SEC Updates Marketing Rule for Investment Advisers

The SEC has issued a final rule, Investment Adviser Marketing. The final rule (1) amends Rule 206(4)-1 of the Investment Advisers Act of 1940 (the “Advisers Act”) by updating the definition of “advertisement” and (2) prohibits the following:

• Certain advertising practices.
• Use of “testimonials and endorsements in an advertisement, unless the adviser satisfies certain disclosure, oversight, and disqualification provisions.”
• Use of third-party ratings in an advertisement.
• Inclusion of performance information in an advertisement.

In addition, the SEC has adopted amendments to (1) the books and records rule under the Advisers Act and (2) Form ADV. For more information, see the press release as well as statements by SEC Commissioners Hester M. Peirce and Elad L. Roisman and a joint statement by Commissioners Allison H. Lee and Caroline A. Crenshaw on the SEC’s Web site.