Reviewing and Approving Ads under the New SEC Marketing Rule

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Struggling to implement an ad review and approval process in compliance with the new SEC marketing rule? Get help here.

In our blog post series on the new SEC marketing rule, we’ve explored numerous topics, including the expanded definition of advertising, leveraging technology, testimonials and endorsements, performance advertising, hypothetical performance, third-party ratings, and Form ADV and recordkeeping requirements. We now turn to the process of reviewing and approving ads under the new rule.

What guidance does the new rule give advisers as they review and approve ads? Let’s take a look.

Wait, No Pre-Use Approval Requirement?

As it turns out, the new marketing rule does not require advisers to review and approve ads before each use, as discussed in the proposed rule. Instead, advisers should ensure their advertising practices comply with the policies and procedures they’re required to follow under rule 206(4)-7, the compliance rule.

Now is a good time to review and update policies and procedures to make sure they comply with the new rule. Advisers need to carefully weigh whether and how much their policies and procedures should require training for employees involved in the creation, review, or use and distribution of ads. Additionally, advisers should be prepared to promptly supply information about their compliance policies and procedures in response to SEC requests.

So How Do I Make Sure My Ads Are Compliant?

The SEC staff believes advisers’ policies and procedures should contain “objective and testable means reasonably designed to prevent violations” of the new marketing rule. Here are some sample methods advisers may use to ensure compliance with the new rule.

Compliance Policies & Procedures Testing Methods

In our recent webinar on the new marketing rule, we discovered that 43 percent of voting attendees want to use technology to facilitate the ad review and compliance alert process. But many advisers grapple with the new rule precisely because of all the gray areas in technology. In our next post, we’ll help you navigate some of these complexities as we consider social media advertising under the new rule.

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