Historically, the SEC has expressed concerns about the use of hypothetical performance and other non-standard track records by private fund managers. Although that has changed with the introduction of the SEC’s new marketing rule under Rule 206(4)‑1 of the Investment Advisers Act of 1940, the road ahead is not smooth. Managers will remain subject to stringent rules about how and when non-standard track records can be used. Those obstacles become doubly daunting for any U.S. managers forced to simultaneously comply with the U.K.’s marketing regime in light of certain subtle, but meaningful, differences between the two regimes’ requirements. The Alternative Investment Management Association hosted a webinar featuring K&L Gates partners Michelle Moran and Michael W. McGrath, who has since moved to Dechert, about marketing issues relevant to managers subject to both U.S. and U.K. marketing rules. This second article in a two-part series outlines similarities and differences in the treatment of non-standard track records (e.g.
, hypothetical performance, predecessor performance, etc.) across the jurisdictions. The first article
reviewed the key differences between the U.S. and U.K. marketing regimes and identified measures advisers can take to reconcile each regime’s requirements. See “Navigating the SEC’s New Marketing Rule
” (Jul. 8, 2021).