Risk Alert “Reminder” | New Marketing Rule
EXAMS Issues Risk Alert on New Investment Adviser Marketing Rule
Brief Introduction
On Monday, September 19th, the Division of Examinations (“EXAMS”), released a Risk Alert towards upcoming review areas on the Marketing Rule for the compliance date of Friday, November 4th, 2022.
Please note that the majority of this information has been released and should act more as a reminder in this instance.
4 Key Areas Reiterated by EXAMS for their Examination Process
- Marketing Rule Policies and Procedures
- EXAMS will review whether investment advisers have adopted and implemented written policies and procedures that are reasonably designed to prevent violations by the advisers and their supervised persons of the Advisers Act and the rules thereunder, including the Marketing Rule.
- Policies and procedures should include objective and testable means reasonably designed to prevent violations of the final rule in the advertisements the adviser disseminates.
- Substantiation Requirement
- EXAMS will review whether investment advisers have a reasonable basis for believing they will be able to substantiate material statements of fact in advertisements.
- Performance Advertising Requirements
- EXAMS will review whether investment advisers are in compliance with performance advertising requirements in the Marketing Rule.
- The following prohibitions will be reviewed:
- Gross Performance;
- Performance Results;
- any statement that the Commission has approved or reviewed any calculation or presentation of performance results;
- Performance of Portfolios;
- performance results of a subset of investments extracted from a portfolio;
- Hypothetical Performance; and
- Predecessor Performance.
- The following prohibitions will be reviewed:
- EXAMS will review whether investment advisers are in compliance with performance advertising requirements in the Marketing Rule.
- Books and Records
- Marketing practices will be required to be included on amended Form ADV.
- EXAMS reminds advisers of their obligations to accurately complete these questions in their next annual Form ADV amendment.
Vigilant’s Final Conclusion
While this Risk Alert was great from a reminder standpoint, it still left a majority of the industry with their same questions and concerns that remain to be answered.
It is important to consider a third party for assistance pertaining to the Marketing Rule, and Compliance Support as a whole, with the increase in new Proposed and Effective Rules.
Need assistance updating/revising your Policies and Procedures to comply with the Marketing Rule?
In need of Training for you and your Team on the new Marketing Rule?
Contact Us Here Today For Assistance
Latest Marketing Rule Releases:
Vigilant’s COO, Chuck Martin, Presented on the Marketing Rule at the 2022 PMAR Conference
EXAMS Issues Reminder For The Marketing Rule Compliance Date