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ARTICLE · 17 JANUARY 2023

SEC Staff Extends ‘Net' Performance Presentation Requirement To Case Studies

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As a general principle, the Marketing Rule requires registered investment advisers to include net performance alongside any presentation of gross performance.

United StatesFinance and Banking
Jan-Paul Bruynes
Jan-Paul Bruynes
Brian T. Daly
Brian T. Daly
Jason M. Daniel
Jason M. Daniel
Barbara Niederkofler
Barbara Niederkofler
William K. Wetmore
William K. Wetmore
Jenny Walters
Jenny Walters
Brian P. Rafferty
Brian P. Rafferty
William V. de Cordova
William V. de Cordova
Kate Whitehead Miller
Kate Whitehead Miller
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As a general principle, the Marketing Rule requires registered investment advisers to include net performance alongside any presentation of gross performance. Market practice on whether or how this principle applies to case studies and other portfolio highlights in the context of an advertisement that already presents net and gross performance information for the portfolio as a whole has varied widely in the two months since the effectiveness of the Marketing Rule.

However, on January 11, 2023, the Staff of the U.S. Securities and Exchange Commission Division of Investment Management sought to eliminate any heterodoxy on this point by issuing a new FAQ requiring that net performance always be shown whenever gross performance is displayed, even when the performance relates to a single investment or group of investments.

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