01.08.25

FAs Still Trip Up on SEC’s Hypothetical Performance No-Nos

by: Mela Seyoum

The Securities and Exchange Commission (SEC) in 2020 proposed modernizing its marketing rule for investment advisors, including expanding the definition of advertisement to include communications traditionally covered by the advertising rule as well as any endorsements or testimonials previously covered by the cash-solicitation rule. Since the compliance date, the SEC has leveled at least 18 cases against firms and advisors for marketing rule violations, most of which were related to showing hypothetical performance to a general public audience without determining whether the audience was composed of experienced investors or had the proper qualifications to understand the information.

Read the full article on Financial Advisor IQ