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The legal issue for investment advisers using public commentaries on social media is an SEC rule called “the testimonial rule.”  Although the SEC rules do not define “testimonial,” the staff has consistently interpreted the term to include “a statement of a client’s experience with, or endorsement of, an investment adviser.”   Historically, any such statement on the adviser’s website, blog or social media site would violate the testimonial rule.

Under new guidance, the SEC has said the publication of third-party commentary from an “Independent Social Media Site” would not violate the testimonial rule if three conditions are satisfied:

  1. INDEPENDENCE. The social media site provides content that is independent of the adviser. This condition would not be satisfied if the adviser or its IARs authors submit the commentary that appears on the social media site.
  1. NO MATERIAL CONNECTION. There is no material connection between the adviser and the social media site that would call into question the independence of the social media site. This does not prohibit an adviser from advertising on the social media site, provided it is readily apparent to a reader that: (1) the advertisement is separate from the public commentary featured on the site; and (2) the receipt (or non-receipt) of advertising revenue did not in any way influence which public commentary is included (or excluded) from the site.
  1. FULL DISCLOSURE OF ALL COMMENTS. The adviser must publish all unedited comments appearing on the site regarding the adviser. The publication must be in a content-neutral manner (e.g., chronological, alphabetical, etc.) presenting positive and negative commentary with equal prominence. In other words, the adviser cannot delete or otherwise hide the negative comments.


This newsletter is published as a source of information only for clients and friends of The Securities Law Group and should not be construed as legal advice or opinion on any specific facts or circumstances.  The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship.

The Securities Law Group
James Grand