Final Rule: Investment Adviser Marketing
Conformed to Federal Register VersionSECURITIES AND EXCHANGE COMMISSION17 CFR Part 275 and 279[Release No. IA-5653; File No. S7-21-19]RIN: 3235-AM08Investment Adviser MarketingAGENCY: Securities and Exchange Commission.ACTION: Final rule.SUMMARY: The Securities and Exchange Commission (the “Commission” or the “SEC”) isadopting amendments under the Investment Advisers Act of 1940 (the “Advisers Act” or the“Act”) to update rules that govern investment adviser marketing. The amendments will create amerged rule that will replace both the current advertising and cash solicitation rules. Theseamendments reflect market developments and regulatory changes since the advertising rule’sadoption in 1961 and the cash solicitation rule’s adoption in 1979. The Commission is alsoadopting amendments to Form ADV to provide the Commission with additional informationabout advisers’ marketing practices. Finally, the Commission is adopting amendments to thebooks and records rule under the Advisers Act.DATES: Effective date: This rule is effective May 4, 2021.Compliance dates: The applicable compliance dates are discussed in section II.K.FOR FURTHER INFORMATION CONTACT: Juliet Han, Emily Rowland, Aaron Russ, orChristine Schleppegrell, Senior Counsels; Thoreau Bartmann or Melissa Roverts Harke, SeniorSpecial Counsels; or Melissa Gainor, Assistant Director, at (202) 551-6787 or IM-
Rules@sec.gov, Investment Adviser Regulation Office, Division of Investment Management,Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-8549.SUPPLEMENTARY INFORMATION: The Commission is adopting amendments to 17 CFR275.206(4)-1 (rule 206(4)-1) and 17 CFR 275.204-2 (rule 204-2) under the Investment AdvisersAct of 1940 [15 U.S.C. 80b-1 et seq.], 1 and amendments to 17 CFR 279.1 (Form ADV) underthe Advisers Act. The Commission is rescinding 17 CFR 275.206(4)-3 (rule 206(4)-3) under theAdvisers Act.1Unless otherwise noted, when we refer to the Advisers Act, or any section of the Advisers Act, we arereferring to 15 U.S.C. 80b, at which the Advisers Act is codified. When we refer to rules under theAdvisers Act, or any section of those rules, we are referring to title 17, part 275 of the Code of FederalRegulations [17 CFR part 275], in which these rules are published.2
TABLE OF CONTENTSI.INTRODUCTION . 6Advertising and Solicitation Rules and Proposed Amendments . 7II.Merged Marketing Rule . 12DISCUSSION .14A.B.C.Scope of the Rule: Definition of “Advertisement” . 141.Overview. 142.Definition of Advertisement: Communications Other than CompensatedTestimonials and Endorsements. 153.Definition of Advertisement: Compensated Testimonials andEndorsements, Including Solicitations. 434.Investors in Private Funds. 58General Prohibitions . 641.Untrue Statements and Omissions. 672.Unsubstantiated Material Statements of Fact . 693.Untrue or Misleading Implications or Inferences. 714.Failure to Provide Fair and Balanced Treatment of Material Risks orMaterial Limitations. 745.Anti-Cherry Picking Provisions: References to Specific InvestmentAdvice and Presentation of Performance Results. 786.Otherwise Materially Misleading. 84Conditions Applicable to Testimonials and Endorsements, IncludingSolicitations . 851.Overview. 852.Required Disclosures . 863.Adviser Oversight and Compliance . 1094.Disqualification for Persons Who Have Engaged in Misconduct. 1135.Exemptions . 135D.Third Party Ratings . 158E.Performance Advertising . 1631.Net Performance Requirement; Elimination of Proposed Schedule ofFees Requirement. 1652.Prescribed Time Periods . 1803.Statements about Commission Approval. 1843
III.4.Related Performance. 1865.Extracted Performance. 1956.Hypothetical Performance. 200F.Portability of Performance, Testimonials, Endorsements, Third-PartyRatings, and Specific Investment Advice . 227G.Review and Approval of Advertisements . 237H.Amendments to Form ADV . 241I.Recordkeeping . 244J.Existing Staff No-Action Letters . 250K.Transition Period and Compliance Date. 252ECONOMIC ANALYSIS. 253A.Introduction . 253B.Broad Economic Considerations. 256C.Baseline . 262D.E.F.1.Market for Investment Advisers for the Advertising Rule. 2622.Market for Solicitation Activity . 2713.RIA Clients . 274Costs and Benefits of the Final Rule and Form Amendments . 2771.Quantitative Estimates of Costs and Benefits. 2782.Definition of Advertisement . 2803.General Prohibitions. 2914.Conditions Applicable to Testimonials and Endorsements, IncludingSolicitations . 2995.Third-Party Ratings. 3136.Performance Advertising . 3167.Amendments to Form ADV . 3288.Recordkeeping . 330Efficiency, Competition, Capital Formation . 3331.Efficiency. 3342.Competition . 3373.Capital Formation. 339Reasonable Alternatives. 3401.Reduce or Eliminate Specific Limitations on Investment AdviserAdvertisements. 3402.Bifurcate Some Requirements . 3434
IV.V.3.Hypothetical Performance Alternatives. 3444.Alternatives to the Combined Marketing Rule. 3455.Alternatives to Disqualification Provisions. 346P APERWORK REDUCTION ACT ANALYSIS . 347A.Introduction . 347B.Rule 206(4)-1 . 3492.Testimonials and Endorsements in Advertisements . 3523.Third-Party Ratings in Advertisements. 3574.Performance Advertising . 3595.Total Hour Burden Associated with Rule 206(4)-1. 369C.Rule 206(4)-3 . 370D.Rule 204-2 . 370E.Form ADV. 377FINAL REGULATORY FLEXIBILITY ANALYSIS . 383A.Reason for and Objectives of the Final Amendments . 3831.Final rule 206(4)-1. 3832.Final rule 204-2 . 3843.Final Amendments to Form ADV . 385B.Significant Issues Raised by Public Comments . 386C.Legal Basis . 387D.Small Entities Subject to the Rule and Rule Amendments . 3881.Small Entities Subject to Amendments to Marketing Rule. 389E.F.G.2.Small Entities Subject to Amendments to the Books and Records Rule204-2 . 3893.Small Entities Subject to Amendments to Form ADV. 390Projected Reporting, Recordkeeping and Other Compliance Requirements3901.Final Rule 206(4)-1 . 3902.Final Amendments to Rule 204-2 . 3913.Final Amendments to Form ADV . 392Duplicative, Overlapping, or Conflicting Federal Rules . 3931.Final Rule 206(4)-1 . 3932.Final Amendments to Form ADV . 397Significant Alternatives . 3971.Final Rule 206(4)-1 . 3975
STATUTORY AUTHORITY . 401APPENDIX A: CHANGES TO FORM ADV . 419APPENDIX B: FORM ADV GLOSSARY OF TERM S. 420I.INTRODUCTIONWe are adopting an amended rule, rule 206(4)-1, under the Advisers Act, whichaddresses advisers marketing their services to clients and investors (the “marketing rule”). Themarketing rule amends existing rule 206(4)-1 (the “advertising rule”), which we adopted in 1961to target advertising practices that the Commission believed were likely to be misleading. 2 Therule also replaces rule 206(4)-3 (the “solicitation rule”), which we adopted in 1979 to help ensureclients are aware that paid solicitors who refer them to advisers have a conflict of interest. 3 Wehave not substantively updated either rule since adoption. 4 In the decades since the adoption ofboth rules, however, advertising and referral practices have evolved. Simultaneously, thetechnology used for communications has advanced, the expectations of investors shopping foradvisory services have changed, and the profiles of the investment advisory industry havediversified.Our marketing rule recognizes these changes and our experience administering theadvertising and solicitation rules. Accordingly, the rule contains principles-based provisionsdesigned to accommodate the continual evolution and interplay of technology and advice. The2Advertisements by Investment Advisers, Release No. IA-121 (Nov. 1, 1961) [26 FR 10548 (Nov. 9, 1961)](“Advertising Rule Adopting Release”).3See Requirements Governing Payments of Cash Referral Fees by Investment Advisers, Release No. 688(July 12, 1979) [44 FR 42126 (Jul 18, 1979)] (“1979 Adopting Release”).4The advertising rule has been amended once, when the Commission revised the introductory text ofpa
marketing rule amends existing rule 206(4)-1 (the “advertising rule”), which we adopted in 1961 to target advertising practices that the Commission believed were likely to be misleading. 2. The rule also replaces rule 206(4)-3 (the “solicitation rule”), which we adopted in 1979 to help ensure
66 examinations and has not had a lapse in registration as an investment adviser or investment adviser or investment adviser representative in any state other than this Department for a period exceeding 2 years immediately prior to the date of filing an application with the Commission.
Adviser Code of Ethics May 2019 . Member FINRA/SIPC. Executive Summary LPL Financial (“LPL”) is an investment adviser (“RIA”) registered with the Securities and Exchange Commission (“SEC”) to engage in investment advisory business. SEC Rule 204A-1 (the “Rule”) under The Investment .
UNIFORM SECURITIES ACTS OF 1956 AND 2002 (Adopted 11/24/2020) (a) It is unlawful for an investment adviser registered or required to be registered pursuant to [section 201 of the 1956 Act or section 403 of the 2002 Act] to provide investment advice to clients unless the investment adviser establishes, maintains, and enforces written policies and
RULE BOOK UPDATED MAY 2019-1 - TABLE OF CONTENTS PAGE RULE 1 Name 2 RULE 2 Objectives 3 RULE 3 Membership 4 RULE 4 Members Entitlements and Obligations 5 RULE 5 Structure 8 RULE 6 Branches 9 RULE 7 Regional Structure 15 RULE 8 National Organisation 19 RULE 9 Officers 26 .
investment advisory services to qualify as an investment adviser. Rather the test is whether any part of the person's activities meet the three elements of "for compensation," "engaged in the business," and "regarding securities." For example, a recommendation to sell securities holdings in order to purchase a .
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registered name has the terms such as Adviser / Advisor / Financial Adviser/ Investment Adviser/ Wealth Adviser/Wealth Manager/Wealth Managers etc. are required get their . app, printed or electronic materials, business card, sign board etc. c. The timeline for making application to RoC
Joanne Freeman – The American Revolution Page 3 of 265 The American Revolution: Lecture 1 Transcript January 12, 2010 back Professor Joanne Freeman: Now, I'm looking out at all of these faces and I'm assuming that many of you have
