Hearsay Updates Tools for SEC Marketing Rule Compliance


Hearsay Systems, a provider of digital client engagement solutions for the financial services industry, is expanding its compliance capabilities to help financial professionals make the most of testimonials and endorsements.

The new functionality is designed to assist advisors and firms in adhering to the U.S. Securities and Exchange Commission’s Modernized Marketing Rule, which goes into effect Nov. 4. Under the Marketing Rule, endorsements and other testimonials written about advisors and shared publicly by the advisor via social media are treated as advertisements.

“It is clear that testimonials and endorsements will become increasingly important to the success of financial advisors,” said Bill Simpson, compliance principal at Hearsay, in a statement. “But complying with the Marketing Rule can feel daunting. Hearsay provides solutions that enable firms to fully leverage testimonials and endorsements while making compliance as efficient and thorough as possible.”

Hearsay upgraded four key components of its programs to support the use of testimonials and endorsements within the Marketing Rule framework. With deployed supervision coverage for LinkedIn Recommendations and Skills and Facebook Reviews and Ratings fields, teams can now use testimonials and endorsements to enhance authenticity and personal branding from the Hearsay platform.

Specifically, Hearsay Social’s new capabilities allow users to capture and supervise the following:

  • The text of LinkedIn inbound recommendations;
  • The text of outbound LinkedIn recommendation requests made by Hearsay users;
  • LinkedIn skills added by Hearsay users that are recorded as part of their Profiles; and
  • Facebook ratings/reviews posted to Hearsay users’ pages, which are recorded as Activities.

Advisors will also be able to attest to any solicitation, conflict, client, and paid status of each testimonial within the Hearsay system, and these attestations will help guide the workflow according to each firm’s specific policies, automatically removing testimonials that don’t adhere. Hearsay will automatically update comments and bios to satisfy SEC rules; custom disclosures set by the compliance administrator will indicate whether the testimonial was solicited, paid for, or constitutes a conflict of interest.



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