks, and even “refer-a-friend” programs may create testimonials or endorsements subject to the requirements of Advisers Act Rule 206(4)-1(b)(1) and (b)(2)(i).
Beyond disclosure failures, examiners also noted gaps in promoter oversight, including:
- Absence of written agreements obligating promoters to provide the required disclosures.
- Reliance on promoters without having a “reasonable basis” to believe disclosures were being made.
- Engagement of promoters who were ineligible persons, an avoidable error the SEC views seriously. Firms had not updated their policies, procedures, and training since the 2020 amendments, or had not implemented updates effectively.
Deficiencies in the Use of Third-Party Ratings
Many firms failed to conduct sufficient diligence to ensure questionnaires used to create ratings were unbiased or appropriately designed. The SEC reiterated that adequate diligence may include:
- Reviewing publicly available information about third-party questionnaire or survey methodologies;
- Obtaining questionnaires or surveys used in the preparation of the rating; and
- Seeking representations from the third-party rating agencies regarding general aspects of how the questionnaires or surveys were designed, structured, and administered.
Insufficient or Misplaced Disclosures
Examiners identified marketing materials that omitted, obscured, or inadequately explained required disclosures, including:
- Dates or periods for which the rating, ranking, or award was given. (SEC examiners frequently insist on exact dates and the full legal name of the rating provider, not just a logo.)
- Compensation information, including payments to the rating provider, even if those payments were not directly tied to receiving the rating.
- The full name of the company that created and tabulated a rating. Logos alone are insufficient.
The SEC found that some firms relied on hyperlinks to third-party websites without ensuring required disclosures were accessible either on their own site or on the linked page. Others buried disclosures in small fonts, on different pages, or at the bottom of web pages. The SEC views these approaches as not sufficiently “clear and prominent.”
Compliance Implications and Recommended Actions
The risk alert reinforces what we continue to see across ACA’s engagement: Marketing Rule compliance remains a top examination priority, and examiners are taking a granular approach to disclosures, promoter oversight, and third-party ratings.
Even firms that updated their programs in 2021-2022 are discovering operational cracks, often in areas involving multiple teams (marketing, business development, digital, vendors, and affiliates).
We recommend advisers revisit their current process with fresh eyes and assess whether additional controls, documentation, or oversight may be warranted to align with examiners’ expectations.
ACA Can Help
As the SEC continues to closely examine advisers’ implementation of the Marketing Rule, particularly around testimonials, endorsements, and third-party ratings. ACA supports firms in strengthening their compliance programs and addressing the gaps highlighted in the latest risk alert. Our team can assist with:
Strengthening Testimonial and Endorsement Compliance
- Reviewing marketing and solicitation materials for proper testimonial and endorsement disclosures.
- Assessing whether influencer, lead-generation, referral, or “refer-a-friend” arrangements trigger Marketing Rule obligations.
- Developing or enhancing written agreements, oversight frameworks, and a reasonable basis of review processes for promoters.
- Updating policies, procedures, and training programs to reflect the rule’s requirements and current SEC exam expectations.
Enhancing Controls Around Third-Party Ratings
- Conducting due diligence on rating questionnaire methodologies and third-party rating providers.
- Drafting and refining disclosures to ensure accuracy, clarity, and prominence across digital and printed materials.
- Reviewing website content and hyperlinks to confirm required disclosures appear where investors would reasonably expect to find them.
- Testing marketing materials for completeness, including the required use of specific dates, compensation information, and the full names of rating providers.
Marketing Rule Program Optimization
- Marketing material inventory reviews and risk-based sampling.
- Gap analyses aligned with the SEC rules, guidance, and the Division’s evolving examination priorities.
- Mock examinations that replicate the SEC review techniques and documentation expectations.
- Building or enhancing substantiation and recordkeeping frameworks to support all Marketing Rule claims.
ACA’s regulatory experts work collaboratively with firms to identify vulnerabilities, remediate deficiencies, and implement controls that withstand regulatory scrutiny.
Contact an ACA regulatory specialist today to ensure your firm is aligned with the SEC’s expectations and prepare for future examinations.