SEC Announces The First Enforcement Action Under The New Marketing Rule

The U.S. Securities and Exchange Commission (the "SEC") announced on August 21, 2023 that it has settled with a FinTech registered investment adviser (the "Adviser") that offers multiple investment strategies, including a crypto strategy, through its mobile app, for more than $1 million to resolve allegations that it, among other things, advertised misleading hypothetical performance projections in its marketing materials. Beginning June 2021, the Adviser elected to comply with the new marketing rule, which became effective on May 4, 2021 but had a compliance date of November 4, 2022. The Adviser's advertisements, which were directed at retail investors and available on its website, were found to be misleading because they lacked material information and "painted a misleading picture of certain of its strategies." The SEC also found that the Adviser failed to adopt and implement policies and procedures regarding hypothetical performance that are required under the