Cases still emerging from prior cash solicitation rule (ThinkAdvisor)

The SEC charged an investment adviser under the former cash solicitation rule for failing to provide required disclosures and documentation. Although the old cash solicitation rule was weaved into the new Marketing Rule, other cases based on the old rule are still in the pipeline at the SEC, explains Amy Lynch, FrontLine’s Founder and President. The recent case against Fundrise Advisors involved violations of the rule that resulted from the firm paying social media influencers and online publishers to solicit clients. Ms. Lynch states that the SEC would be looking to resolve the other cases as well since the old rule, Rule 206(4)-3, no longer exists. She adds that under the new Marketing Rule, the cash solicitation requirements have been rephrased as promoter arrangements, now putting the direct disclosure obligation on the promoter itself, but the adviser must still ensure the promoter is making the required disclosures to the prospect. See ThinkAdvisor, “SEC Fines RIA for Paying Social Media Influencers to Solicit Clients”