SIE Exam Question 823: Answer and Explanation

Question: 823

Which of the following is correct regarding the SEC's guidance on the "testimonial rule" and social media?

• A. Testimonials were originally addressed in Rule 206(4)-1(a)(1) of the Investment Advisers Act of 1940.
• B. Advisers are allowed to select favorable testimonials to include on their websites only if client names are kept confidential.
• C. Advisers are allowed to select favorable testimonials to include on their websites only if they receive permission from the clients, and they post each client's full name.
• D. None of the above are correct.

Correct Answer: A

Explanation:

Testimonials were originally addressed in Rule 206(4)-1(a)(1) of the Investment Advisers Act of 1940. In general, client testimonials are not permitted to be included on adviser websites and social media.