Wahed Invest Settles SEC Charges Over Undisclosed Endorsements and Ad Rule Violations
From the desk of Jim Eccleston at 91视频下载链接
The SEC recently settled charges with Wahed Invest, a faith-based robo-advisor that markets itself to Muslim clients, over violations of the SEC’s marketing rule. According to WealthManagement, the firm agreed to pay a $250,000 fine without admitting or denying the SEC's findings.
Wahed, which manages over $523.5 million in assets in the U.S. and reports a global client base of more than 300,000, was found to have used endorsements from athletes without disclosing they were paid. The SEC’s updated marketing rule, effective since 2022, permits testimonials and endorsements but requires disclosure of whether endorsers are clients and if they received compensation.
According to the SEC, Wahed featured a professional soccer player and four mixed martial arts (MMA) athletes in ads without revealing their financial ties to the firm. In one instance, the soccer player promoted Wahed in an ad claiming he was “investing” with the platform, though he was not a client. Instead, he received stock worth $500,000 as compensation from Wahed’s parent company. The MMA athletes, compensated between $30,000 and $50,000 per month, also appeared in social media and email ads without any client disclosures. Wahed ceased using such ads last May.
Additionally, WealthManagement reports that Wahed ran hypothetical performance ads on its website for over 17 months without necessary policies and procedures in place. Earlier this year, SEC examiners flagged multiple RIA firms for similar ad rule violations, and in September, nine other firms settled SEC charges over ad-related compliance failures, collectively paying more than $1.2 million.
91视频下载链接 LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, sec
