Moderated by Dave Rothschild, Partner at Cole-Frieman & Mallon, Silver’s CEO, Fizza Khan, joined Mike Fitzgerald, Managing Director, Global Head of Cap Intro at TD Cowen, and Malhar Oza, Senior Associate at Cole-Frieman & Mallon, in an in-person panel discussion on Thursday, May 4, 2023, to break down the SEC’s new marking rule for private fund managers. Below is a link to the abridged version of the discussion along with some key takeaways:
- SEC’s new marketing rule replaces, consolidates and modernizes two prior rules (the advertising rule and cash solicitation rule) and hundreds of no-action letters and interpretive guidance. The rule release is 430 pages long, but if it could be distilled into two words they are: “don’t mislead.”
- Adopts a “principles-based” approach, setting out seven broad prohibitions, intending for specifics to evolve with technological and societal changes.
- Gross performance in an advertisement is inherently misleading unless net performance is displayed with equal prominence. This applies to any performance results in an advertisement, including portfolio subsets and case studies.
- Netting fees and expenses out of portfolio subsets poses a myriad of methodological challenges. Consider using case studies to illustrate your investment process, rather than specific results.
- Substantiate all material facts included in an advertisement.
- Avoid hyperbole.
- Review all marketing material with Legal and/or Compliance.
To learn more about Silver’s perspective on the new marketing rule, please read this article. And please feel free to contact Silver with any questions you might have about the impact of the new marketing rule on your firm’s compliance program now and into the future.