Rule 206(4)-1(b)(1)(i)(B)

Testimonial/endorsement: required disclosure of compensation (cash or non-cash)

testimonialendorsementcompensationdisclosure

Excerpted verbatim from the rule

The adviser must disclose, or reasonably believe the promoter discloses, that cash or non-cash compensation was provided by or on behalf of the adviser in connection with the testimonial or endorsement, if applicable.

Source: 17 CFR § 275.206(4)-1 on eCFR.

What violations look like

"Best advisers I have ever worked with." — Mike T., client

Why it's flagged: Even when the speaker's client status is disclosed, the rule also requires disclosing whether the testimonial-giver was compensated for the statement (cash or non-cash, including discounted fees).

Compliant rewrite

"Best advisers I have ever worked with." — Mike T., a current client. Mike received no compensation for this testimonial.

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This page is for educational purposes and is not legal advice. Safe to Publish is not a law firm. Compliance decisions remain the responsibility of the registered investment adviser. See Terms.