On December 16, 2025, the U.S. Securities and Exchange Commission Division of Examinations issued a new Risk Alert providing guidance to registered investment advisers (“RIAs” or “advisers”), investors, and other market participants regarding RIAs’ compliance with the Investment Advisers Act Marketing Rule (Rule 206(4)-1).

The Risk Alert is not a rulemaking; but it matters because it signals heightened scrutiny on these issues for RIAs during exams and enforcement, and is particularly notable coming from the current Commission. The Alert zeroes in on compliance failures under the Marketing Rule’s: (1) Testimonials and endorsements provisions; and (2) Third-party ratings provisions. RIAs should consider these high-priority risk areas for compliance now.

1. What This Risk Alert Is (and Is Not)

The Division of Examinations (and Enforcement) continues to signal that the Marketing Rule remains an active and ongoing exam priority, several years after its adoption. Enforcement actions reflect the same.

This Risk Alert does not reinterpret the rule or announce new standards. Instead, it reflects exam staff’s assessment that many advisers, in practice, are failing to comply with rudimentary Marketing Rule requirements—particularly as marketing practices evolve to include social media, referral programs, influencers, awards, and online reviews.

2. Testimonials and Endorsements: Where Examiners Are Seeing Failures

The Marketing Rule permits RIAs to use testimonials and endorsements only if specific disclosure, oversight, and compliance conditions are met. According to the Risk Alert, this is where many firms are falling short.

a. Missing or Non-Compliant Disclosures

The most common deficiency identified by examiners is the failure to provide required disclosures at the time the testimonial or endorsement is disseminated. In particular, advisers often failed to clearly and prominently disclose:

• Whether the promoter is a current or former client or private fund investor
• Whether the promoter was compensated, and the material terms of that compensation
• Whether the promoter has material conflicts of interest

Even where disclosures existed, examiners frequently found they were not “clear and prominent”—for example, disclosures buried in hyperlinks, placed far from the testimonial, or presented in smaller or lighter font than the endorsement itself.

b. Failure to Recognize What Counts as an Endorsement

Examiners also found RIAs failing to recognize or observe that certain marketing activities triggered the rule at all, including:

• Lead-generation firms
• Social media influencers
• Adviser referral networks
• “Refer-a-friend” programs offering even modest compensation

In many cases, advisers treated these arrangements as informal marketing rather than regulated endorsements subject to disclosure, oversight, and documentation requirements.

c. Oversight, Documentation, and Written Agreements

The Risk Alert highlights breakdowns in RIAs’ oversight and compliance infrastructure, including:

• Inability to demonstrate a reasonable basis for believing promoters complied with disclosure obligations
• Missing or incomplete written agreements with paid promoters
• Improper reliance on the de minimis compensation exemption, where total payments exceeded $1,000 over a 12-month period

Notably, examiners emphasized that merely updating compliance manuals is not enough—policies must be implemented and followed in real-world marketing activity.

d. Ineligible or Affiliated Promoters

Finally, examiners flagged instances where RIAs:

• Compensated ineligible promoters who were subject to disqualifying disciplinary events, or
• Used affiliated promoters without clearly disclosing the affiliation at the time the endorsement was disseminated

Both scenarios create direct Marketing Rule violations and elevate enforcement risk.

3. Third-Party Ratings: Due Diligence and Disclosure Under the Microscope

The Risk Alert also highlights persistent deficiencies in RIAs’ use of third-party ratings, awards, and rankings, which is a common feature of modern adviser advertisements.

a. Insufficient Due Diligence

Before using a third-party rating, advisers must have a reasonable basis for believing the underlying survey or questionnaire was structured fairly and not designed to produce a predetermined result.

Examiners found that many advisers could not demonstrate this because they:

• Never reviewed the actual questionnaire
• Did not evaluate the rating methodology
• Failed to obtain representations from rating providers
• Lacked policies addressing ratings diligence altogether

b. Disclosure Failures Around Ratings

Even where ratings were otherwise permissible, RIAs frequently failed to provide required disclosures, including:

• The date of the rating and the time period it covered
• The identity of the rating provider
• Whether the adviser paid any compensation in connection with obtaining, using, or promoting the rating

Examiners also flagged advisers who paid for logo usage, enhanced placement, or referral links but failed to disclose those payments alongside the rating. As with testimonials, disclosures were often deemed inadequate because they were hyperlinked, minimized, or separated from the rating itself.

4. Why RIAs Should Take This Alert Seriously Now

This Risk Alert is best understood as a warning shot. It reflects the current Commission’s view that Marketing Rule compliance remains uneven; and that examiners will likely press these issues during examinations. These are not theoretical risks. They are concrete exam observations that lead to enforcement exposure if not addressed.

Firms using testimonials, endorsements, or third-party ratings should treat this Alert as a prompt to reassess their marketing practices, disclosures, agreements, and compliance controls now—before examiners do it for them.