Compliance Reminder: Misleading Information
Pursuant to Rule 206(4)-1 of the Advisers Act or the “Advertising Rule” registered investment advisers are prohibited from committing any “fraudulent, deceptive, or manipulative act, practice, or course of business” that directly or indirectly, publishes, circulates or distributes any advertisements which directly or indirectly:
- references a testimonial concerning the adviser or its advice, analysis, report or other service it has rendered;
- references the adviser’s past specific recommendations that were or would have been profitable, unless the advertisement sets out or offers to provide a list of all recommendations made within the immediately preceding period of not less than one (1) year, accompanied by certain disclosures;
- represents that a graph, chart, formula or other device: (a) can in and of itself determine which securities to buy or sell or when to buy or sell securities; or (b) can assist an individual in making such determinations, without prominently disclosing the limitations thereof and the difficulties regarding its use;
- states that any report, analysis or other service is for free, unless such materials or services are entirely free and without any direct or indirect condition; or contains any untrue statement of a material fact, or is otherwise false or misleading.
With keeping the above background Rule 206(4)-1 in mind and addition to, the following are quick reminders and will overlap with what you may already know so please bear with me.
- Guarantee returns, market conditions, and/or any financial outcomes
- Give theoretical data in any form (charts, graphs, matrix, etc.)
- Cherry pick good data only from past results.
- Use testimonials
- Use words/statements unless it can be supported with facts or data for evidence – “best, most desirable, most complete, create complete, superior, largest or least impactful”, etc.
As you create your advertisements, always send it in for approval using the advertisement approval form.
If you have any questions regarding this reminder, please contact Jerry Moore.
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