The Securities and Exchange Commission plans to release frequently asked questions guidance related to the Marketing Rule, according to Natasha Greiner, director of the agency's Division of Investment Management.
Greiner, speaking at the Investment Adviser Association's annual compliance conference in Washington Friday, said that after three years, "the industry is still grappling" with the rule.
The agency is looking at "two key critical" FAQs related to performance — "the net performance requirement as it relates to abstracted performance and then certain portfolio characteristics," Greiner said.
SEC staff "are considering publishing relief to address challenges" stemming from an FAQ issued on Jan. 11, 2023, "which provides that the performance of individual positions included in an adviser’s advertisements must be presented on a net basis," said Gail Bernstein, IAA general counsel and head of policy.
"The guidance would also address issues related to the presentation of yield, attribution, and other portfolio and investment characteristics."
The forthcoming FAQs are "welcome guidance would remove impediments to advisers sharing important information with investors and reduce the risk of investor confusion," Bernstein said. "The updated guidance would permit advisers to advertise the performance of individual investments as well as portfolio and investment characteristics on a gross basis if the net and gross performance of the entire portfolio is also included prominently in the advertisement."
After taking over the IM director's role a year ago, Greiner said it was a priority for her to look at the "pain points" related to the rule — and "what isn't working."
The SEC "has been doing a lot of outreach over the last year and that engagement has increased," Greiner said.
"The devil is in the details" in providing Marketing Rule relief, Greiner continued. "Give us feedback," she encouraged conference attendees. "I think this is really the tip of the iceberg for the Marketing Rule."
IAA has requested a "re-look" at the Marketing Rule, Greiner said. "I'm not sure it will be something on the policy agenda for the new [SEC] chairman, once confirmed," so the focus has been what can the SEC do in the interim to issue relief.
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