Testimonials and endorsements: the SEC December 2025 risk alert

On 16 December 2025 the SEC Division of Examinations published "Additional Observations Regarding Advisers' Compliance with the Advisers Act Marketing Rule". It covers only paragraph (b) (testimonials and endorsements) and paragraph (c) (third-party ratings) of Rule 206(4)-1; the general prohibitions were the subject of an April 2024 alert. Like all staff statements, it has no legal force, but it shows what examiners look for. Below is what it actually says about testimonials and endorsements, then the rule itself. For ratings, see how to disclose an award.

What did examiners find?

Missing disclosures, most of all. The alert says "the most common observed reason" a testimonial or endorsement was non-compliant was that it did not provide the disclosures at the time it was disseminated. These were often on advisers' websites, including "d/b/a" websites run under supervised persons' trade names.

Arrangements not recognised as endorsements. Staff saw lead-generation firms, social media influencers, adviser referral networks and client refer-a-friend programmes paying de minimis amounts, in some cases without the adviser recognising that the arrangement created a testimonial or endorsement. Some advisers had not updated their written policies; others updated them but did not implement them.

Disclosures not clear and prominent. Examples: missing client or non-client status, compensation or conflicts statements; disclosures behind a hyperlink instead of within the testimonial; and disclosures in smaller or lighter font than the testimonial.

Imported reviews and gift cards. Advisers pulled client testimonials or former client endorsements from third-party websites onto their own sites without disclosing that they came from current or former clients. Others gave clients gift cards to write reviews on third-party sites, without a basis to believe the reviewers made the disclosures required for paid testimonials.

Vague compensation terms. Some advisers gave generic statements, for example that influencers were paid for referrals, without the material terms. The alert points to the adopting release: state a specific cash amount, or the percentage of fees and time period, and the value of non-cash compensation where readily ascertainable.

Undisclosed conflicts. For example, promoters with financial interests in the adviser, or who were principals of firms with sub-advisory or other significant arrangements with it.

Oversight failures. Advisers could not show a reasonable basis for believing the testimonial complied; had no written agreement with promoters paid above the de minimis threshold, or agreements that did not fully describe scope and compensation; and claimed de minimis status because each payment was under $1,000 when the 12-month total exceeded it.

Ineligible persons and affiliates. Advisers paid promoters disqualified by disciplinary history with state securities regulators. Affiliated promoters relied on the (b)(4)(ii) exemption, but the affiliation was disclosed only when the prospect was introduced, not when the testimonial was disseminated.

What does Rule 206(4)-1(b) require?

(b)(1) Disclosures

At the time of dissemination, you (or, under your reasonable belief, the promoter) must disclose clearly and prominently: (A) that the statement is from a current client or investor (testimonial) or from someone else (endorsement); (B) that cash or non-cash compensation was provided, if applicable; and (C) a brief statement of any material conflicts. You must also disclose (ii) the material terms of any compensation arrangement and (iii) a description of material conflicts. The adopting release says clear and prominent means "at least as prominent as the testimonial or endorsement," included within it, and that a hyperlink is not consistent with the standard.

(b)(2) Oversight and written agreement

You need (i) a reasonable basis for believing the testimonial or endorsement complies with the rule, and (ii) a written agreement describing the scope of activities and the terms of compensation. Under (b)(4)(i), unpaid or de minimis testimonials are exempt from (b)(2)(ii) and (b)(3) only. De minimis means $1,000 or less in total, cash or equivalent non-cash value, during the preceding 12 months ((e)(2)).

(b)(3) Disqualification

You may not compensate a promoter you know, or with reasonable care should know, is an "ineligible person" when the testimonial is disseminated. (e)(4) covers disqualifying events in the prior ten years, including state and self-regulatory orders. A 15 January 2026 staff FAQ gives no-action relief where the only problem is a self-regulatory organisation order that did not bar or suspend the person, the person is complying with it, and each advertisement for ten years discloses the order with a copy or link.

When do online reviews become your testimonials?

The adopting release applies "adoption and entanglement" (86 FR 13028 and 13029). Letting anyone post on your page, without editing, does not by itself make comments yours. But if you take affirmative steps to involve yourself in preparing comments, endorse them, or delete negative ones or prioritise positive ones, they are attributed to you. Editing only under a neutral, documented policy (profanity, spam, unlawful content) does not. A widget that shows your five-star reviews on your website is a selection by you, so treat each review as a testimonial or endorsement and disclose client status, compensation and conflicts next to it.

What to keep on file

• A copy of every advertisement containing a testimonial or endorsement (Rule 204-2(a)(11)), including web pages and social posts as shown.
• For each promoter: identity, client status, what was paid and when, a running 12-month total, the written agreement if over $1,000, and your disqualification check with its date.
• The (b)(1)(ii) and (iii) disclosures if they were not in the ad itself, and documentation of your reasonable basis ((a)(15)(i) and (ii)).
• For affiliated promoters relying on (b)(4)(ii), a record of their names and status ((a)(15)(iii)).
• Your review site and comment moderation policy, and evidence you follow it.

Plumb's promoters register records client status, compensation over the last 12 months, the agreement date, conflicts and the disclosure text for each promoter. To see whether your website shows testimonials without the disclosures, run the free website check, and work through the full Marketing Rule checklist. Retention rules are in marketing books and records. This is general information for SEC-registered advisers, not legal advice; state-registered advisers should check their state's rules.