“Compliance Pro” Amy Lynch on marketing rule FAQs (ThinkAdvisor)

When the SEC’s new Marketing Rule became effective this past November 4th, it put firms on notice that their marketing policies and materials needed to be in compliance with the rule. Now, a recently updated FAQ issued by the regulator describes a rule directive that is potentially problematic for firms striving to be in compliance. With the article’s title reference and in lead comments, FrontLine’s Founder and President Amy Lynch describes the FAQ response on using extracted performance as the first bit of real guidance from the SEC on its Marketing Rule. However, Ms. Lynch explains that according to the SEC’s answer, firms using extracted performance for marketing purposes must show both gross and net for the extracted investments shown and that could be problematic from a practical perspective, especially for private funds. She continues by stating that it becomes problematic in that firms do not already calculate performance on an investment-by-investment basis at the net level, which is not done because fees and expenses are not typically attributed at the investment level. See ThinkAdvisor, “New SEC Marketing Rule FAQ Could be ‘Problematic,’ Compliance Pro Says“