Don’t Overlook Your Marketing Review Program

Simplifying Marketing Review Compliance

In today’s content-driven environment, firms are producing more client-facing communications than ever. With that visibility comes regulatory scrutiny. Firms must ensure that each piece meets regulatory standards, including modernized SEC Rule 206(4)-1—and that their policies and procedures support consistent, documented compliance. While advertising and marketing review is one of those areas that can seem complex and confusing, it can help to remember some basic rules:

• The material should be fair, balanced and truthful.
• The material should not include any misleading facts, assertions or guarantees against future performance.
• Material statements of fact must be substantiated.

Understand What Constitutes Advertising

Any retail communication with 25 or more individuals within a 30-day period (or the ability for such) requires prior review by a qualified supervisor.  These retail communications, also considered marketing and advertising, can include not only newsletters, market commentaries, videos, blogs and advertisements via newspaper, radio and tv, but also business cards, email signatures, letterhead, form letters, sponsorships and memberships.

Each firm should clearly and specifically define in their policies and procedures what is considered marketing and advertising, and provide instructions for the submission, review and retention of any marketing materials.

FINRA’s Focus on Social Media

FINRA also pays special attention to social media.  Firms should review, prior to use, any social media site that an associate intends to use for business purposes, including the associate’s profile, static content, broad communications and third-party posts.

Each piece of retail communication must be reviewed to determine if it is in line with the firm’s policies and with applicable rules and regulations. This includes:

• the content standards noted above;
• FINRA filing requirements;
• requirements for specific types of communications or products; and,
• limitations on use.

Disclosures should specifically address the content of each marketing piece, and the same disclosure should not be used for all material.  Material used on a continual basis should be submitted to Compliance for re-approval regularly, as determined by the firm.

RIA Marketing Rules: Testimonials and Substantiation

Since the SEC’s modernized marketing rule (Rule 206(4)-1) under the Investment Advisers Act of 1940) now allows the use of testimonials and endorsements – but only with the right controls in place. Registered Investment Advisers (RIAs) should make sure their policies and procedures specifically address whether or not the use of testimonials and endorsements is allowed. Policies and procedures should have a clear definition of what a testimonial and endorsement is and what disclosures need to be used with each.

If testimonials or endorsements are being used, the firm should make sure they have the correct disclosures on any marketing documents that include testimonials or endorsements, and ensure that the platform being used has room for the required disclosures.

Prepare for Examinations with Robust Documentation

It’s also important to remember that the new marketing rules require substantiation for any material statements of fact made in marketing materials. This can be especially important in formats that are static, such as websites and social media posts.  While this substantiation is for the firm’s files only, it should be available at the time the marketing is approved and maintained with any other documentation for that marketing piece.

Along the same lines, firms should prepare for regulatory examinations by properly documenting Compliance review of all marketing and advertising materials, and ensuring that they are able to provide a regulator with a complete listing of all marketing and advertising that is being conducted by the firm. This tracking, evidence of review, and maintenance of the required documentation and substantiation can be critical during an audit of the firm’s marketing and advertising review program.

Marketing Review is a Compliance Cornerstone

Inconsistent marketing review processes can create serious regulatory risk. At Oyster Consulting, our team of experienced regulatory compliance professionals understands the complexities of FINRA and SEC requirements—from disclosure standards and testimonial use to social media oversight and substantiation protocols. We assist firms in drafting tailored policies and procedures and preparing for regulatory exams by ensuring that all marketing materials meet the highest standards of compliance. Whether you need a full review of your advertising oversight process or ongoing support, Oyster’s experts are here to help.