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Regulation and Compliance > Federal Regulation > SEC

SEC Hits 5 RIAs With Marketing Rule Fines

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The Securities and Exchange Commission said Friday that it has settled charges with five registered investment advisors for Marketing Rule violations.

All five firms have agreed to settle the SEC’s charges and to pay $200,000 in combined penalties.

The five advisory firms are:

GeaSphere agreed to pay a civil penalty of $100,000.

Bradesco, Credicorp, InSight and Monex agreed to pay civil penalties ranging from $20,000 to $30,000, “which reflected certain corrective steps taken by each of these firms prior to being contacted by the Commission staff,” the orders state.

On their public websites, the five firms advertised hypothetical performance without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of each advertisement’s intended audience, the orders explain.

“The Marketing Rule’s provisions are crucial to protecting investors from misleading advertising claims,” said Corey Schuster, co-chief of the SEC Enforcement Division’s Asset Management Unit, in a statement.

“Today’s actions show that we will continue to employ targeted initiatives to ensure that investment advisers fully comply with their obligations under the rule,” Schuster said. “They also serve as a reminder of the benefits to firms that take corrective steps before being contacted by Commission staff.”

GeaSphere also violated other regulatory requirements, “including by making false and misleading statements in advertisements, advertising misleading model performance, being unable to substantiate performance shown in its advertisements, and failing to enter into written agreements with people it compensated for endorsements,” the SEC found.

The order further finds that GeaSphere committed recordkeeping and compliance violations and made misleading statements about its performance to a registered investment company client and that the misleading statements were included in the client’s prospectus filed with the commission.

This is the second set of cases that the commission has brought as part of an ongoing targeted sweep concerning Marketing Rule violations after charging nine advisory firms in September 2023.

Natasha Vij Greiner, deputy director of the SEC’s Division of Examinations, who’s now director of the SEC’s Division of Investment Management, said on March 7 that examiners will be ”focusing on marketing in almost every exam. How do you look at a firm without looking at their marketing materials?”


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