New SEC marketing rules for registered investment advisers

Seward & Kissel, our alliance firm for hedge fund and asset management work, have published a client memorandum on the SEC's new Investment Adviser Marketing rules.

The rules will apply to SEC-registered investment advisers only.

In Seward & Kissel's view, the SEC's amendments "will likely result in substantial changes to an adviser's marketing practices and compliance program" - for instance, when providing prior track record information to individual prospective investors.

The memorandum gives an overview of the changes and includes sections on:

• the definition of "advertisement"
• general prohibitions under the new rules
• requirements in relation to testimonials, endorsements and solicitations
• requirements for using third-party ratings in advertisements and
• requirements regarding the use of gross performance results, related performance, extracted performance, hypothetical performance and predecessor performance.

The rules were published in the Federal Register on 5 March 2021. This means they became effective on 4 May 2021 (60 days publication) and affected firms now have until 4 November 2022 in which to come into compliance.

If you would like more information about the changes, please speak to your usual contact at Simmons & Simmons or Seward & Kissel.