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New SEC Guidance on Marketing Rule: Ensuring Compliance in Advertisement and Marketing Material for Investment Advisors 2024
Friday, June 14, 2024

The US Securities and Exchange Commission (SEC) recently released two new sources of guidance for the Marketing Rule. On February 26, the SEC Division of Investment Management released an FAQ clarifying how to include gross and net rates of return in investment advisors’ marketing materials without violating the Marketing Rule.

Further, on April 17, the SEC Division of Examinations (DOE) released a Risk Alert providing new examples of behavior which may violate both the Marketing Rule, as well as marketing-related provisions in the Compliance Rule and the Books and Records Rule.


The Marketing Rule prohibits investment advisors from disseminating inaccurate or misleading advertisements and marketing materials. This rule is supplemented by provisions in the Compliance Rule and the Books and Records Rule. Regarding advertisements and marketing materials, the Compliance Rule requires advisors to maintain a formal internal marketing policy while the Books and Records Rule requires advisors to retain copies of advertisements and other marketing materials.

FAQ – Performance Metrics in Marketing Materials

The SEC’s new FAQ provides guidance on how to present gross and net performance metrics in marketing materials:

  • To provide as clear a picture of performance as possible, any inclusion of a gross rate of return must be accompanied by a net rate of return which was calculated using the same time period and methodology.
  • If providing a net internal rate of return (Net IRR) which includes the impact of fund-level subscription facilities, an advisor must also include either the Net IRR calculated without the subscription facilities or explain how the inclusion of those facilities might impact the perceived performance.

Risk Alert – Marketing Material Creation, Policies, and Records

The Marketing Rule

The Risk Alert prompts investment advisors to include only true information in their marketing materials and to ensure that the materials give a fair and balanced view of the fund’s performance. The following are a selection of problematic behaviors noted by the Risk Alert:

  • It is a potential violation for advisors to claim that acting in the “best interests of clients” sets themselves apart from others, without clarifying that all investment advisors have the same fiduciary duty to their clients.
  • It is a potential violation for advisors to advertise a network of personnel when only a single advisor performs the advertised services.
  • It is a potential violation for advisors to provide market data exclusively from five years prior or earlier, without any recent data for comparison.

The DOE also observed inconsistencies between the information advisors listed in their marketing materials and what those advisors reported on their Form ADVs. In particular, the DOE noted that third-party ratings, performance results, and hypothetical performance results mentioned in advisors’ marketing materials are sometimes not reported accurately on their Form ADVs.

The Compliance Rule

Advisors should maintain a formal internal marketing policy. This policy should:

  • Be specific to the firm’s particular marketing strategy.
  • Address all the various marketing tools that a firm utilizes including websites, social media, and print materials.
  • Be in writing.

The Books and Records Rule

The DOE observed that advisors improperly neglect to retain copies of relevant marketing materials for their records. Advisors should retain copies of the following:

  • Advertisements.
  • Marketing materials.
  • Social media posts.
  • Surveys and/or questionnaires used to obtain third-party ratings which appear in an advisor’s marketing materials.
  • Documentation which supports performance claims included in an advisor’s marketing materials.

Investment advisors should consider both the new FAQ and Risk Alert when creating and storing advertisements and other marketing materials.

ArentFox Schiff attorneys have extensive experience advising clients on SEC compliance, including compliance with the Marketing Rule. Please contact any member of the firm’s Corporate & Securities Group for assistance in navigating these or any other SEC regulations.

Read our previous alerts on the SEC Marketing Rule and Risk Alert:

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