S3:E8 | Marketing Rule Master Class Episode 3 - Impact on Private Funds | Compliance in Context

In the third episode of our new master class series on the SEC Marketing Rule! You’ll hear from host, Patrick Hayes, Calfee along with our industry panelists Genna Garver, Partner, Troutman Pepper, Bree Ward Associate, Akerman LLP, Matt Shepherd, Director, ACA Group. Together, we’ll discuss the general impact of the new Marketing rule to Private Funds. We’ll dive into the requirement to present net performance, the application of related performance to private funds, and considerations around hypothetical performance. We’ll also take a look at other relevant marketing rules and prohibitions that still apply.

With just three months until the compliance date for the new rule, this series is the perfect master class to set you and your firm up for success. Listen and enjoy! 

Show

Interview with Genna Garver, Bree Ward, Matt Shepherd

• 1:50: Introductions
• 4:12: Impact of the new rule to Private Funds
• 15:08: Performance
• 19:15: Extracted Performance
• 32:18: Related Performance
• 43:35: Hypothetical Performance
• 55:10: Endorsements: Replacement of Cash Solicitation Rule, Disclosures, Cap Intro Programs, and Testimonials
• 1:13:10: New private fund rule proposals

Quotes

07:26 –“The big take-away here is that the marketing rule is a merger of the prior cash solicitation rule and the advertising rule... Out of the gate, the combined rule, on its face because of the two-pronged definition to the term advertisement bring in pooled investment vehicle private fund, in particular investors, for compliance generally for both rules and that’s a fundamental shift for how the prior rules both operated.” – Genna

14:11 – “As a practitioner, either on the legal side or the compliance side, you have to presume that written materials or recordings are going to be deemed advertisements. – Genna

18:00 – “Historically, some information has only been presented gross because it’s either mathematically difficult or impossible to come up with a net version of that number. Or is it meaningful to present a net version of that number... The problem is that the rule creates this new definition called extracted performance… The rule explicitly says, if you show extracted performance it must be shown net and that’s a problem. “ - Matt

1:14:37 – “Get your policies and procedures drafted in a way that really tries to catch the ethos of this rule. Which is: Is it fair and balanced? Are you making disclosures? And try to capture your processes in a way that makes sense, that you can justify them, and then follow them.” – Bree

Resources

ACA Group Marketing Rule Resource Library

LinkedIn: ACA Group, Compliance in Context, NSCP

Twitter: @acacompliance, @compliancepod

Websites: ACA Group, Compliance in Context, NSCP