January 16, 2026
What happened?
On January 15, 2026, the SEC updated its Marketing Rule FAQ with new guidance for model performance and disqualifying events for compensated promoters giving testimonials or endorsements. Both answers from the SEC Division of Investment Management provide clarity on strict interpretations that can be relaxed if certain facts and circumstances are present.
Use of Model Fees
The first FAQ focuses on footnote 590 of the adopting release of the new Marketing Rule, which reads “If the fee to be charged to the intended audience is anticipated to be higher than the actual fees charged, the adviser must use a model fee that reflects the anticipated fee to be charged in order not to violate the rule’s general prohibitions.” Many in the industry took “must use a model fee” as a clear requirement to use a model fee in such instances.
The new FAQ clarifies that the general prohibitions are intended to provide flexibility and should be applied with consideration of the facts and circumstances of each advertisement. The FAQ goes on to say that the facts and circumstances of a specific advertisement include “relevant disclosures” and that advisers “may use various means to illustrate the effect of differences between actual fees and anticipated fees on performance.” Thus, the staff view is that a model fee is not categorically required by footnote 590. Actual fees can be used so long as the differences between actual and anticipated fees are illustrated and adequately disclosed to the advertisement’s intended audience.
Testimonials and Endorsements – Disqualification for Self-Regulatory Organization Final Orders
The second FAQ also gave an industry-friendly clarification to one type of disqualifying event for promoters based on final orders issued by Self-Regulatory Organizations (“SROs”).
The definition of “disqualifying event” under the Marketing Rule purposely excluded an SEC order or opinion that does not bar, suspend, or prohibit the person subject to the order from acting in any capacity under the federal securities laws as long as the person is in compliance with the terms of the opinion or order, and the advertisement includes certain disclosures about the disciplinary event. This left an open question about whether final orders by an SRO, like FINRA, could be similarly excluded. The FAQ tells us the answer is yes.
The FAQ states that the staff would not recommend enforcement action if an adviser compensates a promoter who the adviser knows, or in the exercise of reasonable care should know, was subject to the entry of a final order by a self-regulatory organization within 10 years prior to the person disseminating an endorsement or testimonial, provided that:
What does this mean for me?
These latest FAQs, like the FAQs published in March, give very welcome answers to difficult applications of the Marketing Rule. However, just like the prior FAQs, these both depend on creating new disclosures. When presenting actual fees that differ from the audience’s anticipated fees, advisers are free to use “various means” to disclose this difference, but those means must be created and presented. For promoters, who are already required to use clear and prominent disclosures for testimonials or endorsements, the FAQ is asking for additional disclosures to be included in the advertisement for 10 years following the date of the SRO’s final order.
Within the last year, the SEC has published a Risk Alert on the Marketing Rule and added four Marketing Rule FAQs. Marketing is clearly on the SEC’s mind. If your compliance program could use the support of marketing reviewers, regulatory experts, compliance testing, or revised policies and procedures, let us know.
