On Monday, the Securities and Exchange Commission released a risk alert providing an update on “upcoming review areas under review” related to its new marketing rule.

As of the November 4th compliance date, investment advisors may no longer elect to comply with the previous advertising and cash solicitation rules, and all advertising after that date will be subject to the marketing rules, according to the alert. Also note that the SEC’s Examining Division has retracted certain staff statements related to the previous rule.

Advisors should consider whether written policies and procedures need to be updated or revised. Investment advisors are also required to “preparate and maintain certain records, such as records of all advertising they disseminate, including certain internal research reports, performance-related information, oral advertisements, testimonials, and written endorsements.” I have.

The risk warning, which has been noted to represent the views of review department staff, states that staff “will undertake a number of specific national initiatives and broad reviews throughout the review process for compliance with marketing regulations. ‘ said. ” This includes but is not limited to the following areas:

Marketing rules policies and procedures

The Alert shall indicate whether the Staff has adopted and implemented written policies and procedures reasonably designed to prevent the Advisor and its supervisors from violating the Advisors Act and the rules under it, including the Marketing Rules. said to confirm.

Demonstration requirements

The staff will consider whether there are reasonable grounds to believe that investment advisors can substantiate material factual statements in their advertisements, Risk Alert said. Our Marketing Rules prohibit ads that:[i]Include a statement of material fact that the advisor has no reasonable grounds to believe that it can be substantiated at the request of the Commission. ”

Performance advertising requirements

The alert also states that staff will also ensure that investment advisors comply with the performance advertising requirements of the Marketing Rules, including prohibitions on advertising from:

  • Gross performance unless net performance is also provided.
  • performance results, unless provided for a specific period of time;
  • Performance results for a subset of investments drawn from a portfolio, unless performance results for the entire portfolio are provided.
  • Assumed performance; and
  • Prior performance unless otherwise disclosed.

books and records

The alert states that the SEC has adopted amendments to the books and records rule and will consider these requirements for compliance. In addition, agents may amend Form ADV to request advisors to provide additional information about their marketing practices, stating: I will remind you ”.

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