The Securities and Exchange Commission has charged three advisers for violating the testimonial rule by promoting their business on Yelp.
According to separate SEC filings, Jaime Biel, William Greenfield and Brian Eyster hired Leonard Schwartz, the owner and president of marketing consultancy firm Create Your Fate, for a service Mr. Schwartz calls Squeaky Clean Reputation.
The service contacts an investment adviser's clients and asks them to post testimonials on the investment adviser's behalf to Yelp.com and other social media websites. The SEC's testimonial rule prohibits RIAs from publishing, circulating or distributing any advertisement that refers to any testimonial concerning the investment adviser.
Each were fined $10,000 and agreed to a cease-and-desist order. The SEC also fined Mr. Biel's registered investment adviser firm, HBA Advisors, $15,000.
Mr. Greenfield is the owner and president of WealthBridge Advisory Services and is a registered representative of TFS Securities, a dually registered investment adviser and broker-dealer.
Mr. Eyster is an adviser with O.N. Investment Management Company and a registered rep of O.N. Equity Sales Co. Both are affiliated with Ohio National Financial Services.
Mr. Schwartz, who goes by "Dr. Len," will pay civil penalties of $35,000 and also agreed to a cease-and-desist order.
YOUTUBE HOT WATER, TOO
In another case, Romano Brothers & Company, an Illinois-based RIA, was fined $15,000 for creating a 31-minute-long YouTube video that featured testimonials from 27 clients. The video was published on Romano Brothers' public website and YouTube.com, and was shown to guests at a party celebrating the firm's 50th anniversary. Romano Brothers had commissioned a shorter version of the video to use for marketing.
The firm also was censured and must cease and desist from future violations.