New Marketing Rule - SEC Staff Confirms All or None Early Adoption Approach

The SEC issued an FAQ officially confirming what has been informally communicated by Division of Investment Management staff, which is that investment advisers may not implement the new Marketing Rule until they are prepared to comply with it in its entirety. Note that this includes both the rules around traditional advertisements and the new requirements for solicitation arrangements. In the meantime, advisers must continue to comply with the current Advertising Rule and Cash Solicitation Rule and existing guidance related to those rules. Also worth noting is that new written procedures must be in place before an adviser transitions to the new rule’s framework, and the adviser must retain a copy of its prior procedures, which are required records. 

The FAQ reads as follows:

Q: I understand that an adviser must comply with the amended adviser marketing rule with respect to its advertising and solicitation activities by the compliance date (November 4th, 2022), which is 18 months after the effective date of the rule. May an adviser choose to comply with some of the marketing rule requirements before the compliance date, but not comply with others?
 
A:  No. An adviser may choose to comply with the amended marketing rule in its entirety any time starting on the effective date, May 4th, 2021. Until an adviser transitions to the amended marketing rule, the adviser would continue to comply with the previous advertising and cash solicitation rules and look to the staff’s positions under those rules. The staff believes an adviser may not cease complying with the previous advertising rule and instead comply with the amended marketing rule but still rely on the previous cash solicitation rule. Advisers are reminded that they should review their compliance policies and procedures in light of regulatory developments, including the adoption of the amended marketing rule. In addition, the staff believes that when advisers transition to the amended marketing rule, they will need to implement any revisions to the written compliance policies and procedures necessary so that they are reasonably designed to prevent violations of the amended marketing rule. Advisers are also reminded that they are required to maintain a copy of all compliance policies and procedures in effect at any time within the previous five years, and that it should be clear when those policies and procedures were in effect.

SEC Marketing Rule FAQ
 

How we help

ACA can help you understand the requirements of the Marketing Rule as they relate to your business and help you prepare for new regulation. Our risk and compliance management solutions incorporate consulting, managed services, technology, and education to provide our clients with a holistic approach to addressing risk, increasing operational efficiencies, and meeting regulatory requirements while adhering to industry best practices.
 
In addition to our compliance consulting services we can also provide:  

• Marketing Rule Performance Gap Analysis: Assists your firm in assessing the gaps between current performance advertising practices and the new Marketing Rule. The review covers disclosure help, books and records, policies and procedures development, gross and net return calculation methodologies, and composite construction (related portfolio) consulting.
• Performance Analysis Solutions Dashboard: Assists your firm in meeting the new requirement pertaining to marketing related performance by providing a technology solution that will conduct outlier analysis, strategy drift analytics, and scoring metrics to allow for adequate oversight.
• Customized Training: Provides your firm with customized trainings that cover and define many of the key definitions within the new Marketing Rule.
• ComplianceAlpha^® Marketing Review Solution: Helps your firm’s marketing and legal teams easily manage workflows for submitting, reviewing, approving, and archiving marketing and advertising materials. Learn more.
• Marketing and Advertising Review Assistance: Allows your firm to significantly reduce the amount of time and resources devoted to the marketing and advertising review process. ACA’s skilled compliance professionals can step in during periods of high volume or assist your firm with enhancing collateral review workflows and protocols. Learn more.

To learn more about how we can help enhance or strengthen your compliance program, please reach out to your ACA consultant or contact us here.