UNDERSTANDING THE RULES ON ADVERTISING WITH GEORGE CHAMBERLIN & MENTOR RIA CONSULTING Compliance Training Series
Advertising by Advisers Many types of firms advertise their services and products and we all are exposed to advertising every day, in many ways. Because of the special nature of their business, however, investment advisers are subject to a number of restrictions and rules governing their advertisements. These restrictions and rules are intended to protect clients and prospective clients and may be strictly enforced by regulators. The rules are a part of the anti-fraud provisions of the Investment Advisers’ Act and may be enforced in criminal or civil proceedings. We will take a look at the advertising rules and what it takes for an investment adviser to stay on the right side of them. 2 Mentor RIA Consulting © 2013
What Is Advertising? An advertisement is any communication addressed to more than one person that offers (1)analysis concerning a security, (2)any information to used in making a determination to buy to sell a security, or (3)any investment advisory service with regard to securities. This means bulk s or regular mail, magazine or newspaper ads, radio or television ads, websites, and social networking sites are advertisements. 3 Mentor RIA Consulting © 2013
How is Advertising Restricted for Investment Advisers? Section 206(4)-1 of the Investment Advisers’ Act provides there may be No testimonial of any kind concerning the investment adviser or any advice, analysis, report or other service rendered by such investment adviser No referral to specific recommendations of securities made in the past (though a list of all recommendations and pertinent info is OK but must indicate that past performance is not an indication of future performance). No advertisement of a graph, chart, formula or other device that may be used to determine when or what securities to buy or sell. No offer of a free report, analysis or other service unless the item is entirely free and there are no conditions or obligations No untrue statement or material fact or otherwise false or misleading statements. 4 Mentor RIA Consulting © 2013
How Do We Apply These Rules? First, we will examine each of the itemized rules and what activity they are intended to address – what they mean to us The next part of the discussion focuses on establishing the firm’s policy and procedure to address advertising and ensure compliance We know why What the policy and procedure should contain Who is responsible for applying the policy and to whom How the policy is applied What the firm’s manual should contain regarding advertising Sample language and considerations 5 Mentor RIA Consulting © 2013
For More…. For more information about Mentor RIA Consulting, to request a sample written advertising policy and procedure or to discuss this presentation further: us at Visit us at 6 Mentor RIA Consulting © 2013