SEC's New Ad Rule: The Pros and Cons

Advisors enter 2021 with a new rule that allows them to advertise with 21st Century tools, such as client testimonials. The 400-page rule approved by the Securities and Exchange Commission is "complex and lengthy," as noted by the law firm Sidley Austin, and "will be much for lawyers, compliance officers, marketing staff, and others to absorb." The amendments — which create a single rule that replaces the current advertising and cash solicitation rules — were adopted by a unanimous vote, but the commissioners also voiced reservations. "This reflects the twin realities of the rulemaking," according to a recent Sidley alert. First, "the amendments are badly needed; the rules that the marketing rule will replace have become dated, inconsistent with current industry practice and, at times, borderline unworkable," Sidley said. Second, "the amendments present something for everyone to like or dislike. While the final rule drops or relaxes some provisions from the original proposals that deeply concerned the industry, advisers and marketers still face significant new complexities," it explained. Read the galley above to see more on the rule's pros and cons, as cited by the agency's commissioners — including Acting SEC Chair Allison Herren Lee.