SEC Cracks Down on Investment Advisers for Marketing Rule Violations

The SEC has cracked down on nine registered investment advisers for flouting its Marketing Rule, a regulation meant to keep financial promotions honest and transparent. These firms, which made misleading claims, used questionable endorsements, and published third-party ratings without proper disclosures, will collectively pay $1.24 million in penalties.

The firms penalized in the SEC’s sweep include:

• Abacus Planning Group Inc.: $150,000
• AZ Apice Capital Management LLC: $70,000
• Beta Wealth Group, Inc.: $80,000
• Droms Strauss Advisors Inc.: $85,000
• Howard Bailey Securities LLC: $90,000
• Integrated Advisors Network LLC: $325,000
• Professional Financial Strategies Inc.: $60,000
• Richard Bernstein Advisors LLC: $295,000
• TS Bank d/b/a Callahan Financial Planning: $85,000

These firms didn’t just blur the lines of compliance—they bulldozed through them. Abacus Planning Group and Callahan Financial, for instance, were called out for publishing misleading third-party ratings, while Callahan took it a step further by falsely claiming membership in an organization that simply doesn’t exist.

Several advisers, including AZ Apice, Droms Strauss, Integrated Advisors, and Callahan Financial, made unsubstantiated claims about offering conflict-free advice—a major red flag according to the SEC, which requires clear evidence for such assertions. Beta Wealth, meanwhile, touted an unverified award for one of its principals, and Howard Bailey misled investors by promoting fake testimonials and endorsements without revealing the financial incentives behind them.

Some firms, including Abacus, Beta Wealth, Professional Financial, and Richard Bernstein Advisors, were cited for using outdated third-party ratings in their ads, without providing critical context like the age of those ratings or the time periods they covered. This lack of transparency is precisely the kind of behavior the SEC’s Marketing Rule seeks to curb.

SEC's Message: No More Deception

Corey Schuster, Co-Chief of the SEC’s Asset Management Unit, didn’t mince words: “The Marketing Rule’s provisions are there to protect investors from deceptive practices. These violations undermined that trust. Investment advisers need to comply, and we will continue to hold them accountable when they don’t.”

The nine firms in question, without admitting or denying the findings, agreed to cease-and-desist orders, censures, and hefty fines. They’ve also committed to corrective actions to ensure compliance moving forward.

This sweep is just the latest example of the SEC’s intensified focus on ensuring compliance with the Investment Advisers Act of 1940. The goal? Leveling the playing field for investors by weeding out firms that embellish their achievements or conceal important details.

In an industry where trust is paramount, financial advisers can’t afford to cut corners on compliance. The SEC's increasing scrutiny of marketing practices signals a warning: those who mislead investors can expect severe repercussions. With regulatory oversight tightening, investment advisers must review their marketing materials closely, ensuring they reflect both the letter and spirit of the law—or risk costly consequences.

In the evolving financial landscape, this action stands as a stark reminder that bending the truth in advertisements could not only cost firms financially but also erode the trust that is the bedrock of their business.

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