On Dec. 16, 2025, the SEC Division of Examinations released a new Risk Alert. The alert identifies common compliance deficiencies under the amended Marketing Rule (Advisers Act Rule 206(4)-1). It focuses on how investment advisers use testimonials, endorsements, and third-party ratings in advertisements.
Common Compliance Gaps for Investment Advisers
Key Findings
- Advisers often did not provide clear and prominent disclosures. They failed to say whether the promoters who gave testimonials and endorsements were current clients, compensated, or had conflicts of interest. Disclosures must be as prominent as the testimonial. Hyperlinks or small fonts are not sufficient.
- Many firms did not disclose the material terms of promoter compensation arrangements. Others failed to address conflicts arising from these relationships.
- Some advisers lacked a reasonable basis for believing their testimonials and endorsements complied with the rule; failed to maintain documentation to substantiate compliance; failed to enter required agreements with promoters; or paid ineligible persons. (“Ineligible persons” are those subject to SEC sanctions or state disqualifying events.)
- For third-party ratings, advisers often did not conduct appropriate due diligence on rating methodologies or lacked adequate policies to ensure fairness and prevent predetermination.
- Required disclosures for third-party ratings (such as date, time period, identity of rating provider, and compensation) were frequently missing or unclear.
See more details and the full SEC Risk Alert
Download NowPriority Action Items for Investment Advisers
We believe that the following steps will assist advisers in addressing these gaps in risk management and strengthen compliance with the Marketing Rule.
Action Items
- Update and implement policies and procedures addressing testimonials, endorsements, and third-party ratings, including clear, prominent disclosure templates.
- Establish a promoter due diligence and contracting process (eligibility checks, written agreements, conflict assessments).
- Implement third-party rating due diligence (obtain and review questionnaires/surveys; document methodology reviews).
- Enhance books-and-records controls to preserve substantiation of “reasonable basis.”
- Conduct training in marketing, compliance, and advisory staff, with periodic testing.
- Perform a website and social media review (including d, b, a websites) to remove or remediate non-compliant content.
Contact the CBIZ Alternative Investment Group to help strengthen your firm’s compliance framework and minimize risk exposure.
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