SEC Issues Plan to Modernize RIA Ad Rules
November 6, 2019 by Melanie Waddell
The Securities and Exchange Commission has proposed updates to its Advertising Rule that would let advisors use testimonials, endorsements and third-party ratings to solicit clients, subject to certain conditions. The reforms also include tailored requirements for the presentation of performance results, based on an ad’s intended audience.
“The advertising and solicitation rules provide important protections when advisors seek to attract clients and investors, yet neither rule has changed significantly since its adoption several decades ago,” said SEC Chairman Jay Clayton in a statement late Monday, when the plan was issued.
“The reforms we have proposed today are designed to address market developments and to improve the quality of information available to investors, enabling them to make more informed choices,” Clayton added.
The proposed changes, explained in a 507-page document, aim to replace the current rule’s “broadly drawn limitations with principles-based provisions,” the agency said.
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