MFA Blog

SEC Proposes Amended Advertising and Cash Solicitation Rules for Investment Advisers

Posted on November 6, 2019

The Securities and Exchange Commission (SEC) voted yesterday to propose amendments to modernize the rules under the Investment Advisers Act of 1940, as amended, addressing investment adviser advertisements and payments to solicitors.  Below is a brief summary of the proposed amendments as well as the Factsheet and Rule Release.

  1. Advertising Rules – The proposed amendments to the advertising rules would replace the current rule’s broadly drawn limitations with principles-based provisions. The proposed approach would also permit the use of testimonials, endorsements, and third-party ratings, subject to certain conditions, and would include tailored requirements for the presentation of performance results based on an advertisement’s intended audience.
  2. Cash Solicitation Rules – The proposed amendments to the solicitation rule would expand the current rule to cover solicitation arrangements involving all forms of compensation, rather than only cash, subject to a new de minimis They also would update other aspects of the rule, such as who is disqualified from acting as a solicitor under the rule.  NOTE: This rule would apply to investors in private funds.

Click here for the Factsheet
Click here for the Proposed Rule Release