What Was Issued — A New SEC Risk Alert
On December 16, 2025, the SEC’s Division of Examinations (Exams Staff) published a Risk Alert outlining recurring compliance deficiencies and observations by examiners related to Rule 206(4)‑1 under the Investment Advisers Act of 1940, commonly known as the Marketing Rule. This alert focuses on how registered investment advisers (RIAs) are actually complying — or failing to comply — with certain provisions of the rule in practice. (Mayer Brown)
This is the first Marketing Rule risk alert in over a year, and comes as part of the SEC’s ongoing supervisory program to assess how advisers implement the rule. (Mayer Brown)
1. Key Areas Covered in the Observations
Testimonials and Endorsements
The Marketing Rule permits the use of client testimonials and endorsements in adviser communications — but only if strict disclosure and oversight conditions are met.
The SEC observed that many advisers:
- Fail to provide complete and required disclosures about compensation, relationships, and conflicts of interest when testimonials or endorsements are used.
- Do not have adequate written agreements governing the use of compensated promoters or paid endorsers.
- Misapply or omit required disclosures on social media posts or referral/influencer programs.
These gaps can mislead clients or prospects about an adviser’s services or the impartiality of the testimonial. (IQ-EQ)
2. Third‑Party Ratings
Under the rule, advisers can include ratings from independent third parties only if:
- The adviser performed reasonable due diligence on the rating source;
- Required disclosures are provided about what the rating means and how it was generated.
Examiners found that advisers sometimes:
- Didn’t adequately document or disclose how third‑party ratings were vetted,
- Failed to satisfy disclosure requirements about rating methodologies or limitations.
This raises concerns that investors could be misled about the significance or reliability of such ratings. (JD Supra)
3. Oversight and Compliance Program Shortfalls
Across both areas above, the SEC highlighted weaknesses in written policies and procedures:
- Compliance manuals may reference the Marketing Rule, but lack specific processes for managing testimonials, endorsements, or third‑party ratings.
- Documentation of oversight and due diligence is frequently missing or incomplete.
- Firms often fail to consistently apply the rule’s requirements in practice — especially for digital ads and social media posts. (IQ-EQ)
4. Why These Observations Matter
Investor Protection Mandate
The SEC’s mission includes preventing fraud, manipulation, and deception in adviser communications. The Marketing Rule is intended to ensure that advertising — including performance info, testimonials, or ratings — is not misleading and all required disclosures are clear and accurate. (401kspecialistmag.com)
Consistent Exam Focus
These observations align with the SEC’s 2026 Exam Priorities, which emphasize:
- Continued oversight of foundational compliance requirements,
- Focus on disclosures that affect retail investor understanding of adviser marketing claims. (Mondaq)
Common Compliance Pitfalls Seen by Examiners
According to advisory and legal analyses of the alert, examiners have repeatedly seen advisers:
Use compensated testimonials without all required disclosures (e.g., compensation, material conflicts, promoter status).
Overlook written agreements or due diligence documentation for influencers, referral partners, or third‑party raters.
Fail to monitor and supervise social media and digital advertising for Marketing Rule compliance.
Misinterpret or under‑apply disclosure requirements for ratings or endorsements. (IQ-EQ)
Expert and Industry Commentary
Professional Services and Lawyers
- Law firms and compliance specialists view the SEC alert as a “refresher” on core Marketing Rule requirements and a signal that examiners are looking at implementation, not just written policies.
- Many remind RIAs that documentation matters—it’s not enough to intend compliance if you have no audit trail showing you actually conducted the required disclosures and due diligence before publication. (JD Supra)
Risk & Compliance Professionals
- Some compliance officers emphasize that the alert highlights a broader industry issue: advisers often continue past practices under the impression they already comply, but the Marketing Rule’s nuanced disclosure requirements trip them up — especially in new digital and social formats. (ThinkAdvisor)
Case Examples of Deficiencies
While the SEC alert does not name firms, analogous examples in public commentary and legal analyses reflect typical scenarios:
Scenario A — Influencer Compensation
An adviser used compensated industry bloggers to tout its services without disclosing the compensation arrangement or whether the blogger was a current client. This lacked the explicit disclosures required under the Marketing Rule. (IQ-EQ)
Scenario B — Misleading Ratings Usage
An adviser cited a third‑party ranking without documenting the methodology or limitations of the ratings, potentially implying unwarranted endorsement or credibility. (JD Supra)
What Advisers Should Do Now
To address these observations, industry experts recommend advisers:
Review and update written policies and procedures to specifically address testimonials, endorsements and third‑party ratings.
Implement documented due diligence and oversight practices for promoters and ratings sources.
Train compliance and marketing teams to apply the rule across all advertising channels, including social media and digital platforms.
Maintain clear records demonstrating how disclosures were satisfied and oversight was conducted in each case. (IQ-EQ)
Summary — Key Takeaways
- The SEC’s latest Risk Alert outlines common compliance weaknesses under the Marketing Rule, especially around testimonials, endorsements and third‑party ratings. (Mayer Brown)
- Examiners are increasingly reviewing both written compliance frameworks and how they are applied in practice. (Mondaq)
- Advisers are reminded to focus on accurate disclosures, documented oversight, and thorough due diligence to avoid misleading marketing communications. (ThinkAdvisor)
- The alert aligns with broader SEC oversight priorities emphasizing retail investor protection and transparent adviser advertising practices. (Mondaq)
Here’s a case‑study and expert‑commentary summary of the SEC’s latest compliance observations on the Marketing Rule — with real‑world examples, common pitfalls examiners are seeing in practice, and what industry stakeholders are saying.
Context: What the SEC Released
In December 2025, the U.S. Securities and Exchange Commission (SEC) Division of Examinations issued a Risk Alert summarising recurring compliance issues and observations in how registered investment advisers (RIAs) are applying the Marketing Rule (Rule 206(4)‑1) under the Investment Advisers Act of 1940. The alert reflects what SEC examiners are seeing in examinations across firms — focusing not just on policy language but on how the rule is applied in real communications and oversight programs.
Case Study 1 — Incentivized Testimonials Without Proper Disclosures
Situation
A registered adviser launched a digital marketing campaign featuring testimonials and social media posts from compensated “brand ambassadors” promoting the firm’s services.
What the SEC Observed
Examiners found that:
- Required compensation disclosures were not included or were incomplete;
- Agreements with endorsers lacked terms establishing compliance oversight;
- Content did not explain the material conflicts of interest tied to compensation.
Rule Requirements
Under the Marketing Rule, advisers may use testimonials and endorsements only if they comply with disclosure requirements — including disclosure of compensation, material conflicts, and whether the promoter is a client — and subject them to oversight in policies and procedures.
Commentary
- Compliance attorneys note that omission of clear compensation disclosures — even in social media captions — is a leading cause of misleading communications flagged by the SEC.
- One industry compliance officer said, “Firms think including a hashtag or generic note is enough; the SEC wants clarity and context, not ambiguity.”
Lesson: Clear, direct compensation disclosures matter at every touchpoint, including Instagram, TikTok, and influencer content.
Case Study 2 — Third‑Party Ratings Misused in Performance Claims
Situation
An investment adviser cited an industry “Top 50 Adviser” ranking from a vendor newsletter in a brochure and on its website.
What the SEC Observed
Examiners saw:
- A lack of documentation about how the adviser vetted the rating provider’s methodology;
- Missing disclosures regarding rating criteria, limitations, or conflicts;
- No records showing due diligence or analysis performed before using the rating in marketing.
Rule Requirements
The Marketing Rule allows use of third‑party ratings only if the adviser performs reasonable due diligence on the provider and makes all required disclosures about how the rating was generated, its limitations, and any conflicts.
Commentary
- Legal advisors highlight that reliance on a rating without disclosure may make the adviser’s promotional materials appear unduly favorable — misleading investors about the adviser’s track record or standing.
- Industry commentators say this is especially risky in email blasts or landing pages, where ratings are presented without full contextual detail.
Case Study 3 — Weak Compliance Procedures Across Digital Content
Situation
An advisory firm’s compliance manual referenced the Marketing Rule generally but lacked specific procedures for reviewing and approving digital ads, emails, and social posts.
What the SEC Observed
Examiners noted:
- Digital campaigns being launched without evidence of pre‑approval or documented review;
- Social media content lacking consistent disclaimer or risk disclosure language required when performance is shown;
- Recording and retention gaps for versions of ads sent to clients or prospects.
Rule Requirements
The Marketing Rule requires advisers to have written policies and procedures reasonably designed to ensure compliance with all aspects of the rule — including review, approval, recordkeeping, and oversight of communications.
Commentary
- Compliance practitioners observe that many firms formally adopt policies but fail to operationalize them across all platforms, especially newer digital media channels.
- A risk officer commented, “Policies that aren’t reflected in actual workflows are meaningless in SEC exams.”
Common Themes in SEC Observations
1. Disclosure Gaps
The most consistent issue is inadequate or unclear disclosures tied to testimonials, endorsements, and third‑party ratings — especially in digital contexts where space is limited (e.g., social media).
2. Documentation & Due Diligence
Examiners want evidence that advisers have:
- Performed due diligence on endorsements/ratings;
- Conducted appropriate vetting and oversight;
- Preserved records showing why a communication complied with the rule.
3. Operational Weaknesses
There’s a gap between policy language and actual practice — especially in:
- Social media postings,
- Influencer/affiliate content,
- Third‑party content reposted or shared by advisers.
Industry & Expert Commentary
From Legal Advisors
- Many compliance lawyers say the alert serves as a “core compliance reminder”: it doesn’t introduce new obligations but clarifies where advisers are falling short in practice.
- A partner at a securities law firm noted, “The SEC wants advisers to show compliance — not just say in their manuals that they follow the rule.”
From Compliance Officers
- Operational compliance professionals emphasise that exam readiness means more than having a written policy — it means ensuring review workflows, checklists, and sign‑offs are used consistently across all marketing channels.
From Industry Publications
- Trade reporting described the alert as a signal that the SEC is shifting from rule implementation guidance to compliance execution assessment — that is, examiners are looking at how firms actually apply the rule.
Key takeaway: Firms that have policies that only exist on paper may fare poorly under examination; SEC exam staff expect evidence that procedures are followed consistently and recorded appropriately.
Practical Lessons & Takeaways
Review and document due diligence
Ensure you have written evidence of vetting any third‑party content you use in marketing — including testimonials and ratings.
Tailor disclosures
Disclosures shouldn’t be boilerplate — they must meet the rule’s specific criteria and be presented clearly where the content appears.
Operationalise policies
Convert written policies into checklists, approval logs, and training for communicators and social media teams.
Track and retain records
Maintain retentive records of:
- Marketing materials as filed vs as published,
- Oversight and compliance sign‑offs,
- Supporting documentation for ratings and endorsements.
All of these matter in an exam context.
Bottom Line
The SEC’s latest Marketing Rule compliance observations make clear that:
- It’s no longer enough to “have” a Marketing Rule policy;
- Examiners are looking for evidence of effective implementation;
- Digital ads and social posts, influencer content, and third‑party ratings are common trouble spots;
- Clear, complete disclosures and robust documentation are exam priorities.
This Risk Alert reflects a broader SEC focus on practical compliance over theoretical policy, especially where investor perceptions could be influenced by marketing communications.