Best Practices for Presenting Model Performance

On September 14, 2017, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a National Exam Program Risk Alert containing a list of compliance issues related to the Advertising Rule, 206(4)-1. Among the compliance issues most frequently identified in deficiency letters is the use of hypothetical and back-tested performance results without proper disclosure.

While this is not a new concept, the issue is one that is widespread and carries with it regulatory scrutiny and risk. This webcast will focus on best practices for calculating, disclosing, and presenting model performance and how to minimize the risks associated with presenting hypothetical, model, and back-testing results, including: 

• Recent SEC enforcement cases
• New trends or pending enforcements
• Explanation of hypothetical, model, and back-tested results
• What is considered misleading information
• Calculating model performance
• Proper disclosure in the presentation of model performance