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By Greenberg Traurig LLP , an international law firm headquartered in Miami, FL.

On Aug. 9, 2024, the Securities and Exchange Commission initiated administrative and cease-and-desist proceedings against a U.S. registered investment adviser. This action resulted from the Adviser's failure to comply with the SEC amended Marketing Rule under the Investment Advisers Act of 1940 (Advisers Act), adopted to modernize rules that govern investment adviser advertisements and payments to solicitors.

Specifically, the Adviser had advertised hypothetical performance on its public website without implementing policies and procedures to ensure the performance data was relevant to the intended audience's financial situation and investment objectives.

Background

The Marketing Rule, which the SEC amended in December 2020, replaced the then-current advertising rule's broad limitations with principles-based provisions to accommodate the evolution and interplay of technology and investment advice, including through tailored requirements for certain types of advertisements. Most relevant in this instance, the Marketing Rule restricts investment advisers from including hypothetical performance in advertisements unless they design policies and procedures to ensure the performance data is relevant to the likely financial situation and investment objectives of the intended audience.

During the relevant period, the Adviser's website featured advertisem......................

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