SEC Continues to Update Rules for Investment Adviser Marketing

Investment adviser marketing has taken another step into the present now that the SEC has announced it is withdrawing or modifying over 200 staff letters and guidance statements related to the decades-old IA Advertising and Cash Solicitation Rules. Most of the no-action relief letters being withdrawn are related to issues that are now covered in the SEC’s modernized IA Marketing Rule.

“It’s no wonder IAs have been so challenged under the old Advertising and Cash Solicitation Rules since they had to manage so many exceptions to the actual rules. It would be helpful if the SEC would share a list of the no-action letters that were not withdrawn,” said Margie Webber, director of regulatory compliance for RegEd.

The withdrawal and modification of staff letters related to rulemaking on investment adviser marketing will be effective as of Nov. 4, 2022, which is the compliance date for the new SEC IA Marketing Rule (Rule 206(4)-1), according to an information update released by the SEC at the end of October. 

The SEC’s new IA Marketing Rule is intended to reflect market developments, modern communication methods, and regulatory changes that have occurred since the old Advertising Rule was adopted in 1961 and the Cash Solicitation Rule was adopted in 1979. The SEC adopted the new IA Marketing Rule for investment advisers in December 2020 and it took effect on May 4, 2021.

IAs may choose to comply with the new Marketing Rule sooner than the November 2022 compliance date. However, they must fully transition to the new rule if they transition early. 

“They do not have the option of complying with certain provisions of the old Advertising and Solicitation Rules while complying with other provisions from the new Marketing Rule. It’s all in or nothing,” Webber said.

Modernizing Rules for Investment Adviser Marketing

One of the biggest changes is that investment advisers can now use testimonials and endorsements, which were previously prohibited. “This is something IAs are excited to leverage,” Webber said.

Nor is social media prohibited now. Additional changes include:

  • Performance advertising is permitted if gross and net performance are given equal prominence and calculated over the same period.
  • Hypothetical performance advertising is allowed with special compliance duties and disclosures and risks and limitations must be clear to the intended audience.
  • Books & records requirements have been amended to require IAs to keep records related to calculating performance and hypothetical advertising and predecessor performance information.
  • Form ADV is amended to include a section for IAs to disclose the use of testimonials, performance advertising, and predecessor or hypothetical performance. 
  • The Form ADV glossary is amended to include new definitions used in the new marketing rule for IAs (advertisement, endorsement, hypothetical performance, testimonial, third-party rating, and predecessor performance).
  • Solicitors are now regulated under the testimonial provision of the marketing rule.

Though the SEC had stated in the adopting release for the rule that subsequently nullifying some no-action letters issued to solicitors who would otherwise have been subject to the Cash Solicitation Rule’s disqualification procedures could trigger disqualification of IAs under the new Marketing Rule, regulators no longer expect any such disqualifications.

“Upon further review, the staff has not identified any such letters and, accordingly, does not plan to issue a statement addressing such potential disqualifications. The staff encourages persons with a disqualifying event within the Marketing Rule’s ten-year lookback period to review their compliance policies and procedures in light of that rule’s requirements,” the SEC stated in its recent information update announcing the withdrawal and modification of staff letters related to rulemaking on investment adviser marketing.

Complying with the New Rules

Webber recommends IAs begin the process of evaluating their policies and procedures and supervisory controls in anticipation of the Marketing Rule’s compliance date. “The SEC has given IAs 18 months to transition to the new rule. Firms must be ready to fully comply with the new Marketing Rule by Nov. 4, 2022,” she said.

RegEd has reduced non-compliance risk for hundreds of financial services firms by providing them with proven, scalable compliance management solutions, including its market-leading Enterprise Advertising Review solution. The combined capabilities of Enterprise Advertising Review’s Submission Intelligence and Intelligent Review modules, which include Lexicon Detection and Smart Disclosures,  reduce review time by more than 50%, and in some cases, by close to 80%. 

View our most recent Advertising Regulation Webinar to learn more about the new modernized marketing rule for investment advisers, its impact on the industry, and what firms can do now to prepare.

About RegEd

RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please visit

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