Compliance Solutions for Investment Advisers

What the SEC Has to Say About Performance Advertising

The SEC’s National Examination Program (NEP) examination priorities for 2012 lists marketing and performance advertising as a key focus area. Specifically, the NEP release states:

“Marketing and performance advertising is an inherently high-risk area due to the highly competitive nature of the investment management industry. Aberrational performance of certain registrants and funds can be an indicator of fraudulent or weak valuation procedures or practices. The staff will also focus on the accuracy of advertised performance, including hypothetical and back- tested performance, the assumptions or methodology utilized, and related disclosures and compliance with record keeping requirements. Where feasible, the staff will also review changes in advertising practices related to the JOBS Act, which requires modification of the rules restricting general solicitations.”

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