Nine RIA Firms Fined $850K in Regulatory Sweep

In a recent crackdown by the Securities and Exchange Commission (SEC), nine Registered Investment Advisory (RIA) firms reportedly have collectively been fined $850,000 for violating marketing rules. These firms were allegedly found to have improperly advertised hypothetical performance data to the public, running afoul of SEC regulations designed to protect investors. 

According to the announcement, the heart of the matter lies in the SEC’s Marketing Rule, which mandates that these firms must establish and effectively implement policies and procedures ensuring that hypothetical performance data is relevant to the financial situations and investment objectives of their target audience. 

During a regulatory sweep, it was reportedly discovered that these firms were allegedly disseminating these advertisements widely on their websites. Two of the firms had purportedly failed to maintain records of these advertisements, compounding their regulatory violations. 

Without admitting guilt, all nine firms have agreed to pay penalties, with individual civil fines ranging from $50,000 to $175,000. In addition to the financial penalties, they have also reportedly consented to be censured, signifying an official reprimand, and have committed to ceasing violations of the cited provisions. Importantly, they have reportedly pledged not to advertise hypothetical performance data without first implementing the necessary policies and procedures to ensure compliance with SEC rules.