OCIE Publishes Risk Alert on Most Frequent Advertising Rule Compliance Issues Found During Examinations

October 17, 2017

The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) issued a National Exam Program Risk Alert on September 14, 2017 (Risk Alert). The Risk Alert highlights advertising-related compliance issues “most frequently identified in deficiency letters recently sent to SEC-registered investment advisers” (advisers) from a sample of over 1,000 examinations and of nearly 70 examinations of advisers’ “use of accolades in their marketing materials” in 2016 (Touting Initiative). The deficiencies or weaknesses concerned requirements of rule 206(4)-1 (Advertising Rule) under the Investment Advisers Act of 1940 (Advisers Act). The Risk Alert encourages advisers to review their compliance programs – and specifically, their advertisements – for compliance with the Advertising Rule, the anti-fraud protections of section 206 and their fiduciary duties to investors.

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