The New Marketing Rule

The new “marketing rule” (Rule 206(4)-1 under the U.S. Investment Advisers Act of 1940) enacted by the SEC goes into effect November 4, 2022. It overhauls and modernizes the SEC’s “advertising rule” (Rule 206(4)-1) and “cash solicitation rule” (Rule 206(4)-3) and creates a single rule.

Among other changes, the new marketing rule expands the scope of communications deemed to constitute “advertisements” subject to the rule.

There is no doubt that content marketing falls within this definition.

Limitations on advertisements

The marketing rule places these limitations on communications which are advertisements. They cannot:

make an untrue statement of a material fact, or omit a material fact necessary in order to make the statement made, in the light of the circumstances under which it was made, not misleading;

make a material statement of fact that the adviser does not have a reasonable basis for believing it will be able to substantiate upon demand by the SEC;

include information that would reasonably be likely to cause an untrue or misleading implication or inference to be drawn concerning a material fact relating to the investment adviser;

discuss any potential benefits to clients or investors connected with or resulting from the investment adviser’s services or methods of operation without providing fair and balanced treatment of any material risks or material limitations associated with the potential benefits;

reference specific investment advice provided by the investment adviser, where such investment advice is not presented in a manner that is fair and balanced;