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Compliance September 10, 2024
SEC Fines 9 Advisories for Marketing Rule Violations
The regulator issued penalties totaling $1.24 million to settle charges of ‘untrue or unsubstantiated claims.’
Reported by Alex Ortolani
The Securities and Exchange Commission added another nine registered investment advisers to the growing list of firms charged for marketing rule violations.
The SEC on Monday announced settled charges against nine firms of varying amounts for “disseminating advertisements that included untrue or unsubstantiated statements of material fact or testimonials, endorsements, or third-party ratings that lacked required disclosures.”
The settlements represented a total of $1.24 million in fines and add to prior settlements based on breaking the SEC’s marketing rule, which went into effect in November 2022 and was broadened by the regulator in June 2023.
The firms did not admit or deny the SEC’s charges, but all consented to the SEC’s finding that they violated the Investment Advisers Act of 1940. They also agreed to be censured and to cease and desist from violating the specific provisions.
The SEC fines included charges such as those against RIA firms Abacus Planning Group Inc. and TS Bank (doing business as Callahan Financial Planning) for publishing untrue statements about third-party ratings and those against Callahan for posting an advertisement claiming it was part of a member organization that “did not exist.”
The orders also charged AZ Apice Capital Management LLC, Callahan Financial Planning, Droms Strauss Advisors Inc. and Integrated Advisors Network LLC for advertisements noting “conflict-free advisory services,” which the SEC found the firms unable to substantiate.
The regulator charged Howard Bailey Securities LLC with using two testimonials that did not come from current clients. In a final example, it charged Abacus, Beta Wealth Group Inc., Professional Financial Strategies Inc., and Richard Bernstein Advisors LLC for including third-party ratings that were five years old without providing that detail or the time periods to which the ratings referred.
The full list of charges are here: SEC Charges Nine Investment Advisers in Ongoing Sweep into Marketing Rule Violations.