SEC Adopts Modernized Marketing Rule for Investment Advisers
January 7th | 2021
The SEC recently approved reforms under the Investment Advisers Act to modernize rules that govern investment adviser advertisements and payments to solicitors. The new rule replaces the current advertising rule’s broadly drawn limitations with principles-based provisions designed to accommodate the continual evolution and interplay of technology and advice and includes tailored requirements for certain types of advertisements.
The new rule, for example, will require advisers to standardize certain parts of a performance presentation and includes tailored requirements for certain types of performance presentations. In addition, advertisements that include third-party ratings will be required to include specific disclosures to prevent them from being misleading. The rule also will permit the use of testimonials and endorsements, which include traditional referral and solicitation activity, subject to certain conditions. The SEC has adopted a compliance date that is 18 months after the effective date to give advisers a transition period to comply with the new requirements.
The SEC’s adopting release is almost 500 pages, but the agency’s press release contains a helpful fact sheet that summarizes the highlights.