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Sunday, April 14, 2024

New Advertising Rule, AI in SEC Examination Crosshairs


Two examination precedence areas for the Securities and Alternate Fee this 12 months are the company’s new Advertising Rule in addition to advisors’ use of synthetic intelligence, in accordance with Natasha Vij Greiner, deputy director of the SEC’s Division of Examinations.

“You’re going to see us specializing in advertising and marketing in nearly each examination,” Greiner stated Thursday on the Funding Adviser Affiliation’s annual compliance convention, held in Washington. “How do you have a look at a agency with out taking a look at their advertising and marketing supplies?”

Greiner — who was just lately named the brand new director of the Division of Funding Administration, beginning Friday — said that the company additionally continues to do targeted exams relating to the brand new Advertising Rule.

Greiner additionally signaled that the company hopes to share some observations — probably in a danger alert — about what exams have revealed within the final 12 months by way of ”what’s going properly and what’s not” with advertising and marketing rule compliance.

Some companies nonetheless “don’t know that this rule even got here out,” Greiner stated.

The company warned final June in its second Threat Alert associated to Advertising Rule compliance that it was beefing up exams of advisors’ compliance with the rule by zeroing in on testimonials and endorsements, third-party scores and Kind ADV.

The primary Advertising Rule Threat Alert, launched Sept. 19, 2022, warned of different areas that SEC examiners would begin specializing in in exams.

Exams on AI

As to AI, the examination division “is actually targeted on advisors, and all registrants’ use of AI,” Greiner relayed. “By way of exams, we’re taking note of disclosures.”

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