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Five investment advisers have been fined a total of $200,000 by the Securities and Exchange Commission (SEC) for alleged violations of the amended marketing rule

Gea Sphere, based in Rhode Island, agreed to pay a civil penalty of $100,000 for advertising hypothetical performance on its website without implementing policies to ensure relevance to the intended audience's financial situation and investment objectives.


Five investment advisers have been fined a total of $200,000 by the Securities and Exchange Commission (SEC) for alleged violations of the amended marketing rule

Four other firms, including Miami-based Credicorp Capital and Houston-based Monex Asset Management, settled charges by paying reduced penalties. Bradesco Global Advisors and InSight Securities, based in Florida and Illinois respectively, each paid $20,000.

 

Gea Sphere was found to have violated additional SEC rules, including making false and misleading statements in advertisements, advertising misleading model performance, and failing to substantiate performance shown in its advertisements.

 

The firm also allegedly committed recordkeeping and compliance violations, as well as making misleading statements to a client about its performance.

 

COMPANY FORMATION &   DOMICILATION SERVICES

This enforcement action marks the SEC's second sweep on violations of its amended marketing rule, with fines totalling $850,000 against nine firms announced in September. In August, Titan Global Capital Management USA was fined $1 million.

The SEC's amended marketing rule, which had a compliance deadline of November 2022, requires investment advisers to implement policies ensuring compliance with advertising regulations. Gea Sphere, in particular, failed to include necessary policies in its compliance manual, such as requiring approval of marketing materials by the chief compliance officer and conducting an annual review of its compliance program.

All firms settled the charges without admitting or denying the SEC's findings. Gea Sphere did not respond to requests for comment.

By fLEXI tEAM

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