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SEC withdraws previous guidance documents after adopting new Marketing Rule

On Behalf of | Nov 11, 2021 | Securities and Compliance

The Securities and Exchange Commission said recently that it is withdrawing certain staff letters that had provided guidance to advisors on how to comply with its advertising and cash solicitation rules, ThinkAdvisor reports.

The withdrawal is related to the SEC’s December 2020 amendment to rule 206(4)-1 under the Investment Advisers Act of 1940. As a result of the amendment, a new single Marketing Rule replaced the current advertising and cash solicitation rules and will govern investment advisor marketing.. The existing rule had been adopted in 1961 to target advertising practices that the Commission believed were likely to be misleading.

In an information update released last month, the SEC’s Division of Investment Management said that many of the positions taken in the guidance documents have now been incorporated into the new rule while others have been modified or rejected.

The SEC’s amended Marketing Rule will cover marketing activities by investment advisors to clients and prospective investors in private funds that are managed by the advisors.

The withdrawals and modifications of staff statements regarding the existing rules will take effect on the Marketing Rule’s compliance date, November 4, 2022.

FrontLine Compliance, which provides consulting to investment firms, said firms will no longer be able to rely on SEC staff letters pertaining to the advertising and cash solicitation rules but instead will have to rely on the language contained in the new Marketing Rule in order to comply.

The attorneys at Lewitas Hyman regularly monitor SEC, FINRA and other self-regulatory organizations’ rule-making activities to help ensure that our clients are aware of any new policies, while assisting them in implementing any recommended changes. Should you be in need of experienced counsel regarding a matter involving a regulatory agency, please contact us at (888) 655 6002 or through our online contact form.