November 4 is the compliance date for the new rule governing advertising and solicitation activities by investment advisers. The new rule substantially revises decades old authorities governing this activity. On September 19, the Securities and Exchange Commission (SEC) Division of Examinations issued a risk alert announcing the SEC will begin conducting inspection sweeps immediately after the compliance date for the new rule to test whether firms are in compliance. The sweeps with focus on:
- whether firms have revised their policies and procedures to conform with the new rule;
- whether firms are collecting and retaining evidence substantiating factual statements in advertising, as required by the new rule;
- whether firms are changing performance presentations, including presenting all performance gross of fees, presenting multi-year historical performance for separately managed accounts, and complying with numerous conditions on use of hypothetical performance (which will be more broadly permitted);
- and whether firms are retaining newly required records and amending their Form ADVs as required.
Full text of the SEC's Risk Alert can be found here: https://www.sec.gov/files/exams-risk-alert-marketing-rule.pdf (sec.gov)
