Marketing Rule Mishaps: A New York Spin on SEC’s 2025 Risk Alert

Hello, New Yorkers, let’s break down what’s been buzzing in the finance world. You know, just your typical SEC drama—but with some Big Apple flair.

Highlights from the Risk Alert

On December 16, 2025, the SEC’s Division of Examinations hit us with a Risk Alert that’s been the talk of Wall Street. They spilled the beans on some recurring slip-ups advisors are making with the Marketing Rule, mostly about how they flaunt testimonials, endorsements, and third-party ratings. The SEC’s 2026 Exam Priorities keep it clear: no funny business with the basic requirements of the Advisers Act.

Retail-Facing vs. Private Advisors

While these blunders show up more in retail settings (yep, they’re always under the microscope), private fund advisors shouldn’t get too comfy. The alert isn’t just for the retail scene. Advisors for private funds, watch your step—the same rules apply to you too, even if they seem a bit nuanced for your world. Recently, the SEC’s been cracking down, even on the so-called “technical” violations. Imagine getting flagged for that—yikes!

Testimonial Tribulations

Alright, Manhattanites, let’s get into the weeds with this one. The SEC was not pleased with how advisors are handling testimonials.

Common Blunders

• Clear and Prominent… or Not: Many endorsements were missing clear disclosures about promoter status, compensation, and conflicts of interest. Some were in tiny fonts or hidden behind links—seriously? Get those disclosures out in the open!

• Compensation Confusion: Advisors often failed to spell out the nitty-gritty of compensation deals. Some paid for client reviews without ensuring they meet the Marketing Rule. Generic disclosures were a big no-no!

• Conflict Confusion: Some didn’t disclose conflicts like financial ties between advisors and promoters. Imagine a promoter having a stake in your firm—definitely something the SEC wants in the open.

• Oversight Oversights: You need to know if your testimonials play by the rules. Some advisors just weren’t checking. Written agreements? Frequently missing. And that’s just not okay.

• Ineligible Individuals: Paying promoters with disciplinary backgrounds? Big mistake. You should know better!

Private Fund Quirks

Private fund advisors, specifically, need to make their affiliations—and any exemptions—clear when they’re out there endorsing. The SEC saw too many instances where advisories skipped disclosures when issuing private fund testimonials.

Rumbles with Ratings

Moving on, let’s talk third-party ratings. If you think slipping a rating with no context is okay, think again!

Glaring Issues

• Missing Disclosures: Advisers slapped on rating logos but forgot the basics. Who made the rating? Were fees involved? What’s the date? The SEC wants you to be upfront.

• Due Diligence Drama: Advisors didn’t do their homework on the surveys used for ratings. Some didn’t even bother checking if the results were rigged. Come on, folks, do your due diligence!

Some advisors did it right, though—they checked third-party methodologies and obtained necessary questionnaires. Kudos to them!

What You Need to Do

So, what’s the takeaway here? Whether you’re in retail or with private funds, keep those disclosures front and center. Be honest about reviewer statuses, fees, and any conflicts. Make sure to verify promoter eligibility and never rely on fine print or tricky hyperlinks.

Quick Checklist

• Review marketing materials for transparency.
• Clarify identities of rating providers.
• Examine compensation-related disclosures.
• Dive deep on third-party survey methodologies.
• Maintain solid agreements with promoters.

Simple? Maybe. Important? Absolutely. Because if the SEC’s knocking, you better have all your ducks in a row.

Maegan Kae Sunaz helped break this down.