Potomac Law partner Isaac Mamaysky authored an article titled Can Investment Advisers Ask Clients for Online Reviews? The Implications of the SEC's New Marketing Rule that was published in the Fordham Journal of Corporate and Financial Law blog on June 2, 2022.
Using testimonials in investment adviser advertising has been banned for decades prior to the SEC's new investment adviser marketing rule, which amends the Investment Advisers Act of 1940. The SEC was historically concerned about the undue influence that testimonials may have on investors. However, in recent years, online reviews have become an increasingly important component of consumer decision-making. To strike a balance between the value and risk of online reviews to investor decision-making, the SEC has put various safeguards in place to ensure that testimonials and endorsements aren’t misleading. Mamaysky explores the implications of this for investment advisers that use online review platforms like Google My Business.