Monday, February 1, 2021
ACA ALERT: SEC ADOPTS NEW MARKETING RULE FOR INVESTMENT ADVISERS

The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited overhaul of the Advertising Rule (Rule 206(4)-1 under the Investment Advisers Act of 1940 (Advisers Act)). The new rule, which is referred to as the “Marketing Rule,” was approved on December 22, 2020, and is intended to modernize the framework for investment adviser advertising and replace the patchwork of cases, no-action letters and SEC staff guidance that has developed in this area since the rule was first adopted in 1961. The new Marketing Rule also eliminates the separate Cash Solicitation Rule (Rule 206(4)-3 under the Advisers Act) by incorporating requirements for compensated solicitation activities within the new rule.The new Marketing Rule imposes a number of significant changes on the framework for investment adviser advertising that will have material impact on advisers, in some cases affording more flexibility and in others imposing new conditions. Here, we provide a summary of some of the key changes under the new Marketing Rule, highlighting differences from the SEC’s initial proposal, and outline important steps for advisers to begin taking in advance of the rule’s compliance date. Proposed Rule vs. Final Rule Amendments to the Advertising and Solicitation Rules were first proposed in November 2019. Commenters generally applauded the SEC’s efforts to modernize the rules and the proposed principles-based approach to the regulation of investment adviser advertising. However, many industry participants expressed concerns over the rule’s proposed scope and several provisions perceived as overly-burdensome and not in the interest of investors. The SEC responded to many of these concerns in the final rule.Key differences between the proposed rule and the final rule include the following:

Read the full article here.

ACA COMPLIANCE GROUP

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