SEC Adopts New Marketing Rule For Investment Advisors

SEC Adopts New Marketing Rule For Investment Advisors

practice and relevant jurisdictions


On December 22, 2020, the US Securities and Exchange Commission (SEC) harmonized regulations governing advertising and attorney fees by investment advisers. The changes combined the previous advertising and fundraising rules into a single rule called the marketing rule.

According to the SEC, this approach is designed to balance the Commission's goal of protecting investors from misleading advertising and inducements while also taking into account existing marketing practices and their subsequent evolution.

It is important to note that the date for compliance with marketing norms is November 4, 2022. Any advertisement placed after the eligibility date is subject to this rule.

The marketing rules prohibit advertising that "contains a statement of material facts which counsel had a reasonable basis to believe the commission could prove if necessary." Any material and factual statements made by investment advisers to investors or potential investors require a reasonable basis for such statements. This reason must be parallel in use.

The marketing rules have several changes to the previous rules:

  • Definition of advertisement. The new rules will cover investment advisers' marketing of securities investment advisory services, while maintaining existing exemptions for individual communications (except for compensation reports and other special categories).

  • Re-evaluate. Consultant advertising may include testimonials, but some promotions are subject to disclosure, consultant oversight and compliance requirements, including written contracts and sometimes disqualification clauses.

  • Consultant approval. The new rules would not require investment advisers to review and approve advertisements before distribution.

  • Notice of performance. Performance advertising requires net performance information to be provided when gross performance is displayed. Certain conditions will also apply to related performance, omitted performance, presumptive performance and prior performance claims.

  • Form ADV. Amendments to the investment adviser's Form ADV must comply with the new rules

Advisers should review their written policies and procedures to ensure they comply with the new rules and are reasonably designed to prevent violations of the new rules.

© 2022 ArentFox Schiff LLP National Law Review, Volume XII, Number 311

The possibility of the SEC implementing new marketing rules

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