1. Introduction
Experience.com is committed to ensuring that all reviews collected and displayed for financial advisors comply with the SEC’s Marketing Rule, effective May 4th, 2021, under the Investment Advisers Act of 1940. This policy outlines the rules, monitoring systems, and compliance controls in place to safeguard the integrity of the review process and ensure compliance with SEC regulations.
2. Compliance with SEC Marketing Rule
2.1 Use of Testimonials and Endorsements
- Disclosures : All testimonials and endorsements must include clear and prominent disclosures, indicating whether the reviewer is a current client.
- Visibility : Disclosures are designed to be easily understood and cannot be overlooked by users.
2.2 Prohibition of Payment for Reviews
- No Compensation : Advisors are strictly prohibited from compensating clients in exchange for reviews, endorsements, or testimonials. This prohibition aligns with the SEC’s Marketing Rule under the Investment Advisers Act of 1940, which aims to prevent misleading advertisements. Compensated reviews can create a false impression of the Advisor’s services and are therefore not allowed on our platform.
- Regulatory Background : The SEC’s Marketing Rule (Rule 206(4)-1) under the Investment Advisers Act of 1940 outlines that testimonials and endorsements used in advertisements must not be misleading. Compensation for reviews, even with disclosure, can be considered misleading and is therefore prohibited to ensure the authenticity of client feedback.
- Monitoring : Our platform actively monitors for any indications of compensated reviews. Any review found to violate this rule will be promptly removed, and appropriate action will be taken against the Advisor.
2.3 Third-Party Ratings
- Fairness : Third-party ratings used in advertisements must be based on a fair process. Clear disclosures about the rating criteria are mandatory.
2.4 Representative Sampling
- Broad Surveying : Advisors must survey a representative sample of clients. Selective surveying of only satisfied clients is prohibited and monitored for compliance.
3. Monitoring and Compliance Controls
3.1 PII Detection and Redaction
- Automatic Detection : Automated tools detect and redact personal identifiable information (PII) from reviews, ensuring privacy compliance.
- Manual Review : Flagged reviews are manually reviewed by our Compliance team before posting.
3.2 Personalized Surveys
- Survey Design : Surveys are designed to gather balanced feedback. Non-compliant reviews are automatically withheld until they meet the required standards.
3.3 Escalation Workflows
- Flagging and Escalation : Non-compliant reviews are escalated to our Compliance team for review and must meet regulatory standards before publication.
3.4 Non-Compensated Reviews
- Audit Trails : All review-related activities, including submissions, edits, and removals, are logged, creating an audit trail to ensure compliance with SEC regulations. These records are maintained in accordance with SEC requirements to provide transparency and accountability in the review process.
3.5 Monitoring for Selective Surveying
- Pattern Analysis : Our system monitors for selective surveying patterns and triggers investigations if such behavior is detected.
4. Record-Keeping and Reporting
- Review Records : Detailed records of all reviews, including those flagged or removed, are maintained in accordance with SEC requirements.
- Audit Reports : Regular audits ensure compliance with this policy.
5. Compliance Training
- Advisor Training : We provide training to Advisors on the SEC Marketing Rule and the platform’s compliance requirements.
- Internal Training : The Compliance team receives ongoing training on regulatory updates and best practices.
6. Violation of Policy
- Consequences : Non-compliance may result in the removal of reviews, suspension from the platform, and possible reporting to authorities.
- Review Removal : Non-compliant reviews are removed immediately, with notification to the Advisor.
7. Conclusion
Experience.com is committed to maintaining the integrity of the review process for Financial Advisors. By adhering to the SEC’s Marketing Rule and implementing robust compliance controls, we ensure that reviews on our platform are accurate, fair, and fully compliant with regulatory standards.