Photo: Diego M. Radzinschi/ALM Navigating the SEC's Marketing Rule: Compliance Challenges and Legal Insights
The Securities and Exchange Commission (SEC) has underscored the critical importance of its Marketing Rule compliance through a series of recent enforcement actions and risk alerts. This article delves into the challenges that investment advisers must navigate when marketing their services. It also explores how legal counsel and compliance consultants can effectively support their clients in adhering to both the explicit requirements and nuanced aspects of the Marketing Rule.
October 14, 2024 at 11:26 AM
16 minute read
Regulation
What You Need to Know
- In 2020, the SEC formalized the Marketing Rule with the goal of codifying the multiple sources of guidance and case law that had accumulated over the years regarding the promotion of services under the previous regime.
- Since its implementation, investment advisers have faced challenges due to the regulation's ambiguity.
- Mastering the Marketing Rule's major elements is crucial for protecting a firm from exam deficiencies or, worse, referrals to the SEC's Division of Enforcement.
In 2020, the SEC formalized Rule 206(4)-1 (the Marketing Rule) under the Investment Advisers Act of 1940 (the Advisers Act) with the goal of codifying the multiple sources of guidance and case law that had accumulated over the years regarding the promotion of services under the previous regime. Since its implementation, investment advisers have faced challenges due to the regulation's ambiguity. Despite the Staff's initial release of a two-item FAQ to clarify the adoption time frame and reporting period for the Marketing Rule, many substantive questions remained well after the November 2022 compliance date.
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