S3:E7 | Marketing Rule Master Class - Episode 2 Overview of the Rule and Tricky Legal Aspects | Compliance in Context

The Securities Compliance Podcast: Compliance In Context

Welcome back! In the second episode of our new master class series on the SEC Marketing Rule! You’ll hear from host, Carlo di Florio of ACA Group along with our industry panelists Issa Hanna, Partner, Eversheds Sutherland, Amber Allen, VP and General Counsel, Fairview Investment Services, and Chas Spiros, Principal Consultant, ACA Group. Together, we’ll provide additional insights on the new rule, including misconceptions, key definitions, timelines, ADV changes, and key features. We’ll also cover tricky legal aspects like promoter vs. solicitor and the withdrawal of no-action letters.

With just three months until the compliance date for the new rule, this series is the perfect master class to set you and your firm up for success. Listen and enjoy!

Show

Interview with Issa Hanna, Amber Allen, and Chas Spiros

• 2:30: Overview of the rule and additional insights
• 8:30: Practical application of the rule: What is and isn’t an advertisement?
• 14:17: Prohibitions: What will be prohibited under the new rule?
• 20:30: Solicitors and Promoters: How does solicitation fit within the framework?
• 35:25: Performance: What the requirements that apply to performance?
• 53:45: Form ADV and Books and Records: Are there changes to other rules?

Quotes

5:30 – “They made the rule more evergreen so it could withstand the test of time; and to the extent that mediums of communication change overtime … the rule is equipped to handle that.” - Issa

10:00 – “What I think firms will have to get used to and what is new are the compensated testimonials, and endorsements, and third-party ratings. Firms are going to have to have a mechanism for reviewing this material and memorializing it from a books and records perspective which will be really critical.” – Chas

15:28 – “Instead, firms should use a layered disclosure approach. If you’re going to highlight a benefit of your advisory services, for example, you should also be talking about the material risks that are associated with that benefit. And the risks should be discussed within the “four corners” of the ad.”- Amber

17:09 – “If you’re trying to rely on something being an opinion, you want to make sure that your advertising piece is couching that statement like “in our BU” or “we believe.”” – Amber

25: 33 – “When it comes to testimonials and endorsements, just because something falls within the definition of a testimonial or endorsement doesn’t necessarily make it a prong 1 or prong 2 endorsement under the rule. It has to be compensated, adopted, or entangled by the advisor. There has to be one of those things going on before the endorsement or testimonial becomes an advertisement under the rule and the requirements of the rule kick in.” – Issa

48:53 – “One important component of the application of the new rule is going to be the training component. So with all of these changes with how firms are presenting performance it’s really important to make sure your marketing team is trained well in advance of that November 4 deadline.” - Amber

Resources

ACA Group Marketing Rule Resource Library

LinkedIn: ACA Group, Compliance in Context, NSCP

Twitter: @acacompliance, @compliancepod

Websites: ACA Group, Compliance in Context, NSCP