Proposed Amendments To Advertising Rule For Registered Investment Advisers


In November 2019, the SEC proposed amendments to the advertising rules promulgated under the Advisers Act for RIAs. Among other things, the proposed rules would allow the use of hypothetical performance, related performance, and extracted performance subject to satisfaction of certain conditions. An RIA would be required to adopt policies and procedures reasonably designed to ensure that hypothetical performance is disseminated only to persons for whom it is relevant to their financial situation and investment objectives. The hypothetical information would have to be accompanied by disclosure related to the criteria used, the assumptions made and the limitations of, and associated risks of reliance on, the information. Perhaps if adopted these amended rules relating to hypothetical performance may provide a useful analogy for structured products marketing materials that frequently include hypothetical backtested data.

Originally published in REVERSEinquiries: Volume 3, Issue 1. Click here to read the articles in this latest edition.

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