In November 2019, the SEC issued proposed changes to the advertising and cash solicitation rules to update those antiquated rules and address various concerns. In December 2020, the Commission issued a new marketing rule – Rule 206(4)‑1 under the Investment Advisers Act of 1940 (Marketing Rule) – which amends the existing advertising rule and replaces the cash solicitation rule. The Marketing Rule became effective on May 4, 2021, with an 18‑month transition period. Thus, the compliance deadline is November 4, 2022. Unsurprisingly, a recent investment management compliance testing survey
found that marketing is one of the top three “hot” compliance topics for private fund advisers. In light of concerns around the Marketing Rule’s requirements – and the looming compliance date – the Hedge Fund Law Report is highlighting five articles that will help hedge fund managers meet that compliance deadline. These articles note some of the advertising-related issues that partly led to the Marketing Rule; provide an overview of the rule and its requirements; explain how the cash solicitation rule has been subsumed into the Marketing Rule; discuss the key takeaways and next steps for fund managers’ legal and compliance departments; and examine the use of predecessor performance in advertising. Next week (the week starting May 9, 2022), the HFLR will resume its normal weekly publication.