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RULE §116.15 Advertising Restrictions

Published: 2015

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The antifraud provisions of the Texas Securities Act prohibit an investment
adviser from using any advertisement that contains any untrue statement of
material fact or that is otherwise misleading. The prohibition would include
any notice, circular, letter, or other written communication addressed to
more than one person, or any notice or other announcement in any publication
or by radio, television, Internet, the World Wide Web, or similar proprietary
or common carrier electronic systems, that offers any service as an investment
  (1) Specifically, an advertisement of a registered investment
adviser may not:
    (A) use or refer to testimonials (including any statement of
a client's experience or endorsement);
    (B) refer to past, specific recommendations made by an investment
adviser that were profitable, unless the advertisement sets out a list of
all recommendations made by the investment adviser within the preceding period
of not less than one year, and complies with paragraph (2) of this subsection;

    (C) represent that any graph, chart, formula, or other device
can, in and of itself, be used to determine which securities to buy or sell,
or when to buy or sell securities, or assist persons in making those decisions,
unless the advertising prominently discloses the limitations thereof and the
difficulties regarding its use; and
    (D) represent that any report, analysis, or other service will
be provided without charge unless the report, analysis, or other service will
be provided without any obligation whatsoever.
  (2) A registered investment adviser may advertise its past
performance (both actual performance and hypothetical or model results) only
if the advertisement discloses all material facts necessary to avoid any unwarranted
inference. An investment adviser may not advertise its performance data if
the advertisement:
    (A) fails to disclose the effect of material market or economic
conditions on the results advertised;
    (B) fails to disclose whether and to what extent the advertised
results reflect the reinvestment of dividends or other earnings;
    (C) suggests or makes claims about the potential for profit
without disclosing the potential for loss; or
    (D) omits any of the facts material to the performance figures.

  (3) In addition, generally a registered investment adviser
may not advertise gross performance data (i.e., performance data that does
not reflect the deduction of various fees, commissions, and expenses that
a client would pay) unless the investment adviser also includes net performance
information in an equally prominent manner.

Source Note: The provisions of this §116.15 adopted to be effective August 12, 2001, 26 TexReg 5799; amended to be effective November 26, 2001, 26 TexReg 9582