The SEC’s new Marketing and Advertising Rule for investment advisers will require significant changes at firms. However, there’s some good news: the Rule is intended to bring its original compliance requirements up to speed with modern communications. And with the compliance date for the Rule on November 4th of this year, firms should be taking action now to ensure a smooth transition to the new requirements.
There are several key changes to the Rule:
- The definition of “advertisement” now includes “indirect” communications, such as those produced or distributed by third parties.
- The absolute prohibition on testimonials and endorsements has been rescinded.
- There are now 7 principle-based guidelines, with 2 original guidelines remaining.
- All previous SEC no-action letters related to marketing have been fully rescinded.
- The revised Rule makes it clear that private fund managers are subject to the Rule with specific applications and exemptions.
Here’s where to start to make sure your firm meets the November 4th compliance date:
- Conduct a targeted gap analysis. This will determine where to address updates and revisions based on the new Rule.
- Provide training to key employees. In this way you will educate on crucial changes and avoid missteps.
- Utilize a reputable outside party with expertise in the Advisers Act to assist and support your firm through this transition. This will provide confidence that your firm will be in compliance with the new Rule’s requirements.
The SEC has already issued several rule proposals this year so investment advisers, and especially private fund managers, are now on notice that changes are coming.
Also see these related ComplianceAlerts, previously issued: