14.1 Advertising and Client Communications
Advisory advertising regulations balance promotional freedom with retail investor protection, requiring substantiation and prominent risk disclosures.
Key NASAA Exam Takeaways
- SEC Marketing Rule 206(4)-1 permits testimonials and endorsements provided clear disclosures regarding compensation and conflicts are made.
- Performance advertising must present net-of-fees returns alongside gross returns with equal prominence.
- Hypothetical and back-tested performance can only be distributed to institutional or sophisticated audiences with documented policies.
- Guarantees, untrue statements of material fact, and misleading omissions in advertisements are strictly fraudulent.
Interactive Knowledge Checkpoint • Section 14.1
Under the modernized SEC Marketing Rule, an investment adviser may include a client testimonial in its marketing materials provided that: