INVESTMENT ADVISERS—Risk alert highlights common g

INVESTMENT ADVISERS-Risk alert highlights common gaps in adviser advertising disclosures - 22 December 2025

The Division of Examinations outlines deficiencies in disclosures and compliance in the use of testimonials and third-party ratings in investment adviser advertising.

The SEC's Division of Examinations published a risk alert concerning the Advisers Act Marketing Rule. The alert offers additional observations following prior guidance on other aspects of the rule, focusing on advisers' satisfaction of the rule's provisions governing testimonials and endorsements as well as those relating to third-party ratings. The Division is sharing these observations to promote compliance with the Marketing Rule and encourages advisers to reflect upon their practices in light of this information.

Testimonials. The rule contains provisions prohibiting the use of testimonials and endorsements unless the adviser satisfies disclosure and oversight conditions. In addition, certain ineligible persons can not be compensated for providing testimonials or endorsements.

The most common deficiency observed by Division staff was the use of testimonials and endorsements that lacked the required disclosures at the time they were disseminated. These lapses were frequently observed on advisers' websites, but also in arrangements involving lead-generation firms, social media influencers, and referral programs. For example, in some instances "refer-a-friend" programs were offered for de minimis compensation without recognizing that this could create an endorsement or testimonial.

The Division also noted that many advisers have updated their compliance policies and procedures to address testimonials and endorsements. Others, however, did not, or had updated policies that were not implemented; so, these advisers disseminated advertisements that did not appear to comply with the Marketing Rule.

Going into detail, the staff observed many investment advisers failing to provide clear, prominent disclosures in advertisements using testimonials and endorsements. Common issues included missing or insufficient statements about promoter status, compensation, and conflicts of interest. Additionally, advisers sometimes compensated ineligible promoters or failed to disclose affiliations with promoters.

Third-party ratings. The Marketing Rule also contains provisions barring the use of third-party ratings in advertisements unless the material used in preparing the ratings meets certain criteria and discloses certain information. As with testimonials and endorsements, the staff observed advisers using third-party ratings without appearing to comply with all or some of the requirements for their use.

Here, the staff observed advisers that did not satisfy the provision's due diligence requirement. This requirement asks that an adviser have a reasonable basis to believe that the materials used to prepare the third-party ratings would not elicit biased responses and were not designed to produce predetermined results. In these instances, policies and procedures addressing this requirement were often absent or insufficient.

Advisers also failed to make the required clear and prominent disclosures. These deficiencies included: links to third-party websites that did not contain the required disclosures; ratings that did not identify the period of time on which the ratings were based; and failing to clearly identify the third-party itself.

Prior guidance. This alert follows earlier guidance sharing initial observations about compliance with the Marketing Rule's general prohibitions. In this risk alert, released in April 2024, the Division said that it had observed Marketing Rule-related books and records deficiencies and deficient reporting on Form ADV. The Division encouraged advisers to make appropriate modifications to their training, supervisory, oversight, and compliance programs.

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