The News: The Securities and Exchange Commission is proposing a rule to loosen investment advisor advertising restrictions that have been in effect since the Kennedy Administration.
Who It Affects: Anybody under the scope of the Investment Advisers Act of 1940.
Why It’s Important: Advisors are severely restricted in any kind of advertisement and even something that can be read as a third-party endorsement may run afoul of the current rules.
Background: The SEC under the Trump Administration has been focused on reducing regulatory burden. This one would remove what many called an antiquated reg.
The new amendments would “replace the current rule’s broadly drawn limitations with principles-based provisions,” according to an SEC press release. “The proposed approach would also permit the use of testimonials, endorsements, and third-party ratings, subject to certain conditions, and would include tailored requirements for the presentation of performance results based on an advertisement’s intended audience.”
The new definition of an advertisement would include, “any communication, disseminated by any means, by or on behalf of an investment adviser, that offers or promotes investment advisory services or that seeks to obtain or retain advisory clients or investors in any pooled investment vehicle advised by the adviser.”
What’s Next: The SEC will accept public comment for the proposal for 60 days following publication in The Federal Register.