SEC Fines Investment Advisers for Marketing Rule Violations

The Securities and Exchange Commission (SEC) has announced the conclusion of investigations into five registered investment advisers, resulting in settled charges for violations of marketing rules. Each of the firms implicated has agreed to settle with the SEC and collectively pay $200,000 in penalties.

The five advisory firms involved in the settlement are GeaSphere LLC, Bradesco Global Advisors Inc., Credicorp Capital Advisors LLC, InSight Securities Inc., and Monex Asset Management Inc.

According to the SEC's findings, all five firms were found to have advertised hypothetical performance data to the general public on their respective websites. However, they failed to implement adequate policies and procedures to ensure that the hypothetical performance presented was relevant to the financial situations and investment objectives of the intended audience, as mandated by the Marketing Rule.

Bradesco, Credicorp, InSight, and Monex received mitigated penalties due to proactive corrective measures taken prior to contact by SEC staff.

In the case of GeaSphere, the SEC's order outlined additional regulatory infractions. These included making false and misleading statements in advertisements, promoting misleading model performance, inability to substantiate advertised performance, and failure to enter written agreements with compensated endorsers. Moreover, GeaSphere was cited for record-keeping and compliance violations, as well as including misleading performance data in a registered investment company client's prospectus filed with the Commission.

Corey Schuster, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, emphasized the critical role of the Marketing Rule in safeguarding investors from misleading claims. Schuster underscored the SEC's commitment to enforcing compliance and highlighted the benefits for firms that proactively rectify issues before SEC intervention.

In settling the charges, none of the firms admitted or denied the SEC's findings. However, they consented to the entry of orders acknowledging violations of the Investment Advisers Act of 1940. The orders require the firms to be censured, cease and desist from further violations, and comply with specified undertakings.

GeaSphere agreed to a civil penalty of $100,000, while Bradesco, Credicorp, InSight, and Monex agreed to civil penalties ranging from $20,000 to $30,000. These penalties reflect the corrective actions undertaken by each firm before engagement with the Commission staff.

This enforcement action represents the second wave of cases stemming from an ongoing targeted sweep addressing Marketing Rule violations. Previously, the SEC charged nine advisory firms in September 2023 as part of this initiative.

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