Promotion and Disclosure Rules
Anyone paid to promote a security must disclose it. The rule is old, it applies on social platforms, and the disclosure is usually present and unread.
MadStockAlerts Research · Updated August 29, 2026
What to take away
- Paid promotion of a security requires disclosure of who paid and how much.
- The obligation applies regardless of the medium, including social platforms.
- Testimonial and endorsement rules also apply to advisers, with their own conditions.
- Performance claims are subject to presentation rules that constrain what can be shown.
- The disclosure is usually in the material; finding it is a reading habit.
MAD Academy Training Video · 0:45
Paid Promotion Has to Say So
Anyone paid to promote a security must disclose it, and that disclosure is usually present, in small print, at the bottom.
This lesson is part of a Stock Alerts + Tools plan.
The touting provision
Section 17(b) of the Securities Act makes it unlawful to publish material describing a security for compensation without fully disclosing that compensation, who provided it and how much it was. The provision dates from 1933 and applies to any medium.
The disclosure requirement is specific rather than general. A statement that the author may hold positions is not sufficient where compensation was received; the amount and the source are part of what must be disclosed.
Because compliance is common, the practical consequence for a reader is a habit rather than a judgement: scroll to the end of any promotional material and read the disclosure. It is frequently there and it frequently says exactly what it should.
- 1Read the claim
- 2Scroll to the endThe disclosure is conventionally in small print there
- 3Was compensation receivedThe provision requires the source and the amount
- 4Read the claim againKnowing who paid for it
Where the rules reach
| Situation | Requirement |
|---|---|
| A paid article or newsletter mention | Full disclosure of compensation under the touting provision |
| A social media post promoting a security for payment | The same provision applies; the medium is irrelevant |
| An adviser using a client testimonial | Permitted under conditions, including disclosure of compensation and conflicts |
| A firm presenting past performance | Subject to presentation rules on periods, fees and comparability |
| An issuer's own promotional material | Subject to the antifraud provisions regardless of format |
The third row changed in recent years, with testimonials permitted for advisers under a modernised rule rather than prohibited outright. The conditions attached are substantive and include disclosing whether the person was compensated.
How performance may be presented
- Presentations of performance are constrained in what periods must be shown, so that a favourable window cannot be presented alone.
- Net-of-fee figures are generally required alongside gross ones, since a gross figure is not what anyone received.
- Hypothetical and backtested performance carries additional conditions and disclosures.
- Cherry-picked selections of profitable recommendations are addressed directly by the rules.
These rules apply to registered firms. Material from an unregistered source is subject to the antifraud provisions and not to the presentation rules, which is one more consequence of the registration question.
How this applies to what you read here
It is worth stating our own position in the same terms. Everything in this library is educational analysis rather than financial advice, none of it is a recommendation to buy or sell any security, and no part of it is compensated by any issuer.
The general reading habit is the useful part: for any material about a specific security, from any source, the questions are who wrote it, who paid for it, and what they hold. Where those answers are not available, that absence is itself the finding.
Reading a performance claim
Wherever performance is presented, a small number of questions determine whether the figures mean anything. They are the same questions the alert performance article asks, applied to material from any source.
| Question | What a weak answer looks like |
|---|---|
| Over what period | A window that starts at a convenient low |
| Gross or net of fees | Gross, with the fee mentioned separately |
| Actual or hypothetical | Backtested results presented alongside real ones |
| All recommendations, or a selection | Highlights, with no total count |
| Are costs included | No mention of spread or commission |
| Who is presenting it | An unregistered source, outside the presentation rules |
The fourth row is the most diagnostic. A record without a denominator is not a record, and a presentation of selected results is a selection rather than a measurement, however accurate each individual figure is.