Published on Jan 12th, 2023 |

SEC Updates Marketing Rule FAQs

SEC Releases

On January 11th, the SEC released updated Marketing Rule FAQs.

See below for key takeaways.

Key Takeaways from the SEC

Key Takeaways from the SEC

Gross and Net Performance

Net Performance is required for case studies, performance tables, and single investment extractions.

  • The adviser must satisfy the other tailored disclosure requirements as well as the general prohibitions, including the general prohibition against specific investment advice not presented in a fair and balanced manner, when showing extracted performance.
  • An adviser may not show gross performance of one investment or a group of investments without also showing the net performance of that single investment or group of investments.
  • The SEC believes that displaying the performance of one investment or a group of investments in a private fund is an example of extracted performance under the new marketing rule.

Time Period Requirement

Investment Advisers have one month after the closing of a year to comply with the 1-, 5- and 10- year time requirements under the rule.

  • The SEC believes that a reasonable period of time to calculate performance results based on the most recent calendar year-end generally would not exceed one month.

Compliance Date

Investment Advisers may not comply with only part of the Marketing Rule prior to the implementation date.

  • Advisers are required to maintain a copy of all compliance policies and procedures in effect at any time within the previous five years.
  • Advisers should expect, during an Exam, for the SEC to focus on whether an Adviser only complied with certain portions of the New Rule (instead of all) prior to the compliance date.


Vigilant's Final Conclusion

Vigilant’s Final Conclusion

We believe the updated Marketing Rule FAQ responses were valuable and provided some clarity for the Industry. However, our hope is there will be much more guidance coming in the future.

It is important to note that the SEC added that they expect to update the FAQ document occasionally to include responses to additional questions.

We will continue to keep you updated if the SEC provides any additional documents to this page for the Marketing Rule FAQs.

Contact Us If You Need Compliance Assistance Or Have Any Questions