The umbrella group of U.S. state and provincial regulators, the North American Securities Administrators Association (NASAA), is proposing changes to the marketing rules for investment advisers — to lift some of the restrictions on the content that advisers can include in their advertising.
NASAA is seeking feedback on reform proposals that aim to more closely align its requirements with the U.S. Securities and Exchange Commission’s (SEC) rules in this area, following changes to the SEC’s rules in 2021. Those changes allow adviser marketing to include testimonials, endorsements, third-party ratings and performance reports. Previously, these were prohibited under the SEC’s rules, and they remain banned under NASAA’s rules.
Now, amid concerns about the divergence in the rules and the impact on advisers, the state regulators are proposing to rescind the existing prohibition on content that’s now permitted under the SEC rules.
“The ability of [federally regulated] advisers to advertise in ways that state-registered advisers may not could put state-registered advisers at a competitive disadvantage,” noted NASAA in its proposal.
The proposal acknowledged that some regulators want to preserve these prohibitions in the NASAA rules. However, it concluded that consistency with the SEC’s rules is more important.
As a result, it’s proposing to scrap the specific prohibitions contained in its rules that conflict with the SEC’s requirements.
“These proposed amendments reflect NASAA’s efforts to provide a model for updates to state investment adviser advertising rules based in part on changes made by the SEC to marketing rules for SEC-registered advisers,” said Leslie Van Buskirk, NASAA’s president, in a release.
The deadline for feedback is Aug. 28.