S3:E10 | Marketing Rule Master Class Episode 5 - Adventures in Marketing | Compliance in Context

Written By Katie Sizemore
 

Welcome to Episode 5 of the Marketing Rule Master Class mini-series.  Episode 5 focuses on testimonials, endorsements, and third-party ratings. Moderator, Patrick Hayes, Calfee and panelists Jaqueline Hummel, ACA, Anthony Dillingham, ACA, and Matt Shepherd, ACA, delve into the nuances and traps for the weary when utilizing testimonials, endorsements and third-party ratings.  While the new rule is a potential game-changer for firms, actual implementation comes with caveats and compliance burdens.  We hope you enjoy this installment of the Master Class mini-series!

 

Show

Interview with Jacqueline Hummel, Anthony Dillingham, Matt Shepherd

  • 7:11: Review of the industry (social media, adoption and entanglement, live presentation/speeches, inadvertent endorsements).

  • 45:36: Building the right disclosures (disclosure of compensation and conflicts of interest)

  • 1:01:40: Third Party Ratings

  • 1:08:20: How will this area be reviewed by the Division of Examinations?

 

Quotes

07:33 - “The prior advertising rule contained an outright prohibition against the inclusion of testimonials and over time that was supplemented by a series of no-action letters where essentially the industry was writing to the SCC and saying, ‘If we do this, is this a testimonial?’ And they would say, ‘Well, maybe but not if you do it this way.’” - Matt 

10:04 - “The definition of endorsement and testimonial… They’re not the same but they are very, very similar. So, just for the sake of keeping the conversation simple, I’m going to say that they’re basically the same and what’s different between the two is the identity of the person who makes that statement.” - Matt  

18:48 - “You still have to remember that no matter what you put out there you are still subject to the fraud provision of the Advisers Act.” - Jacqui

31.52 – “The degree of adoption and entanglement, whether a third-party communication is even going to be deemed an advertisement of the adviser at all, is going to be dependent on the extent the adviser has adopted or entangled itself.” – Patrick

49:57 – “There is still going to be a dichotomy between state registered investment advisers and federally registered investment advisers.  So, while many states will follow the SEC’s lead, there are still exceptions.” – Jacqui

1:03:32  - “It is always best practice to disclose whatever the reader, or listener, or the watcher of that marketing material would want to know.  What does this rating mean in context and how did you get it?”– Jacqui

Katie Sizemore
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S3:E11 | Marketing Rule Master Class Episode 6 - Implementation | Compliance in Context
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S3:E9 | Marketing Rule Master Class Episode 4 - Performance | Compliance in Context