Advertising Under Marketing Rule

Advertising Under the SEC Marketing Rule The SEC Marketing Rule is a high-yield exam topic within Section IV (Laws, Regulations & Guidelines), which accounts for roughly 30% of the Series 65 exam. Expect one to several questions testing whether an investment adviser's communications comply with specific Marketing Rule requirements — particularly around testimonials, endorsements, and performance advertising. --- ## What Is the SEC Marketing Rule? The SEC Marketing Rule (formally an amendment to Rule 206(4)-1 under the Investment Advisers Act of 1940) governs how registered investment advisers may advertise to prospective and existing clients. It replaced older, more restrictive rules and introduced a principles-based framework with specific prohibitions and conditions. An advertisement under the Marketing Rule broadly includes any communication — written, electronic, or oral in recorded form — disseminated to more than one person (or to a single prospective client) that offers advisory services or promotes the adviser. --- ## Core Prohibitions The Marketing Rule identifies seven general prohibitions for all adviser advertisements. Advertisements may NOT: 1. Include untrue statements of material fact 2. Include materially misleading implications or omissions 3. Make unsubstantiated claims 4. Reference specific investment advice that was profitable without fairly disclosing risks 5. Include cherry-picked performance results 6. Include hypothetical performance without required disclosures and policies 7. Otherwise be misleading in any way --- ## Testimonials and Endorsements This is among the most testable sub-topics within the Marketing Rule. - A testimonial is a statement by a current client about the adviser's services. - An endorsement is a statement by a non-client (e.g., a celebrity or influencer) about the adviser. ### Key Requirements for Testimonials and Endorsements | Requirement | Detail | |---|---| |…