SEC To Allow “Yelp-Type” Investor Reviews In Promotional Materials

SEC To Allow “Yelp-Type” Investor Reviews In Promotional Materials
By U.S. Government [Public domain], via Wikimedia Commons, a website that allows consumers to write reviews of various financial products, will soon be allowing “Yelp-type” reviews of financial advisors on their web site.

SEC: Investors “unmuzzled”

The Securities and Exchange Commission (SEC), in an Investment Management Guidance Update last week, said financial advisors can feature investor comments in their promotional materials and on web sites such as WalletHub. “The directive effectively serves to unmuzzle consumers, allowing community-based learning to promote improved financial decision-making,” the site said in a statement.

21st Century Investing with The Investment Integration Project’s William Burckart

Yarra Square Investing Greenhaven Road CapitalValueWalk's Raul Panganiban interviews William Burckart, The Investment Integration Project’s President and COO, and discuss his recent book that he co-authored, “21st Century Investing: Redirecting Financial Strategies to Drive System Change”. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors.

“The SEC’s recent guidance represents a major breakthrough for consumers,” said WalletHub CEO Odysseas Papadimitriou, a former Capital One senior director. “We are now free to compare the professionals who manage our money with the same level of discerning and transparency that has long been available in other segments of the retail market – from restaurants to consumer electronics.”

Difficult for unscrupulous financial advisors to operate in the shadows

Saying the new rules would make it more difficult for unscrupulous financial advisors to operate in the shadows, Papadimitriou said “the unscrupulous segment of the industry is out in the open, vulnerable, while the effective and honest professionals can move freely amongst consumers.”

“We understand that use of social media has increased the demand by consumers for independent, third-party commentary or review of any manner of service providers, including investment advisers,” the SEC said in the Guidance Update. “We recognize that social media has facilitated consumers’ ability to research and conduct their own due diligence on current or prospective ser­vice providers. Through this guidance, we seek to clarify application of the testimonial rule as it relates to the dissemination of genuine third-party commentary that could be useful to consumers.”

Policing of comments

The SEC indicated that endorsements must not be influenced by the financial advisor, but did not indicate how this issue would be policed.  Yelp has significant problems with restaurant and store owners posting positive reviews of their own service under a false identity, as well as posting negative reviews of their competition.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)

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