If you send investors documents showing you’ve delivered a 20% return, now you really have to prove it.
Wall Street’s main regulator is going to require investment advisors to create and maintain any documents that are distributed demonstrating performance calculations or returns, according to a statement Thursday. That will make it easier for the Securities and Exchange Commission to identify fraudulent advertising and pursue misleading claims.
In addition to the new record-keeping requirements, the SEC approved changes Thursday to the so-called ADV form, which investment advisors use to register with the agency. Firms will now have to disclose additional information about separately managed accounts, such as their use of derivatives. Other modifications will streamline registration and reporting for groups of private fund advisors that operate as a single advisory firm.