SEC Sweep into Marketing Rule Violations – Charges Against Nine Investment Advisers

Convergence would like to share some information related to the SEC’s recent press release on Marketing rule violations. The 2020 rule makes some important changes that provide transparency for investors, such as outlining requirements for advertising performance. The press release details a follow-up compliance sweep by the SEC which found 9 Advisers in violation of the rule.

These cases show why the 2020 changes are a step in the right direction. Investors deserve to know how their Investor Advisers are calculating performance numbers, especially if they are hypothetical. The rule ensures that Advisers cannot cherry-pick or alter data for advertising purposes without consequence. Hopefully, this will help provide investors with the information they need to make the best decisions for their financial goals.

These cases also show the prevalence of the multi-hatted CCO in SEC enforcement. In these cases specifically, the marketing materials would typically be approved by the CCO before release. This begs the question, how many of these cases might have been prevented by an independent CCO?