SEC Staff to Advisers: “You Must Fully Comply with the New Marketing Rule. You Can’t Partially Opt-In.”

On March 18, 2021, the staff of the Division of Investment Management released an FAQ regarding the new marketing rule. The new rule becomes effective May 4, 2022, but has a compliance date of November 4, 2022. The FAQ makes clear that an adviser may comply with the new rule prior to November 4, 2022, but they must be fully compliant with all aspects of the new rule when they opt in to compliance. The full text of the FAQ is set forth below:

Q: I understand that an adviser must comply with the amended adviser marketing rule with respect to its advertising and solicitation activities by the compliance date (November 4th, 2022), which is 18 months after the effective date of the rule. May an adviser choose to comply with some of the marketing rule requirements before the compliance date, but not comply with others?

A:  No. An adviser may choose to comply with the amended marketing rule in its entirety any time starting on the effective date, May 4th, 2021. Until an adviser transitions to the amended marketing rule, the adviser would continue to comply with the previous advertising and cash solicitation rules and look to the staff’s positions under those rules. The staff believes an adviser may not cease complying with the previous advertising rule and instead comply with the amended marketing rule but still rely on the previous cash solicitation rule. Advisers are reminded that they should review their compliance policies and procedures in light of regulatory developments, including the adoption of the amended marketing rule. In addition, the staff believes that when advisers transition to the amended marketing rule, they will need to implement any revisions to the written compliance policies and procedures necessary so that they are reasonably designed to prevent violations of the amended marketing rule. Advisers are also reminded that they are required to maintain a copy of all compliance policies and procedures in effect at any time within the previous five years, and that it should be clear when those policies and procedures were in effect.

Leave a Reply