On September 19, 2022, the Securities and Exchange Commission (the "SEC") increased its pressure on private funds and their need to get into full compliance with the new Marketing Rule (Rule 206(4)-1) within the next month and a half. The SEC originally published the new rule in March 2021 with a compliance date of November 4, 2022 to modernize and replace a patchwork or old rules and no-action letters that have been in place for over 60 years.
Now the SEC has sent out a risk alert titled, "Examinations Focused on the New Investment Adviser Marketing Rule" announcing that the SEC intends to begin investigations and enforcement of the new marketing rule immediately.
While enforcement of any of the SEC's rules are to be expected, an announcement with such a narrow focus and in advance of the Marketing Rule's mandatory compliance date suggests a surprising intensity in the Division of Examinations.
The new marketing rule, which is extensive and layered, will affect most communication between investment advisers and their investors. If fund managers have not yet done so, it is time to immediately put in place policies and procedures to get into compliance.
The examination focus areas highlighted by the SEC's September 19, 2022 Risk Alert include:
For a more detailed review of the new Marketing Rule, please see Foley's summary of the new rule, when it was originally published here, and for a copy of Foley's new marketing rule checklist for assistance in your review of all marketing materials after November 4, 2022, please contact email@example.com or firstname.lastname@example.org.