On 15 January 2026, the SEC staff released two new FAQs addressing issues arising under Advisers Act Rule 206(4)-1 (the Marketing Rule). These FAQs provide important, if technical, guidance to advisers on key provisions of the Marketing Rule and show continued Staff willingness to issue guidance in the form of FAQs.
1.Net Performance and Model Fees: No Per Se Rule
One of the key planks of the Marketing Rule is that investment performance be presented, or accompanied by performance that is, net of fees. The provisions of the Marketing Rule permit, but do not require, advisers to use a model fee when showing net performance. However, a footnote in the adopting release (Footnote 590) seemed to imply that, due to the Marketing Rule’s general prohibitions, it would be misleading to show actual net performance of an account if the strategy or fund being marketed charges fees higher than the advertised account.
The FAQ clarifies that this was not the intent of Footnote 590. The FAQ emphasizes that the Marketing Rule’s general prohibitions are applied based on facts and noted the SEC’s stated intent to provide flexibility. As such, the Staff noted that whether net performance based on actual fees is misleading depends on the overall presentation, including the disclosures provided and how differences between historical and anticipated fees are explained. In other words, it is not per se misleading to show net of fees performance based on actual fees.
2.Testimonials and SRO Final Orders: A Practical Extension
The Marketing Rule prohibits advisers from compensating promoters for a testimonial or endorsement if the promoter is subject to any “disqualifying events”, including certain actions by the SEC and self-regulatory organizations (SROs). With respect to SEC actions, the definition excludes certain orders, but the Marketing Rule did not specifically apply the exclusion to SRO orders. The FAQ establishes a no-action position that permits advisers to compensate promoters subject to SRO final orders that do not result in a suspension or bar so long as advertisements containing testimonials or endorsements disclose for a period of 10 years that the promoter is subject to the SRO final order and include the order or a link to the SRO order.
