01.16.26

SEC Drops New Marketing Rule Guidance for Testimonials, Net-Performance Modeling

by: Leo Almazora

The U.S. Securities and Exchange Commission (SEC) has issued new staff guidance clarifying parts of its marketing rule, offering registered investment advisors more flexibility on testimonials and performance advertising. The guidance says staff would not recommend enforcement if advisors pay for testimonials from individuals subject to certain self-regulatory organization orders, provided they were not barred or suspended, have fully complied with the order and the order is prominently disclosed for 10 years. The SEC also addressed how advisors present net performance, rejecting a rigid requirement to use modeled fees when future client fees differ from historical ones. Instead, staff said compliance depends on the specific facts, circumstances and disclosures in each advertisement.

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