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1. Overview of the SEC Marketing Rule

Purpose and Scope:

• Applies to all investment adviser representatives (IARs) under the Investment Advisers Act of 1940.
  Fact check: https://www.sec.gov/investment/marketing-rule-faq
• Consolidates and modernizes previous advertising and cash solicitation rules into a single framework.
• Covers all communications—digital, print, and in-person—that are designed to offer advisory services to prospective or current clients.

2. Key Definitions Under the Rule

Advertisement:

• Any direct or indirect communication offering services to more than one person.
• Includes one-on-one communications if they include hypothetical performance data.
• Encompasses social media posts, websites, email campaigns, podcasts, webinars, and newsletters.
  Fact check: https://www.sec.gov/rules/final/2020/ia-5653.pdf

Endorsements & Testimonials:

• Any statement by a client or third party about an adviser’s services.
• Must disclose whether the person is a client, if compensation is involved, and any material conflicts of interest.

3. Performance Presentation Requirements

General Performance:

• Must be presented net of fees, or both gross and net with equal prominence.
• Must include disclosure of the time period covered and conditions/risks of achieving similar results.

Hypothetical Performance:

• Allowed only if adviser has policies and procedures to ensure it’s relevant to the recipient’s situation and accompanied by required disclosures.
  Fact check: https://www.sec.gov/investment/marketing-rule-faq#hypothetical-performance

Related vs. Extracted Performance:

• Related: Includes all portfolios with substantially similar investment policies.
• Extracted: Subsets of a portfolio—must disclose that results exclude other investments and explain the impact.

4. Social Media & Third-Party Content

Adviser Responsibility:

• You are responsible for content you “adopt” or “entangle” yourself with—including likes, shares, and reposts.
• Third-party ratings can be used, but only if they are conducted by an independent party and meet specific methodology requirements.
  Fact check: https://www.sec.gov/investment/marketing-rule-faq#third-party-ratings

Recordkeeping:

• Firms must archive all advertisements, including social media content, for at least five years.
  Fact check: https://www.sec.gov/rules/final/ia-3060.htm

5. Testimonials, Endorsements, and Solicitor Arrangements

Disclosures Required:

• Whether the promoter is a client.
• Compensation arrangement details.
• Material conflicts of interest.

Solicitor Agreements:

• Written agreement required for paid promoters unless the promoter is an affiliate or receives $1,000 or less in 12 months.

6. Compliance Risks & Enforcement Trends

Recent SEC Actions Highlight:

• Misuse of hypothetical performance with retail investors.
• Inadequate disclosure of material risks and conflicts.
• Failure to maintain complete records of advertisements.

Penalties:

• Can include significant fines, censure, and restrictions on practice.
  Fact check: https://www.sec.gov/enforce

7. Practical Steps for Advisors

1. Audit Existing Marketing Materials: Ensure compliance with the new definitions and disclosure requirements.
2. Train Staff and IARs: Everyone involved in client communications should understand the rule’s boundaries.
3. Implement Policies & Procedures: Especially for hypothetical performance and third-party ratings.
4. Leverage Technology for Archiving: Use compliant systems for email, website, and social media retention.
5. Document Everything: Maintain detailed records for any marketing claim, testimonial, or performance metric.