The distribution rule applies to any investment adviser who is or must be registered with the Commission under section 203 of the Act and who directly or indirectly broadcasts an advertisement. The marketing rule allows you to include performance information in an ad if certain conditions are met. The marketing rule prohibits inclusion in an advertisement: what is the definition of advertising according to the marketing rule? On December 22, 2020, the Securities and Exchange Commission (the “Commission”) passed amendments under the Investment Advisers Act of 1940 (the “Advisers Act” or the “Act”) to update the rules governing the marketing of investment advisers. The amendments create a single rule (the “marketing rule”) to replace the current rules on advertising and cash advertising, namely Rule 206(4) to (1) and Rule 206(4) to (3) respectively. These changes reflect market and regulatory changes since the introduction of the advertising rule in 1961 and the adoption of the species regulations in 1979. The marketing rule aims to regulate consultants` marketing communication in a comprehensive and effective manner. The Board also adopted corresponding amendments to Rule 204-2, the books and records rule, and to Form ADV, the Investment Advisor Registration Form. The Marketing Rule and amendments to the Books and Records Rule and Form ADV will come into effect on May 4, 2021. The Commission set the compliance date of 4 November 2022 (eighteen months after the date of entry into force) in order to give consultants sufficient time to comply with the provisions of the amended rules and form. Advisors may begin to comply with the marketing rule at any time from the effective date. Under the new marketing rule, the SEC will operate on a clean slate and withdraw any arbitrary directive issued since the original publicity rule as a stopgap. The regulator recognizes that “this amended rule replaces an outdated and unequal regime that advisors have relied on for decades.” This is a major overhaul, which is why companies have 18 months to comply.
The new marketing rule has broadened the definition of advertising and allows marketing through new channels. It also requires better disclosure to clients, particularly with respect to performance, and will have a significant impact on compliance with advertising and cash solicitations for investment advisors who are or must be registered with the SEC. Tuesday, 22. In December 2020, the Commission announced that it had completed reforms to modernise the rules governing the recruitment of investment advisers and the remuneration of lawyers under the Investment Advisers Act 1940. None of these regulations has changed much since it was passed more than forty years ago. The SEC has explicitly included private fund investor disclosures (as defined in the Advisers Act) in both pillars of advertising under the marketing rule. The SEC noted that this “provides more precision (and certainty) regarding what we believe to be false or misleading statements that advisors should avoid in their advertising.” The SEC said the general prohibitions in the marketing rule “will provide advisors with a principles-based framework for evaluating advertising to private funds and provide more clarity on marketing practices that may be misleading in relation to the anti-fraud provisions of the law.” RIAs should ensure that their social media policies provide for pre-approval of managers and other staff, where warranted, and provide warnings that these individuals can use for communications that the SEC would likely consider advertising under the new marketing rule and the RIA. The Commission`s Investment Management Service is pleased to answer questions from small businesses regarding Rule 206(4)-1.
You can IMOCC@sec.gov send a question by email. In addition, you may contact the Office of the Chief Counsel of the Investment Management Division at (202) 551-6825. Amended Rule 204-2 contains record-keeping requirements related to the marketing rule. Investment advisors must make and retain copies of all advertisements that they distribute directly or indirectly. Some alternative methods of meeting this requirement are available for oral advertising, including oral certificates and spoken mentions. The amended rule also includes specific requirements for the creation and retention of records related to third-party performance information, testimonials, endorsements and evaluations. [1] This guide has been prepared by staff of the U.S. Securities and Exchange Commission as the Small Entity Compliance Guide pursuant to Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended. The guide summarizes and explains changes to rules and forms adopted by the Commission, but does not replace any rule or form itself. Only the rule or form itself can provide complete and definitive information about their requirements. Rule for books and registers.
The SEC also passed amendments to Rule 204-2 of the Advisers Act (“Books and Records Rule”), which requires investment advisers to create and maintain certain records of all advertisements they distribute, with certain provisions to comply with this provision in the case of spoken word advertising. As more diversified disclosures now fall within the definition of advertising, the SEC has “made related changes to .. Books and registers reign. RIAs must archive and record all the advertisements they distribute, which now includes emails, websites, social media profiles, and an ever-growing list of platforms. It`s important to note that ads are now defined by the message they contain, as opposed to how they are delivered to ensure that the SEC doesn`t continually catch up with its legislative backlog as digital channels continue to spread.
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