SEC Marketing Rule Update: New Staff FAQs On Performance Presentations

On March 19th, Staff from the Securities and Exchange Commission (SEC) issued much needed (and anticipated) relief in the form of two new frequently asked questions (FAQs) related to rule 206(4)-1 under the Investment Advisers Act of 1940 (the Marketing Rule).

Key Takeaways

• The Staff's "open door" policy, in which it invites comments from industry participants on their top-of-mind concerns and regulatory "sticking points," is underway.
• Don't skip the footnotes! The FAQs provide useful additional context. For example:
  • gross and net performance of the total portfolio do not need to be presented on the same page to meet the "prominent" requirement - in some cases, presenting this information prior to the extracted performance and/or portfolio characteristic may be sufficient;