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The Securities and Exchange Commission's final rule on registered investment advisors' advertising and marketing practices was published in the Federal Register Friday — setting in motion a May 4 effective date.
RIAs have 18 months to come into compliance with the new rule.
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The SEC passed the ad rule changes in late December. The rule allows advisors to use testimonials and endorsements, which include traditional referral and solicitation activity, subject to certain conditions.
The amendments create a merged rule that will replace both the current advertising and cash solicitation rules.
Karen Barr, president and CEO of the Investment Adviser Association, told ThinkAdvisor Friday in an email that publication "means the rule won't be delayed for further review, and investment advisors now have a firm compliance deadline of Nov. 4, 2022," with 18 months to modernize their marketing and advertising programs.
John Baker, a lawyer with Stradley Ronon in Washington, told BenefitsPRO's sister publication ThinkAdvisor Friday in an email that publication of the rule in the Federal Register "should put to rest any questions as to whether the Commission was having second thoughts about the rulemaking. That always seemed unlikely, when the action was unanimously approved."
Industry officials had wondered if Gary Gensler, President Joe Biden's pick to be the next SEC chairman, would voluntarily follow Biden's recent regulatory freeze directive, as independent agencies like the SEC are exempt from it.
The rule replaces the current advertising rule's "broadly drawn limitations with principles-based provisions designed to accommodate the continual evolution and interplay of technology and advice," and includes tailored requirements for certain types of advertisements.
The SEC also adopted related amendments to the investment advisor registration form and to the books and records rule. Form ADV was also amended to require advisors to provide additional information regarding their marketing practices to help facilitate the SEC's inspection and enforcement capabilities.
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
