Marketing Rule

Replaced the former advertising and cash solicitation rules with a single principles-based rule. Paragraph (a) sets seven general prohibitions, including untrue statements, unsubstantiated claims, benefits discussed without fair and balanced treatment of material risks, and performance presented without fairness and balance. Paragraph (b) permits testimonials and endorsements subject to disclosure, oversight, written agreement and disqualification conditions. Paragraph (c) conditions third-party ratings. Paragraph (d) governs performance, including net alongside gross with equal prominence, one, five and ten year periods, and conditions on hypothetical, extracted and predecessor performance. 86 FR 13024 (5 March 2021), amended at 87 FR 22447 (15 April 2022).

• 01Anything that meets the rule's definition of an advertisement is in scope, including much that firms still call a pitch deck or a one-pager.
• 02The adviser needs a reasonable basis for believing it can substantiate each material statement of fact on demand. In practice that is easiest to show with the substantiation assembled before the piece goes out.
• 03Net performance shown with at least equal prominence to gross, and one, five and ten year periods for portfolios other than private funds.
• 04Compensated testimonials and endorsements need the disclosures, oversight, written agreement and disqualification check, subject to the (b)(4) exemptions for de minimis compensation and affiliated persons.

• Gross performance shown larger, earlier or more often than net.
• Hypothetical performance distributed to an audience the adviser has not shown it assessed for relevance.
• Claims like 'award winning' or 'top ranked' with no record of the questionnaire behind the rating.
• No substantiation file, so a demand under (a)(2) cannot be answered.