Achieving full compliance with the SEC Marketing Rule requires a systematic, documented approach. The following fifteen-step checklist provides a structured framework for investment advisers seeking to align their practices with Rule 206(4)-1. Each step should be completed in order and revisited at least annually as part of the firm ongoing compliance program.
Policies & Inventory (Steps 1–2)
- Step 1: Update your written compliance policies and procedures to incorporate the Marketing Rule requirements — include definitions of advertisements and endorsements, approval workflows, and recordkeeping procedures
- Step 2: Conduct an inventory of all existing marketing materials (website content, pitch decks, fact sheets, social media posts, third-party profiles) and flag materials that require revision
Testimonials & Endorsements (Steps 3–4)
- Step 3: Establish testimonial procedures requiring written consent, mandatory disclosures about client status and compensation, and documentation of the selection methodology
- Step 4: Implement endorsement disclosure requirements — all endorsers must disclose their relationship with the adviser, material conflicts of interest, and compensation terms
Performance & Hypothetical (Steps 5–6)
- Step 5: Review and update performance presentation standards — ensure net-of-fee returns, standardized time periods, portfolio identification, and past-performance limitations disclosures
- Step 6: Develop specific policies for hypothetical performance (backtested results, model portfolios, projected returns) and limit distribution to appropriate audiences
Social Media & Records (Steps 7–8)
- Step 7: Update your social media policy to address Marketing Rule requirements — posts by advisory personnel promoting firm services constitute advertisements and require pre-approval
- Step 8: Ensure books and records procedures comply with amended Rule 204-2 (retention of all advertisements, performance calculations, testimonial records, and approval records)
Review & Substantiation (Steps 9–11)
- Step 9: Establish CCO or designee review procedures requiring documented pre-use approval of all advertisements
- Step 10: Create third-party rating procedures — verify questionnaires and criteria, confirm no payment for ratings, and check currency
- Step 11: Implement a substantiation file for all material claims of fact with supporting data producible during SEC examination
Training & Monitoring (Steps 12–15)
- Step 12: Train all advisory personnel (portfolio managers, client-facing staff, marketing teams) on Marketing Rule requirements and internal approval processes
- Step 13: Establish a periodic review cycle (minimum quarterly) to audit marketing materials for ongoing compliance
- Step 14: Develop a process for monitoring regulatory developments, enforcement actions, and SEC staff guidance
- Step 15: Conduct an annual mock examination simulating an SEC document request related to marketing practices
This checklist should be documented and maintained as part of your firm annual compliance review under Rule 206(4)-7. Assign ownership for each step, establish completion deadlines, and track remediation through a centralized compliance management system.