SEC Commissioner Questions Proposed Advertising Rule’s Principles-Based Approach

When the SEC proposed its new Advertising Rule back in November, there was much applause. Some suggestions for improvement were made, but by and large, the Rule was welcomed by the asset management community. After all, the Rule had not been significantly updated since 1961, and its principles-based approach, as opposed to specific prescriptive prohibitions, appeared to be generally well received. Now, however, a significant voice is questioning whether that approach is correct.

Industry Associations Applaud Proposed Advertising Rule, but Want Changes

When the SEC unveiled its proposed Advertising Rule in November, it was roundly welcomed by the asset management industry. The proposal was the first reform of the existing Rule in more than half a century, and the principles-based approach it took to advertising regulation made more sense to many than the prescriptive prohibitions of the existing Rule. Now, with a few months to digest and review the proposed Rule, the industry continues to welcome it, but also wants some changes made.

SEC’s Proposed Advertising Rule Largely Welcomed by Industry Advocates

It took almost 60 years, but the SECs proposed changes bringing the Advertising Rule into the 21st century appear to be finding a welcome reception, albeit with some concerns, among those in the investment adviser community.

Advertising: SECs Pursuit of Back-Tested Performance Nets another Settlement

Any adviser considering the use of back-tested performance in its advertising would be wise to think twice. The SEC, which has made no secret in recent years of its concerns about this practice, may well look further into firms that employ it, as one advisory firm recently discovered.

Advertising with Blended Back-Tested and Actual Results Draws SEC Attention

The SEC for several years has made it clear that it does not like the use of hypothetical and/or back-tested performance results in advertising. A recent settlement not only shows that the agencys Division of Enforcement has not changed its view, but that it may file enforcement actions against advisers that blend back-tested performance results with actual results.

Five Settlements Show the SECs Determination to Enforce the Testimonial Rule

Theres talk of the SEC revising parts of the Advertising Rule, including its ban on testimonials. That day may come, perhaps sooner than later - but until it does, the agencys Division of Enforcement is making clear that violations of the Advertising Rule, in particular its testimonial ban, will be prosecuted.

Advertising and Custody Rule Reform on SECs Latest Regulatory Agenda

Its beginning to look like the next 12 months may be a period of wish fulfillment for advisers, funds and attorneys who have long called for the SEC to reform some of its existing Advisers Act rules, the Advertising Rule and the Custody Rule among them.

Advertising Rule Reform: What to Expect

Reform of Rule 206(4)-1, the Advertising Rule, has long been a goal of many in the investment advisory community. With the new SEC chair, Jay Clayton, now indicating that he too would like to see some long-term agency rules revisited, it is beginning to look like 2018 may be the year when the Advertising Rule is brought in line with the realities of todays business world.

Advertising Rule Violations: OCIE Lets Advisers Know Which Get Cited Most

Advisers now have even less of an excuse for violations of Rule 206(4)-1, the Advertising Rule, than they did before. With the Office of Compliance Inspections and Examinations issuance of a risk alert listing the most frequent Advertising Rule compliance issues identified during examinations, the agency is leaving little doubt as to what may constitute a violation.

SEC Crackdown on Misleading Marketing Nets Another Adviser

Use of hypothetical and/or backtested performance results in marketing is a surefire way to draw attention from SEC staff. A new settlement with an advisory firm should serve as a potent reminder to anyone who may have forgotten.

Audio Interviews

How to Read an SEC Enforcement Action

Stern Tannenbaum law firm partner Aegis Frumento on how to get the most from reading an SEC administrative order or court complaint.

Most Important Supreme Court Decisions for Advisers and Funds

Find out the high court decisions from recent years that are likely to affect how advisers and investment companies work from Debevoise partner Robert Kaplan. 

Top 10 Cybersecurity Steps to Take Now

Sutherland law firm partner Brian Rubin shares the most urgent cybersecurity steps for investment advisers.

Top Marketing Problems … and Solutions

Get solutions for the top marketing challenges that advisers face from ACA Compliance Group managing director Kimberly Daly

Watch Out for 5 Cybersecurity Myths

ACA Aponix Director Pascal Busnel on the most common cybersecurity myths that may cause firms to spend resources where they may not be needed.

The Hidden Costs of Non-Compliance

Proskauer law firm partner and former SEC Division of Investment Management deputy director Robert Plaze on why the costs of non-compliance go way beyond an SEC penalty.

CCO Liability: How to Protect Yourself

Find out from Blue Edge Capital CCO Margaret Fretz what chief compliance officers may be liable for and best practices to make sure you are protected.

Ethics or Compliance: Making the Choice

Find out the difference an ethics, rather than a compliance, perspective makes at an advisory firm from former Ethics and Compliance Officer Association COO Timothy Mazur.