Page 39 - Investment Advisor December 2022/January 2023
P. 39
THE PLAYING FIELD
By Melanie Waddell
Still Not Ready for the SEC’s New Marketing
Rule? Here’s What to Do
Compliance experts air their views on what advisors should be doing now
to be ready if the SEC comes knocking.
ow that compliance with the new rule, outstanding marketing
the Securities and Exchange collateral, plans for future marketing
NCommission’s new Marketing (including performance-related market-
Rule has officially kicked in, advi- ing), and their policies and procedures,”
sors and industry attorneys are urging Schatzow said.
advisors not to brush it off — and to Peter Hong, a partner at Stradley
forgo moving ahead with advertising Ronon Stevens and Young in Washington,
and testimonials until their firms are added that if advisors’ policies and pro-
fully compliant. cedures do not satisfy the SEC’s require-
While the compliance date hit on ments, he recommends advisors “hold
Nov. 4, the SEC’s revamped advertising off on disseminating advertisements
and marketing rule was adopted by the and suspending any third-party refer-
SEC in December 2020 and has been in ral arrangements that started after the
effect since May 2021. I reached out to effective date of the rule” until they’re
compliance experts to get their views on able to comply.
“[Regulators] will likely what advisors should be doing now to be That being said, “any compensation
be heavy-handed in its ready if the SEC comes knocking. obligation for a referral/solicitation
arrangement established prior to the
“I would encourage them [advisors]
disciplinary actions to immediately call their compliance effective date of the marketing rule is
for firms that are not consultant or lawyer to come into permitted to continue,” Hong added.
Hong recommends that advisors
compliance” if they haven’t done so
in compliance, [since already, says Max Schatzow, partner at make a record of their “decision to sus-
firms have had] roughly RIA Lawyers. pend advertisements and referral/solici-
tation arrangements so that the adviser
While most of RIA Lawyers’ clients
two years to comply.” “reached out to us for assistance” well can show to SEC staff that no violations
in advance of the Nov. 4 compliance of the marketing rule have occurred.”
As to compliance policies and pro-
—Bill Simpson, date, a couple clients waited until just cedures, “I would suggest putting one
days before the deadline “to get across
Hearsay System the finish line,” Schatzow relayed, while together the best they can initially, and
others “made some calculated decisions to continually work on revising the poli-
on their policies at the last minute.” cies and procedures until they are rea-
Since the SEC will be conducting sonably satisfied,” Hong stated.
“focused exams” on the marketing rule Ken Joseph, managing director
next year, “it is important that they and head of the Financial Services
[advisors] take this seriously,” Schatzow Compliance and Regulation practice for
said. “I wouldn’t wait another second the Americas at Kroll, said that “ques-
before working on compliance.” tions abound” from firms as they assess
Right now, advisors “need to focus where they are in their compliance, and
on their relationships with solicitors, that the “lack of credible guidance” from
their contracts that might implicate the SEC is also becoming more apparent.
DECEMBER 2022/JANUARY 2023 INVESTMENT ADVISOR 37
