Investment Newsletter Violated Rule Prohibiting Past Specific Recommendations

An investment newsletter publisher agreed to fines and sanctions (including the appointment of an independent compliance consultant) for violating the SEC’s prohibition on advertising past specific recommendations. According to the SEC, the respondents claimed significant success with its recommended options strategy, including 100% successful trades over two years. However, the SEC charges that the respondents failed to include losing options trades that were rolled into new positions to avoid realizing a loss. The respondent also recorded one successful recommendation as several when executed through multiple brokers. The SEC charges that the respondents violated Rule 206(4)-1(a)(5), which prohibits the use of past specific recommendations unless all recommendations made in the prior year are included.