Published on Feb 22nd, 2021 |

On February 22nd, Ignites provided a publication on the Ad Rule and how it may push shops to ban social media.

Professionals are saying that fund shops should develop policies and procedures that clearly define how employees are allowed to use social media.

Pending a regulatory freeze, the updated Ad Rule will allow advisors to use social media and third-party testimonial to promote products and endorse services.

Vigilant’s Director, Justin Dausch, believes limiting employees use of social media will help to avoid entangling the Manager.

He provided his insights on Ignites where he states “A manager and its compliance department would need to make sure they are clear with employees exactly how they are choosing to define that boundary.”

He provided key remarks towards social media revealing “Some firms have already prohibited employees from using all social media except for LinkedIn.” Dausch says. Without company policies, shops could be potentially liable for anything an individual employee or advisor says online, even if said anonymously. Justin also suggested “However, shops that have such policies could be on the hook if a rogue individual willingly violates company rules. Regulators are more likely to go after companies than people because they have deeper pockets and bigger names.”

It is important to note that the Ad Rule also imposes tight requirements around the performance data included in marketing materials. Justin notes that “Under current practice, spoken, impromptu remarks were exempt from the ad rule.”  The new rule extends that exemption to such statements made digitally, such as something spoken during a Facebook live Q&A. However, if transcripts or audio recordings of such statements are published, they will be subject to the ad rule, he notes, because they are no longer impromptu.

Lastly, Justin provides examples of firms hosting Q&A events saying “Recently, firms including Fidelity and Robinhood have hosted open Q&A events on Reddit. Fidelity likely curated which subjects were covered during the two days leading up to the event in order to give their compliance teams an opportunity to monitor the responses to make sure they complied with the ad rule” Dausch says.

Want to learn more about Ignites Article on the Ad Rule and Social Media?

Click HERE to see Ignites Publication.




Interested in Vigilant’s Compliance Solutions and how we can help prepare YOU for the new Ad Rule?

financial charts and graphs


Check out our Compliance Solutions Page below to learn more about what Vigilant has to offer:

  • Compliance Solutions 
    • Investment Adviser
    • Mutual Fund
    • Private Equity
    • Hedge Funds
    • Exchange Traded Funds
    • Broker Dealer