The SEC charged an investment adviser with using his radio show and other advertisements to mislead investors. The adviser advertised that he had been selected to host the radio show, when, according to the SEC, he actually paid to host and broadcast the show. He also claimed to hold a fictitious “Qualified Retirement Advisor” designation. The SEC also accuses the adviser of intentionally concealing his significant disciplinary history by failing to deliver Form ADV and using internet search suppression consultants to hide his background. As alleged, the adviser also failed to disclose compensation arrangements and conflicts of interests. The principal, who also served as the firm’s Chief Compliance Officer, is also charged with operating a compliance program with insufficiently tailored policies that the firm failed to implement.
Now that the SEC has proposed a new investment adviser advertising rule, we expect that OCIE and Enforcement will step up review of how advisers comply. The new rule prohibits any misleading or unsubstantiated statements, which would include marketing hype not grounded in specific facts.