SEC Proposals

SEC proposes advertising and cash solicitation rules overhaul

Brian T. Daly, Marc E. Elovitz, Brad L. Caswell and Christopher S. Avellaneda, SCHULTE ROTH & ZABEL
Originally published in the November | December 2019 issue

On Nov. 4, 2019, the U.S. Securities and Exchange Commission issued proposed amendments to the Advertising Rule (“Proposed Advertising Rule”) and Cash Solicitation Rule (“Proposed Solicitation Rule”) under the Investment Advisers Act of 1940 (“Advisers Act”) (collectively, the “Proposed Rules”).1

The Proposed Advertising Rule represents a comprehensive overhaul of the existing “Advertising Rule” (Rule 206(4)-1), which has not been substantively updated since it was adopted in 1961. The Proposed Advertising Rule seeks to dramatically shift the model for regulating advertisements under the Advisers Act from a prescriptive to a principles-based approach. The proposing release runs over 500 pages and provides detailed and thoughtful analyses of a broad range of issues under the Advertising Rule, seeking to update the Rule for the current era. We have highlighted some of the key proposals below, including with respect to the Cash Solicitation Rule, Books and Records Rule, and Form ADV.

The SEC is soliciting comments on a wide range of items relating to the Proposed Rules, with all comment letters due within 60 days after the publication of the Proposed Rules in the Federal Register. 

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