In it’s prohibition against fraud, deceit and manipulation, Section 206 of the Investment Advisers Act is strict. There is no requirement of intent. You can argue that you didn’t mean to mean to commit fraud. That may affect whether you get referred to enforcement instead of merely getting hit with a deficiency letter or an injunction.
Under common law there us generally some requirement of intent. That is not so true under securities laws.
In SEC v. Capital Gains Research, Inc. 375 U.S. 180 (1963) (.pdf 16 pages), the Supreme Court allowed an injunction without a finding of intent to commit fraud.
The foregoing analysis of the judicial treatment of common-law fraud reinforces our conclusion that Congress, in empowering the courts to enjoin any practice which operates “as a fraud or deceit” upon a client, did not intend to require proof of intent to injure and actual injury to the client. Congress intended the Investment Advisers Act of 1940 to be construed like other securities legislation “enacted for the purpose of avoiding frauds,” not technically and restrictively, but flexibly to effectuate its remedial purposes.
The limitations in Rule 206(4)-1 on investment adviser advertising approach the communication from the view of a client or prospective client, not the adviser. The limitations are designed to prevent an adviser from doing things that could be perceived as fraudulent even if the adviser is acting with good intent.
The use of testimonials and ratings are an example of this. More on that subject later.