Compliance and Regulatory Alerts | 12-22-25
SEC Division of Examinations Issues Risk Alert on Investment Adviser Marketing Rule Compliance
The SEC’s Division of Examinations ("the Division") released a new Risk Alert highlighting recurring issues in investment advisers’ compliance with the Marketing Rule, with a particular focus on (1) testimonials and endorsements and (2) third-party ratings.
Testimonials and Endorsements: Disclosure gaps and weak oversight
The Division observed that advisers frequently failed to deliver required disclosures in a clear and prominent manner at the time testimonials or endorsements were disseminated, particularly on adviser websites (including d/b/a sites) and through lead generators, influencers, referral networks, and refer-a-friend programs. In some instances, disclosures were missing altogether. In others, disclosures appeared but were not effective because of placement, font treatment, or reliance on hyperlinks. The Division also noted shortcomings in promoter oversight, including inadequate documentation supporting a reasonable basis to believe required disclosures were being provided, as well as deficiencies in written agreements, de minimis compensation tracking, and screening for ineligible persons.
Third-Party Ratings: Due diligence and disclosure breakdowns
The Division observed that advisers often used third-party ratings across websites, social media, pitchbooks, newsletters, and blogs without fully satisfying due diligence and disclosure requirements. A common deficiency was insufficient diligence to establish a reasonable basis that rating questionnaires or surveys were structured to avoid bias and predetermined outcomes, including failure to obtain or review the underlying materials. The Division also identified disclosure problems, including unclear or missing information about the rating date and the period the rating covered, unclear identification of the third-party rating provider, and gaps in compensation disclosure where advisers paid for logos, reprints, enhanced exposure, or other rating-related benefits.
Practical Steps Firms Can Take Now
Inventory all advertisements and channels (website and d/b/a sites, social, newsletters, pitchbooks, blogs, referral pages) and map where testimonials, endorsements, and ratings appear.
Map promoter relationships end-to-end (lead generators, influencers, referral networks, refer-a-friend programs), and confirm whether arrangements create a testimonial or endorsement.
Standardize disclosure language and placement so disclosures are delivered at the time of dissemination and remain clear and prominent (avoid treating hyperlinks, tiny fonts, or distant placement as a substitute).
Tighten promoter oversight: document the reasonable basis for belief, implement written agreements for paid promoters above de minimis, and track compensation aggregation across a 12-month period.
Screen for ineligible persons and maintain documentation supporting eligibility determinations.
Build a third-party ratings diligence file (questionnaires/surveys, methodology descriptions, representations from rating providers) and confirm required disclosures (date, period, identity of the rater, compensation).
Refresh policies, training, and testing: ensure written procedures match actual workflows and produce auditable evidence of implementation.
How Bates Group Helps
Bates Group supports investment advisers and financial firms with compliance support tailored to your firm's individual needs. We offer practical, exam-ready Marketing Rule compliance support, including advertising and website reviews, promoter and referral program assessments, and mock examination services aligned to the Division's stated observations.