On December 16, 2025, the SEC’s Division of Examinations released a new Risk Alert, “Additional Observations Regarding Advisers’ Compliance with the Advisers Act Marketing Rule,” offering fresh insight into how investment advisers are struggling to meet the rule’s requirements – particularly when using testimonials, endorsements, and third-party ratings.
The Risk Alert builds on prior guidance and reflects deficiencies identified during recent examinations. The SEC’s message is consistent and direct: Marketing Rule compliance remains an examination priority, and advisers should reassess not only their disclosures, but also the policies, procedures, and oversight frameworks that support their marketing activities.
Key Observations: Testimonials and Endorsements
While the Marketing Rule allows advisers to use testimonials and endorsements, the SEC continues to observe widespread non-compliance – often driven by incomplete disclosures, weak oversight, and misunderstanding of what constitutes an endorsement.
Disclosure Failures Remain the Most Common Deficiency
The Division found that the most frequent issue was advisers’ failure to provide required disclosures at the time testimonials or endorsements were disseminated. In many cases, disclosures were missing entirely; in others, they were included but failed to meet the rule’s “clear and prominent” standard.
Common disclosure gaps included failure to clearly state:
- Whether the promoter was a current client or investor
- Whether the promoter was compensated (cash or non-cash)
- Whether the relationship created a material conflict of interest
Even when disclosures were present, they were often de-emphasized – placed behind hyperlinks, displayed in smaller or lighter font, or positioned far from the testimonial itself. The SEC reiterated that disclosures must be at least as prominent as the testimonial or endorsement and that hyperlinks alone generally do not satisfy this requirement.
Compensation and Conflict Transparency Issues
Beyond missing disclosures, the Risk Alert highlights advisers that provided generic or incomplete descriptions of compensation arrangements. For example, advisers disclosed that promoters were compensated but failed to explain the material terms – such as the amount, method of calculation, or duration of compensation.
The SEC also observed advisers failing to disclose conflicts of interest stemming from:
- Financial relationships between advisers and promoters
- Promoters who were investors, principals, or affiliated with related advisory firms
- Referral arrangements that created incentives influencing the endorsement
These omissions deprived investors of critical context needed to evaluate the credibility and objectivity of the endorsement.
Oversight and Supervision Breakdowns
The Marketing Rule requires advisers to have a reasonable basis for believing that testimonials and endorsements comply with the rule, supported by documentation and, in many cases, written agreements with paid promoters. However, examiners frequently observed breakdowns in this area.
Notable oversight deficiencies included:
- No written agreements with paid promoters
- Agreements that failed to fully describe promotional activities or compensation terms
- Lack of documentation supporting the adviser’s reasonable basis for belief
- Failure to recognize that influencer partnerships, referral networks, or “refer-a-friend” programs constituted endorsements
In several cases, advisers had updated their compliance policies on paper but failed to communicate and implement them in practice – resulting in non-compliant advertisements being disseminated.
Ineligible and Affiliated Promoters
The SEC also identified issues involving ineligible persons and affiliated promoters. Some advisers compensated promoters who were subject to disqualifying disciplinary events, despite knowing – or reasonably being expected to know – of their ineligible status.
In other instances, advisers relied on affiliated promoters without clearly disclosing those relationships at the time the endorsement was presented. The SEC emphasized that disclosures must be made when the testimonial or endorsement is first encountered – not after a prospective client has already been influenced.
Key Observations: Third-Party Ratings
The Division’s findings related to third-party ratings reflect similar themes: insufficient diligence, incomplete disclosures, and inconsistent oversight.
Due Diligence Is Often Inadequate
Under the Marketing Rule, advisers must have a reasonable basis for believing that any survey or questionnaire used to create a third-party rating:
- Was structured to allow both favorable and unfavorable responses
- Was not designed to produce predetermined outcomes
While some advisers demonstrated diligence by reviewing methodologies or obtaining representations from rating providers, others lacked evidence that any evaluation had occurred. In many cases, advisers had no policies or procedures governing how third-party ratings were vetted before being used in marketing materials.
Disclosure Gaps Across Marketing Channels
The SEC observed advisers using third-party ratings across websites, social media, pitchbooks, newsletters, blogs, and press releases without providing required disclosures in a clear and prominent manner.
Common disclosure failures included:
- Missing dates or rating periods
- Failure to identify the rating provider
- Omission of compensation paid for logo use, reprints, enhanced placement, or referrals
As with testimonials, disclosures were often buried at the bottom of webpages, presented in smaller font, or accessed only through hyperlinks – practices the SEC made clear do not meet the rule’s standards.
What This Means for Advisers
Taken together, the SEC’s observations reinforce that Marketing Rule compliance extends well beyond disclosure language. Advisers must ensure their marketing programs are supported by effective governance, training, and oversight across all channels and third-party relationships.
The Division encourages firms to:
- Reassess compliance policies and procedures under Rule 206(4)-7
- Strengthen supervisory controls and documentation
- Provide training to marketing and compliance teams on how the rule applies in practice
- Regularly review digital and third-party marketing activities
The Risk Alert also makes clear that the deficiencies identified are not exhaustive —underscoring the need for a proactive, continuous approach to compliance rather than a one-time remediation effort.
How RegEd Can Help
As adviser marketing becomes more digital and decentralized, complying with the SEC’s Marketing Rule requires consistent oversight, clear disclosures, and defensible review processes. Powered by advanced capabilities that integrate AI technology to automate and streamline marketing compliance review and speed time to market, RegEd’s AI-Powered Advertising Review solution enables firms to simplify compliance while maintaining rigor. Features such as AI-driven problematic language detection, SMART Disclosures management, lexicon-based keyword monitoring, dynamic workflows, and Document Compare automate key processes and minimize human error. The solution’s intuitive interface, hierarchy management tools, and seamless integration with FINRA AREF further enhance operational efficiency.
In 2025, RegEd expanded its AI capabilities with the launch of media transcription for multimedia content, enabling compliance teams to efficiently review videos, webinars, and podcasts. The AI-powered transcription automatically converts audio and video content into text, applying the same robust compliance analysis used for written materials. This enhancement allows firms to:
- Detect potentially problematic language, including misleading claims or exaggerated statements.
- Verify required disclosures and disclaimers are present.
- Ensure brand and policy alignment across all media types.
Looking ahead, RegEd is expanding the platform with AI Submission PreCheck, an enhanced pre-submission review solution that introduces additional efficiencies in the review process, reduces time-to-market, while continuing to reduce the risk of non-compliance.
Trusted by the industry, RegEd’s advertising compliance solution has processed more than 8 million submissions and has been recognized with an InvestmentNews 5-Star Technology Award for innovation in wealth management solutions – reinforcing RegEd’s role as a proven partner for Advertising Review compliance.
About RegEd
RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients that represent more than 35 of the top 50 insurance companies.
Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.
Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please visit www.reged.com.