Card Set Information

2012-06-15 16:57:48

Advertising for IAs
Show Answers:

  1. What is the rule for advertising under the USA?
    It is unlawful for any IA to publish, circulate or distribute any advertisement that does not comply with the rules under the IAA of 1940.
  2. How does the SEC define as advertisement?
    • To include any notice, circular, Website, letter, or other written communication addressed to more than one person, or any notice or other announcement in any publication or by radio or television, that offers:
    • any analysis, report, or publication concerning securities;
    • any graph, chart, formula or other device to be used in making any determination concerning securities, or
    • any other investment advisory services with regard to securities.
  3. What types of advertisements are illegal under the IAA 1940?
    • Any testimonials or client endorsements;
    • Any statement that the IA is sponsored, recommended, approved or passed on by the SEC or the Administrator.
    • The use of IAR or IA in business cards
    • Make reference to past, specific, profitable recommendations without adding all the recommendations made by the IA for the preceeding period of no less than 1 year and the statement that past performance is not to be used as a basis for future performance.
    • Represents that any graphs, chart, formula or other device can determine buy and sell strategies without prominently disclosing the limitations and difficulties regarding its use.
    • Represent that a report, analysis or other service has been provided at no charge when the truth is otherwise.
    • Fails to disclose any ownership position in securities being recommended by the IA.