Host Testimonial Radio Ads Draw SEC Fine For Investment Firm

Ads Cause SEC Trouble

The SEC has issued a Cease-and-Desist Order against investment firm CREATIVE PLANNING, INC. and its President PETER A. MALLOUK and has settled with the parties over running radio ads with prohibited host testimonials, as well as record keeping and policy violations.  CPI and MALLOUK are paying $200,000 and $50,000, respectively, to settle the matter.

The ads, which the KANSAS CITY STAR identified as airing on ENTERCOM News-Talk KMBZ-F/KANSAS CITY, were live spots during 2016-17 in which the host, a client of CPI, gave testimonials about his experiences with the company; a pre-recorded spot, also with the host's testimonials, was created in MARCH 2017 and aired through OCTOBER of that year. 

The order notes that "no one at CPI told the radio station or the radio host that they could not air testimonials in radio advertisements for CPI, and CPI did not listen to, monitor, or obtain copies of any of the live spots that the radio station aired for CPI."  In addition, the order states that "The radio station never provided CPI with recordings of any of the live spots, and CPI never followed up to obtain them. In FEBRUARY 2016, the radio station offered to provide CPI with transcripts of some of the live spots, but CPI declined the offer."

MALLOUK wrote a column at RIABIZ.COM about his experience with the radio ads and settlement with the SEC, explaining how the radio ads ended up costing the company and how it changed the way he approaches advertising.  Read his piece here. Neither ENTERCOM nor KMBZ were cited by the SEC for the violations.

« see more Net News