Pitfalls of Performance Advertising by Investment Advisers

In this age of technology, advertising and marketing by investment advisers can be very economical and the venues numerous.  Advisers utilize websites, social media, blogs and blast messages as their main distribution channels and all of these mediums have far reaching capabilities. While the SEC has issued a multitude of guidance in the way of no-action letters, Risk Alerts, and enforcement cases that pave the landscape of requirements covering advertising and marketing by investment advisers, such guidelines are not contained within the text of Rule 206(4)-1.

This month’s Risk Management Update outlines the main prohibitions covering this area, discusses common pitfalls and risks regarding performance advertising, and provides information and practical tips that can help firms ensure compliance with the regulatory requirements governing marketing and advertising.

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