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Advertising Securities With Celebrity Endorsers
Thursday, August 1, 2013

The last two posts have reviewed some of California’s rules governing the advertising of securities in California.  As we look ahead to general solicitations in Rule 506 offerings, some issuers will undoubtedly be tempted to use celebrity endorsers.  If an advertisement contains any endorsement or recommendation of the securities by any public figure, whether express or implied (for example, by the inclusion of such person’s photograph or name in the advertisement), then full disclosure must be made of any compensation or other benefit given or promised by the issuer or any person associated with the issuer to such person, directly or indirectly.  Rule 260.302.  The disclosure must be made in the same document containing the advertisement or, if such advertisement is presented on radio or television, as a part of the same program, without any intermission or other intervening material.

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