Part 3: SEC Marketing Rule Compliance Guide

Stay Ahead of Enforcement

If you missed Part 1 covering recent SEC penalties or Part 2 on building compliant systems, check them out here and here. Now let's get into the detailed compliance checklist, what you actually need to verify to keep your marketing compliant.

Want this checklist in easy to use word format? Send me a message requesting your copy of the SEC Marketing Rule Audit Checklist.

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Also a couple of caveats:

· This is a living document – if you have ideas to add – please send them to me

· Being that it is my focus, and the focus of most of my Subscribers, this is private fund focused.

1. Essential Policies & Procedures

The Foundation You Can't Skip

Get a marketing policy in writing that is tailored for your IA and shows that you have reviewed the Marketing Rule. The Marketing Rule requires having a policy. Not having one is basically handing the SEC a violation on a silver platter. Your policy needs to clearly define when the rule applies and how your firm complies.

Core Policy Requirements

☐ Written Marketing Rule policy in place and current which are updated to reflect the new rule

☐ Marketing Rule policy tailored to firm type (e.g., private fund adviser, dual registrant, SMA manager) and considers actual use cases.

☐ Policy defines what qualifies as an "advertisement"

☐ Policy has clearly defined that one-on-one communications containing hypothetical performance or compensated testimonials/endorsements are considered "advertisements" under the Marketing Rule, except for the limited exclusion for hypothetical performance provided in response to unsolicited requests or one-on-one communications to private fund investors as specified by the rule

☐ Firm has identified whether any communications fall under exclusions (see below) from the "advertisement" definition and has documentation supporting the rationale.

☐ Policies and reviews reflect the Marketing Rule’s requirement that all advertising must be fair and balanced, and not materially misleading.
☐ Hypothetical performance procedures documented, if applicable
☐ Performance presentation standards documented

☐ Multimedia content (video, podcasts, webinars) reviewed and retained if deemed advertisements
☐ Social media policy covers firm and employee accounts

☐ LinkedIn and other social platforms monitored and pre-approved where required.

☐ Annual compliance review of marketing policies completed and documented

Communications Excluded from “Advertisement” Definition

☐ Extemporaneous, live, oral communications (spontaneous verbal discussions)
☐ Regulatory filings and notices (e.g., Form ADV, statutory or regulatory notices, filings, or other required communications designed to satisfy regulatory requirements)
☐ Hypothetical performance provided in response to an unsolicited request from a prospective or current client or private fund investor
☐ Hypothetical performance provided in a one-on-one communication to a prospective or current investor in a private fund advised by the adviser

Review & Approval Process

The SEC expects a real review process for advertising materials. Having a policy is step one. Actually following it is what keeps you out of trouble.

Some basic questions:

· Who writes your disclaimers?

· Who reviews your marketing materials?

· Who gets trained on the Marketing Rule?

· Who does the training?

☐ Best practice is to have a designated reviewer(s) for all marketing materials (including if created by a third party)
☐ Approval process documented and consistently followed
☐ System in place to update or remove outdated materials (check your website for materials that may have been written before the Marketing Rule was amended)
☐ Regular training provided on Marketing Rule requirements

Documentation & Recordkeeping

Advisers must maintain:
• Documentation supporting the calculation of performance
• Documentation supporting any material statement of fact
• Copies of all advertisements disseminated
• Records of the required annual review of compliance policies

☐ All advertisements retained for at least 5 years
☐ Documentation supporting performance claims maintained
☐ Current and complete policies and procedures retained
☐ Review and approval records available
☐ Annual compliance review specifically includes marketing materials review and is properly documented
☐ Training records maintained showing who received Marketing Rule training and when
☐ Decision-making process documented for material claims (not just the final materials)

☐ Records of oral marketing communications (scripts or recordings), if used, retained when they meet the definition of an advertisement.

☐ Archived copies of webpages, social media posts, and interactive tools retained in compliance with Books & Records Rule.

☐ Agreements, communications, disclosures, and oversight records related to solicitors and placement agents

☐ Firm reviews and retains marketing materials prepared by third parties (consultants, platforms, sub-advisers) that are used in firm advertising.

2. Content-Specific Compliance

Performance Presentations

☐ Both gross and net performance shown, with fee disclosures
☐ Time periods consistent (no cherry-picking)
☐ Extracted performance includes net performance for the full portfolio
☐ Model fees and model performance clearly disclosed
☐ Third-party ratings include methodology and required disclosures
☐ Predecessor performance meets the portability requirements (e.g., same team, strategy, ownership)

☐ Documentation maintained showing continuity in personnel, strategy, and decision-making processes when using predecessor performance
☐ Predecessor firm disclaimers included to clarify any limitations or material differences
☐ Present material in a fair and balanced manner, including risks and limitations alongside benefits
☐ Note: Non-private funds must show 1, 5, and 10 year performance and follow interim period standards under the Marketing Rule

☐ Cross-check consistency with Form ADV Part 2A and other disclosures

Investor Relations & Due Diligence Compliance

☐ Pitch deck materials reviewed for hypothetical performance disclosures
☐ Investor meeting presentations comply with performance presentation standards
☐ Due diligence questionnaire responses consistent with marketing policies
☐ Third-party platform profiles monitored and controlled
☐ Investor letter performance claims properly documented and supported

Hypothetical Performance

☐ Written policies and procedures in place specifically addressing the use of hypothetical performance
☐ Hypothetical performance is clearly labeled and distinguished from actual performance
☐ Methodology used to calculate performance is clearly explained and available to the audience
☐ Key assumptions and limitations are prominently disclosed
☐ Information is tailored and relevant to the financial situation and investment objectives of the intended audience

☐ Hypothetical performance only shown to investors with the financial expertise to understand it
☐ Presentation is clear, fair, and not misleading, and understandable to the intended audience
☐ If interactive tools are used, they are reviewed to determine whether outputs constitute hypothetical performance, and appropriate disclosures are included

Model Performance Disclosures
☐ Disclosure that model fees were used
☐ Application of the highest fees and expenses a prospective investor could be charged
☐ Confirmation the presentation is not misleading

Backtested & Projected Performance
☐ Backtested performance disclosures clarify that the results were generated using historical data and were not achieved by actual client accounts
☐ Projected or targeted returns include a reasonable basis, plus clear and prominent disclosures that actual results may differ materially

Testimonials & Endorsements

☐ Speaker identified as client/investor or not
☐ Compensation disclosed clearly, unless total compensation paid to the promoter is $1,000 or less in the preceding 12 months
☐ Any material conflicts disclosed

☐ Testimonials and endorsements reviewed to ensure presentation is fair and balanced (e.g., not cherry-picked or misleading)
☐ Disclosures appear near the content, not hidden
☐ Written agreements in place with all promoters (except affiliates and unpaid promoters or paid de minimis)
☐ Oversight system established to monitor promoter compliance with Marketing Rule requirements
☐ Process to ensure promoters understand and follow disclosure requirements
☐ No "bad actors" and other ineligible persons used as promoters (check Reg D 506(d) status)
☐ Third-party content reviewed for compliance
☐ Combined advertisements (e.g., testimonial + performance) comply with all applicable requirements
☐ Have a process to monitor third-party testimonials and ensure disclosures remain accurate and up to date

Note: Placement agent arrangements and social media endorsements raise additional compliance considerations, especially regarding compensation structures, platform limitations, and supervisory oversight. Additional disclosures and monitoring may be required in those contexts.

Third-Party Rankings

☐ Adviser has a reasonable basis for believing the questionnaire or survey:
  ☐ Allowed equally easy favorable and unfavorable responses
  ☐ Was not designed to produce a predetermined result

☐ Due diligence performed on the third-party rating provider’s methodology and survey process

☐ Advertisement clearly and prominently discloses:
  ☐ The date of the rating
  ☐ The time period the rating covers
  ☐ The identity of the third party that created and tabulated the rating
  ☐ Whether compensation was provided by the adviser in connection with the rating

☐ Supporting records maintained, including copies of the rating, methodology, and any related agreements

☐ Adviser avoids using ratings or accolades that do not meet the rule’s criteria, such as informal blog lists or reviews

Placement Agent & Solicitor Oversight

If your firm uses third-party solicitors, placement agents, or promoters (including compensated investors), the Marketing Rule treats their communications as your own advertisements. You are responsible for ensuring they comply with all applicable requirements.

☐ Written Agreements – Firm enters into written agreements with all compensated promoters, containing the required disclosures and compliance obligations
☐ Bad Actor Checks – Firm confirms promoters are not subject to disqualification events under Regulation D Rule 506(d), and retains documentation
☐ Disclosure Timing – Required disclosures (e.g., promoter identity, compensation, material conflicts) are provided to prospects at or before any solicitation
☐ Recordkeeping Procedures – Promoter agreements, advertisements, disclosures, and oversight documentation are retained in accordance with Rule 204-2
☐ Regular Oversight Reviews – Firm conducts periodic reviews of promoter activities, including reviewing communications and materials for compliance
☐ Promoter Training – Promoters receive clear instructions on Marketing Rule obligations and firm-specific expectations
☐ Termination Procedures – The firm has a documented process for ending promoter relationships and ensuring deactivation/removal of outdated materials
☐ Cross-Border Considerations – If applicable, firm ensures compliance with foreign solicitation and marketing rules (e.g., AIFMD, FCA COBS)
☐ Technology & Social Media Monitoring – Promoter use of LinkedIn, podcasts, email marketing, or other digital platforms is reviewed and supervised
☐ Complaint Handling Process – The firm has a procedure for tracking and responding to any investor complaints or red flags related to promoter conduct

3. Implementation & Ongoing Management

Cross-Reference Requirements

☐ Form ADV Part 1 accurately reflects use of hypothetical performance, testimonials, and third-party ratings
☐ Marketing materials consistent with Form ADV Part 2A disclosures
☐ Performance claims match regulatory filings and records

Common Trouble Spots to Monitor

☐ Website reviewed regularly for compliance – have materials on the website from before the adoption of the Marketing Rule? They need to be compliant as well
☐ Social media activity monitored and pre-approved as applicable
☐ Testimonials and endorsements include required disclosure which are clearly and prominently placed
☐ All material statements of fact substantiated. This means you need to have a reasonable basis for believing you can prove the truthfulness of those statements if requested by the SEC.

☐ Documentation supporting material statements of fact prepared contemporaneously and retained

Red Flag Check

☐ No unsubstantiated performance or strategy claims
☐ No cherry-picked results without proper context
☐ Material risks clearly disclosed
☐ No misleading suggestions about likely outcomes
☐ Testimonials and endorsements compensation disclosed
☐ No misleading implications about regulatory approval or endorsement
☐ No statements that could be construed as guarantees of future performance
☐ Comparative performance claims properly contextualized and not misleading

☐ Advertisements do not imply SEC approval or registration as an endorsement; disclaimer language reviewed and standardized.

Broader Compliance Considerations

☐ Other regulatory requirements considered (state, international, CFTC, FINRA if applicable)
☐ Compliance with other SEC rules that intersect with marketing (e.g., custody, Regulation S-P, Regulation FD, Rule 10b-5)
☐ Communications accurately categorized as advertisements or exceptions properly noted

☐ Communications made in the context of fundraising, investor relations, and due diligence are reviewed under the Marketing Rule if they meet the definition of an “advertisement”
☐ Composite performance calculations consistent and fairly presented
☐ Assumptions, limitations, and methodologies for any model, backtested, or projected performance clearly documented and tailored to audience
☐ Disclosures presented clearly and prominently (no fine-print that can’t be read)

The Bottom Line

The SEC has made Marketing Rule compliance a clear priority, as shown by recent enforcement actions and penalties. Tailor this checklist to help your firm stay compliant — and avoid becoming the next enforcement statistic.