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SEC Advertising and Marketing Risks as Part of the Marketing Rule

May 1, 2024

On December 22, 2020, the SEC adopted amendments under the Investment Advisers Act of 1940 (“Advisers Act”) that replaced previous advertising and cash solicitation rules with the amended Rule 206(4)-1 (the “Marketing Rule”).  

SEC’s Marketing Rule Background  

The Marketing Rule became effective on May 4, 2021, and the SEC allotted investment advisers an 18-month compliance period, due on November 4, 2022, to implement written policies and procedures to ensure compliance with the Marketing Rule. In connection with the Marketing Rule, amended Rule 204-2 (the “Books and Records Rule”) would require investment advisers to maintain records of all disseminated advertisements. 

In a September 19, 2022 press release, the SEC announced that Marketing Rule examinations would consist of a review of investment advisers’ compliance with the following:  

  • Marketing Rule policies and procedures 
  • Substantial requirements 
  • Performance advertising requirements 
  • Books and Records Rule 
  • Form ADV reporting obligations 

Results of SEC’s Marketing Rule Examinations  

The SEC has since commenced Marketing Rule examinations, and on April 17, 2024, the SEC issued a risk alert sharing its preliminary findings related to investment advisers’ compliance with the Marketing Rule. Through the examination process, the SEC observed the following deficiencies in policies and procedures: 

  • They were not designed or implemented to address compliance with the Marketing Rule 
  • They contained general information 
  • They did not address all marketing channels, such as websites and social media 
  • They were informal, incomplete, and not in writing 
  • They were not tailored to address advisers’ specific advertisements 
  • They did not address the preservation and maintenance of advertisements and related documents 
  • They may have been updated to reflect the Marketing Rule but were not implemented 
  • They failed to maintain documentation of adequate Marketing Rule related books and records 
  • They displayed inaccurate reporting on Form ADV, Part 1A - Item 5.L and Part 2A - Item 14 

Staying Compliant with the Marketing Rule  

It’s crucial for investment advisers to stay compliant with these regulations. Having professional guidance can help you stay compliant and avoid pitfalls. Contact our team below for more information or to get guidance on your specific situation.  

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TaNeka Ray

TaNeka Ray is a Senior Manager in the firm's Global Compliance & Regulatory Solutions Group & and has over 5 years of experience.

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