Series 63: C.4 Testimonials And Endorsements

C.4 Testimonials and Endorsements

The Marketing Rule gives more flexibility for testimonials and endorsements, while still mandating certain requirements. These requirements are largely to regulate the activities of paid solicitors of investment advisers and placement agents of private funds. The Marketing Rule calls anyone who receives compensation for delivering a testimonial or an endorsement a promoter.

A testimonial is a paid statement made by a current or former client that describes the individual’s experience with the firm, to either promote the firm or solicit someone to be a client of the firm.

An endorsement is a statement made by someone other than a current client or private fund investor in favor of the investment adviser, either by indicating support of the IA or soliciting or referring someone to become a client of the IA. Thus, an endorsement is like a testimonial, but it is made by someone who is not a client, and it supports or recommends the firm or a representative of the firm.

When an investment adviser, or someone on the adviser’s behalf, sends out a testimonial or endorsement, it must include a disclosure sta