A registered investment advisor of New York has agreed to pay the Securities and Exchange Commission for violations of endorsement of professional athletes in advertisements.
The SEC states that Wahed Invest, Inc.’s advertisements throughout popular social media platforms and its own website and email presenting MMA fighters and other athletes contained the necessary disclosures required under the SEC’s Marketing Rule as the firm claimed that it was paid endorsements by individuals not currently affiliated with the firm. The advertising process went on for over 18 months.
The athletes were said to have been receiving $30,000-$35,000 monthly for appearing along marketing campaigns namely: ‘Step into the ring of financial success with Wahed in 2023’. Celebrities present included ex-UFC lightweight champion Khabib Nurmagomedov who has invested in Wahed and acts as a brand ambassador for the firm since announcing his retirement from professional MMA.
The same SEC order also unearths that hypothetical returns were part of advertisements for over seventeen months.
While Wahed did not either accept or reject the findings contained in the order, Wahed agreed to a cease-and-desist order, a reprimand, to undertake to not advertise such hypothetical can produce highs without possessing the necessary policies and procedures and to ensure its advertisements do not violate the Marketing Rule and a civil penalty of $ 250,000.
This is not the first time that Wahed has been spotted by the SEC. It was also accused in 2022 of making false statements and violating its legal obligations and, further, for compliance violations concerning its Shariah advisory operations.
Given that Wahed undertakes to offer Halal investment solutions, endorsements from leaders who embrace Islamic culture and or values are impactful to Wahed ‘s main customer base.
However the firm’s advertising again has not been friendly outside the United States with a recent complaint made to the mayor of London England regarding a subway ad portraying a Muslim cleric although it was considered to be within ad code.
