SEC Overhauls Marketing Rules for Investment Advisers

On December 22, the SEC announced a major rule change that it hopes will clarify what investment advisers can and can’t do when it comes to marketing their services. Continue reading

On December 22, the SEC announced a major rule change that it hopes will clarify what investment advisers are permitted to do when it comes to marketing their services.

The SEC cited the need to adapt its rules to changing communications technology. “The marketing rule reflects important updates to the traditional advertising and solicitation regimes, which have not been amended for decades, despite our evolving financial markets and technology,” said SEC Chairman Jay Clayton in announcing the overhaul.

The SEC’s current rules about advertisements and paying for client referrals will be consolidated into a single rule. Paying a third party to solicit new clients will now be considered a form of advertising, as will paid testimonials and endorsements and some one-on-one communications with clients.

Currently, each of these activities is subject to a separate set of requirements. By bringing them under the definition of advertising, the new rule replaces this complex system with a set of six broad principles that all forms of IA advertising must adhere to:

  1. No untrue statements or omissions of material facts
  2. No unsubstantiated statements
  3. No statements that imply something untrue or misleading
  4. When the benefits of the IA’s services are discussed, there must be a fair and balanced discussion of material risks
  5. “Anti-cherry picking”: the IA must present its track record in a fair and balanced way
  6. No advertisements that are otherwise materially misleading (intended as a “catch-all provision” for misleading advertising not covered above)

The rule change is expected to take effect sometime in the spring of 2021 and will affect the Series 65 and Series 66 exams.

SEC Announces Major Revisions to Registration Exemptions Aimed at “Harmonizing” Regulation A Offerings, Regulation D Private Placements, and Crowdfunding

On November 2, the SEC announced a collection of rule changes meant to, in the announcement’s words, “harmonize, simplify, and improve” its “overly complex exempt offering framework.” Continue reading

On November 2, the SEC announced a collection of rule changes meant to, in the announcement’s words, “harmonize, simplify, and improve” its “overly complex exempt offering framework.” The changes affect Regulation A, which governs small public offerings; Regulation D, which governs private placements; and Regulation CF, which governs crowdfunding. This system of exemptions allows various small offerings to avoid the normal registration process required by the Securities Act.  
 
The rule changes should provide a clearer choice as to which exemption is most appropriate to an issuer, based on how much the issuer needs to raise and other factors.
 
The changes also seek to clarify how issuers can avoid “integration” of exempt offerings. Integration is the risk that exempt offerings will be considered a single offering by the SEC, because the offerings are too similar.
 
Highlights of the changes include:
 
  • If two exempt offerings are conducted more than 30 days apart, they are almost always protected from integration.
  • An issuer can “test the waters” with potential investors before deciding which exemption it will use for an offering. Test-the-waters communications solicit interest in a potential offering before the issuer has filed anything with the SEC. Previously, an issuer could only test the waters after deciding that its potential offering would take place under Regulation A.
  • Caps on the amount that may be raised through these exemptions have been increased:
    • Crowdfunding: from $1.07 million to $5 million
    • Regulation A, Tier 2: from $50 million to $75 million 
    • Regulation D, Rule 504: from $5 million to $10 million
  • Make “bad actor” exclusions more consistent across different exemptions.
The rule changes will take effect early next year. Until the changes take effect, securities exam questions will continue to be based on the old rules. FINRA Exams affected by these rule changes include the SIE, Series 6, Series 7, Series 14, Series 22, Series 24, Series 65, Series 66, Series 79, and Series 82.

Solomon’s Industry News: June 2016 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – June 2016.

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Solomon’s Industry News: May 2016 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – May 2016.

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Solomon’s Industry News: April 2016 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – April 2016.

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Solomon’s Industry News: March 2016 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – March 2016.

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Solomon’s Industry News: February 2016 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – February 2016.

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Solomon’s Industry News: January 2016 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – January 2016.

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Solomon’s Industry News: December 2015 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – December 2015.

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Solomon’s Industry News: November 2015 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – November 2015.

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