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Vedder Thinking | Articles SEC Staff Issues Risk Alert on New Investment Adviser Marketing Rule


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On September 19, 2022, the SEC’s Division of Examinations issued a risk alert highlighting the staff’s observations about review areas for upcoming examinations focused on the new investment adviser marketing rule, amended Rule 206(4)-1 under the Investment Advisers Act. The SEC adopted the new marketing rule on December 22, 2020 to provide for a single rule in place of the previous advertising and cash solicitation rules. The new marketing rule has a compliance date of November 4, 2022, meaning that any advertisements disseminated on and after that date are subject to the new rule.

The staff stated that future examinations based on the new marketing rule will focus on, among others things, the following areas:

  • Whether investment advisers have adopted and implemented written policies and procedures reasonably designed to prevent violations of the new marketing rule, including whether policies include objective and testable methods to prevent violations in advertisements. The risk alert noted examples of such methods identified in the adopting release for the new marketing rule, which include internal pre-review and approval of advertisements, a risk-based review of a sample of advertisements and pre-approving templates.
  • Whether advisers have a reasonable basis for believing they can substantiate statements of material fact published in advertisements. In the adopting release for the new marketing rule, the SEC suggested that advisers consider preparing records contemporaneous with any advertising material that substantiate material statements in the advertisement or implement policies and procedures to address the substantiation requirement.
  • Whether advisers comply with performance advertisement requirements and prohibitions on including the following content in advertisements:
  • Gross performance results in the absence of net performance;
  • Performance results that are not provided for specific time periods (not applicable to the performance of private funds);
  • Statements to the effect that the SEC has approved or reviewed calculations or presentations of performance results;
  • If an advertisement includes performance information for portfolios other than the portfolio being advertised, performance results from fewer than all portfolios with investment policies, objectives and strategies substantially similar to those of the portfolio being offered in the advertisement, subject to limited exceptions;
  • Performance results of a subset of investments in a portfolio, unless the advertisement provides, or offers to provide promptly, performance results of the whole portfolio;
  • Hypothetical performance results, unless the adviser adopts and implements policies and procedures to ensure that the performance information is relevant to the likely financial situation and investment objectives of the target audience and the adviser provides certain additional information; and
  • Predecessor performance returns, unless the same personnel responsible for achieving the predecessor performance returns manage accounts at the current adviser and the predecessor accounts previously managed by those personnel are sufficiently similar to the accounts they currently manage. Any advertisements providing predecessor performance returns must clearly and prominently include all relevant disclosures.

The staff will also focus on whether investment advisers are complying with new books and records requirements implemented in connection with the new marketing rule.

The SEC staff encouraged investment advisers to appropriately address modifications to training, supervisory, oversight and compliance programs in accordance with the new marketing rule.

The risk alert is available here.


John S. Marten


Nathaniel Segal


Jacob C. Tiedt