Finally, the SEC Is Looking at Modernizing the Advertising Rule
Posted by Sanja Lamba, IAA Assistant General Counsel
If your firm engages in marketing, including via a website, social media or email, you are painfully aware of the restrictions imposed by the SEC’s Advertising Rule for investment advisers (Rule 206(4)-1). Calling the rule outdated would be a massive understatement. It has been on the books substantially unchanged for nearly six decades!
Good news! It appears that the SEC will reexamine the Advertising Rule at long last. The SEC’s published regulatory priorities for 2018 include amending the rule to “enhance marketing communications and practices by investment advisers.”
The IAA has long advocated for modernizing the Advertising Rule and we are pleased to see our efforts bearing fruit. We certainly intend to engage with the SEC and will provide significant comments as it considers changes to the rule. In fact, front and center in our letter welcoming Chairman Jay Clayton to the SEC was our view that the current rule is unworkable in the 21st century and our recommendation that the Chairman initiate a retrospective review of the rule.
Of course, the devil is in the details and we look forward to working with the SEC and our members to improve regulation in this area. As we consider specific improvements, we think it is important to bear in mind the following:
The manner in which investors communicate and obtain information continues to evolve.
There was a time when investors relied solely upon information mailed to them, reading newspapers, or watching television. For historical information, investors typically went to the library. Anyone remember microfiche? Technology has removed traditional barriers to obtaining information. The Internet, the use of social media, and other modern advancements in communications have led to the significant proliferation of the availability of information. Investors can now access and assimilate a vast trove of information into their decision-making process. In addition, mobile devices have changed the way investors read, absorb, and respond to marketing and accompanying disclosures. The SEC should carefully consider the role technology plays in how investors communicate and obtain information today and into the future.