Robo Falsely Compared Performance with Other Robos
The SEC fined and censured a now-defunct robo-adviser for disseminating misleading marketing information that purported to show outperformance versus competitors. The SEC asserts that the respondent understated the performance of competitor robo-advisers by using only publicly available information and failing to account for actual weightings. The SEC faults the firm for publishing information without the documents or data to support its performance claims. The SEC also maintains that the firm inflated its own performance by cherry-picking certain clients and time periods. The SEC faults the firm for failing to have policies and procedures requiring the review of marketing materials in part because the Chief Compliance Officer was not aware that social media posts constituted marketing materials under the Advisers Act.
We hate (HATE!) the concept of using a competitor’s name and/or information in marketing and advertising. You are inviting your competitor to prove you wrong and thereby call you out on a regulatory violation.