SEC Charges 9 More Firms With Marketing Rule Violations


The Securities and Exchange Commission announced more charges Monday related to its ongoing sweep of advisory firms’ compliance with the new marketing rule.

The SEC said it charged nine registered investment advisors “for advertising hypothetical performance to the general public on their websites without adopting and/or implementing policies and procedures required by the Marketing Rule.”

All nine firms have agreed to settle the SEC’s charges and to pay $850,000 in combined penalties.

The firms, according to the SEC, are:

  • Banorte Asset Management Inc.

  • BTS Asset Management Inc.

  • Elm Partners Management LLC

  • Hansen and Associates Financial Group Inc.

  • Linden Thomas Advisory Services LLC

  • Macroclimate LLC

  • McElhenny Sheffield Capital Management LLC

  • MRA Advisory Group

  • Trowbridge Capital Partners LLC

“Because of their attention-grabbing power, hypothetical performance advertisements may present an elevated risk for prospective investors whose likely financial situation and investment objectives don’t match the advertised investment strategy,” said Gurbir Grewal, director of the SEC’s Division of Enforcement, on Monday in a statement.

“It is therefore crucial that investment advisers implement policies and procedures to ensure their compliance with the rule. Until that is the case, we will remain vigilant and continue our ongoing sweep to ensure that investment advisers comply with the Marketing Rule, including the requirements for hypothetical performance advertisements.”

The SEC’s orders find that “each of the charged firms advertised hypothetical performance to mass audiences on their websites without having the required policies and procedures,” the agency said. “In addition, two of the advisers, Macroclimate LLC and MRA Advisory Group, failed to maintain required copies of their advertisements.”

The SEC levied its first action enforcing the new marketing rule on Aug. 21, when it ordered Titan Global Capital Management USA LLC, a New York-based fintech RIA, to pay more than $1 million for using hypothetical performance metrics in advertisements that were misleading, among other violations.

Without admitting or denying the SEC’s findings, the charged firms agreed to be censured, cease and desist from violating the charged provisions, comply with undertakings not to advertise hypothetical performance without having the requisite policies and procedures, and pay civil penalties ranging from $50,000 to $175,000.