Rule 206(4)-1(c)

Third-party ratings: due diligence and disclosure requirements

third-party-ratingdue-diligencedisclosure

Excerpted verbatim from the rule

An advertisement may not include any third-party rating unless: (1) the adviser has a reasonable basis for believing that any questionnaire or survey used in the preparation of the third-party rating is structured to make it equally easy for a participant to provide favorable and unfavorable responses, and is not designed or prepared to produce any predetermined result; and (2) the advertisement clearly and prominently discloses, or the adviser reasonably believes that the third-party rating clearly and prominently discloses (i) the date on which the rating was given and the period of time upon which the rating was based; (ii) the identity of the third party that created and tabulated the rating; and (iii) if applicable, that compensation has been provided directly or indirectly by the adviser in connection with obtaining or using the third-party rating.

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

What violations look like

Newsletter

Morningstar awarded us a five-star rating last month.

Why it's flagged: Third-party ratings require disclosure of: who created the rating, the period it covers, the criteria/methodology, and whether any compensation flowed to the rating provider. Risk Alert 12/16/25 specifically called out advisers who skipped due-diligence here.

Compliant rewrite

Morningstar awarded our growth strategy a five-star rating in its November 2025 review (rating covers the 3-year period ending September 30, 2025; methodology at morningstar.com/research/methodology). No compensation was paid to Morningstar for this rating.

Website

As featured in Barron's, Forbes, and The Wall Street Journal.

Why it's flagged: Press mentions used as marketing carry endorsement risk. Dates, context (was it a paid placement?), and the nature of the feature must be disclosed. Stale or sponsored "featured in" badges are a recurring exam finding.

Compliant rewrite

List specific articles with publication date and a link, e.g., "Barron's, Top Independent Advisers (September 2024)."

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