In November 2022, the Securities and Exchange Commission’s (SEC) new Marketing Rule went into effect for all SEC-registered firms. But, what about the registered investment advisers (RIA) registered at the state level?
While not all states have adopted the new rule, many states have, in fact, implemented at least some form of the new Marketing Rule. In order to remain in compliance and avoid potential fines and penalties, advisory firms must firstly understand which regulations are applicable to their firm (based on registration) and subsequently integrate the appropriate policies and procedures to reflect the necessary protocols under the relevant regulation(s).
The SEC Marketing Rule on a state level: What state-registered RIA firms need to know
Marketing and advertising are essential tactics in attracting new clients, however, certain precautions must be followed to ensure your RIA firm does not violate any regulations which restrict certain marketing activities.
For state-registered RIAs, the regulations can vary greatly from state to state. For instance, the following states have incorporated or reference the new SEC Marketing Rule in their own regulations on the matter:
- Rhode Island.
While other states, such as the ones listed below, have spelled out their own rulings as it relates to marketing and advertising material:
As the guiding document which your firm will use to maintain and enforce your firm’s internal policies on all aspects of your business, your policies and procedures manual must comprehensively document all processes designed to keep your firm in compliance – including the handling of marketing and advertising material.
As compliance consultants for both state- and SEC-registered firms, we believe the best way to ensure compliance with all marketing and advertising regulations is to prepare and incorporate policies and procedures manual language which covers “all states” by including both SEC and state restrictions. In doing so, your advisory firm puts it proverbial best foot forward in proactively mitigating regulatory risk for marketing and advertising.
While updates to the SEC Marketing Rule were largely designed to reflect the current marketing landscape and give advisory firms new opportunities (specifically as it relates to use of testimonials and endorsements), it also brings new requirements which advisory firms must follow – or risk potential enforcement action. By taking a proactive approach and incorporating policies and procedures language which is reflective of multiples state regulations (including for states adopting the SEC Marketing Rule), your RIA can effectively market to and attract new clients without running afoul of regulatory restrictions.
RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.