Additional Observations Regarding Advisers’ Compliance with the Marketing Rule (Dec 16, 2025)
Published December 16, 2025 · Original PDF on sec.gov
Most recent risk alert. Calls out missing required disclosures (current-client status, compensation, material conflicts), compensating ineligible persons for endorsements, and failure to perform reasonable-care diligence. Closing line: repeat findings will be referred to Enforcement.
Findings (9)
The specific issues examiners flagged. Each maps to a sub-paragraph of the Marketing Rule that the Safe to Publish reviewer cites in real time.
- I.A
Risk Alert (Dec 2025): compensation disclosures must specify amount/percentage/value
Compensation disclosures must specify exact cash amounts, percentage calculations with associated time periods, or readily ascertainable non-cash compensation values. A bare statement that compensation was provided is not sufficient.
- I.A
Risk Alert (Dec 2025): disclosures must be at-or-before time of dissemination
The Division observed that advisers failed to provide the required client/non-client, compensation, and material-conflicts disclosures at the time (or before) the testimonial or endorsement was disseminated. Required disclosures missing entirely, presented only via hyperlink, presented in smaller fonts, or otherwise lacking "clear and prominent" treatment were repeatedly cited.
- I.A
Risk Alert (Dec 2025): hyperlinked disclosures generally fail "clear and prominent"
The Division specifically observed that hyperlinked disclosures fail to meet the "clear and prominent" obligation. Disclosures must appear within the testimonial or endorsement, in close proximity to it.
- I.B
Risk Alert (Dec 2025): oversight and written agreement deficiencies
Advisers could not demonstrate a reasonable basis for believing testimonials or endorsements complied with the Marketing Rule, often lacking written agreements with promoters that addressed disclosure processes, compensation terms, and the scope of promotional activity. Recognition that an arrangement constituted an endorsement at all was, in many cases, missing.
- I.C
Risk Alert (Dec 2025): paying ineligible persons (incl. state actions)
The Division observed advisers compensating disqualified individuals when the adviser knew or should have known they were ineligible. State regulatory actions against promoters qualify as "disqualifying events" rendering the promoter ineligible to be compensated for testimonials or endorsements.
- I.D
Risk Alert (Dec 2025): affiliation of promoter must be readily apparent at time of endorsement
Where an endorsement comes from a person affiliated with the adviser, the affiliation must be readily apparent to a client or private fund investor at the time of the endorsement. Failures included not disclosing affiliation at all, or disclosing it only in collateral materials.
- II.A
Risk Alert (Dec 2025): third-party rating due-diligence "common-sense" steps
Acceptable due-diligence steps for third-party ratings include: reviewing publicly disclosed information about survey methods, obtaining and reviewing the questionnaires/surveys themselves, or seeking representations from the third-party rating provider on the design and administration of the rating. Advisers who used ratings without performing any of these steps were repeatedly cited.
- II.B
Risk Alert (Dec 2025): third-party rating disclosure failures
Required third-party rating disclosures were frequently absent: rating date and period it was based on, identity of the rating provider, and any compensation provided in connection with obtaining or using the rating. Hyperlink-only disclosures and disclosures presented away from the rating itself failed the standard.
- III
Risk Alert (Dec 2025): repeat findings to be referred to Enforcement
The Division put advisers on notice that, having identified these deficiencies publicly, repeat findings on subsequent examinations may be referred to the Division of Enforcement. Advisers using or planning to use testimonials, endorsements, or third-party ratings should expect their next examination to focus on these areas.
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