Atkins SEC Brings Case Involving Marketing Rule Substantiation Requirement

Summary:

• On September 4, 2025, the SEC charged a retail investment adviser with violations arising from website statements and disclosures in its Form ADV Part 2A ⁽¹⁾.
• The case reflects the Atkins Commission openness to continue to utilize the Advertising Rule’s substantiation requirement to pursue technical violations .

Facts:

• Adviser managed approximately $250 million exclusively for retail clients.
• Marketing Rule Violations:
  • The adviser’s website claimed the adviser “refuse[d] all conflicts of interest.”
  • Form ADV Part 2A stated conflicts would be disclosed or mitigated, but the adviser could not substantiate that this was done.
• Books and Records Violations:
  • The adviser failed to retain copies of prior website versions, which was considered advertising, in violation of the Books and Records rule.
• Compliance Program Violations:
  • The adviser lacked policies for retaining historical website content.
  • The adviser’s annual compliance reviews were either missing or insufficiently robust not meeting the standards for annual reviews set forth in its compliance manual.

Takeaways:

• Substantiation Requirement as Enforcement Tool: The case highlights the broad application of the marketing rule’s substantiation requirement. While this tool has been used before, it is notable that it’s now been used again by the Atkins Commission, who many expected to more narrowly apply current regulations. Firms should allocate resources toward testing substantiation claims proactively.
• Websites as Advertisements: This matter highlights the SEC’s view that websites may constitute “advertising” under the marketing rule. While not conclusively settled, the case demonstrates that the Commission will, under certain circumstances, treat website content as advertising subject to retention requirements in the SEC’s books and records rule.
• Annual Reviews: The SEC charged the adviser not only with failing to conduct an annual review, but also with conducting one the Commission deemed insufficiently rigorous because it did not conform with the standards set forth in the adviser’s compliance manual. This enforcement posture reflects a surprisingly aggressive approach, in which the SEC scrutinizes even the quality and depth of compliance efforts and is willing to pursue charges where it can make the case that the annual compliance review was insufficient. 
• Compliance Manuals: “Less is More”: The SEC relied in part on the adviser’s own compliance manual, which imposed obligations not strictly required by the Compliance Rule. This underscores the risk of overly expansive compliance policies: when requirements are not met, they may become the basis for enforcement. Firms should draft policies that are clear, practical, and capable of consistent implementation.

_{(1) In the Matter of Meridian Financial, LLC}