How are investment firms complying with SEC Marketing Rule?
In the fall, it will be two years since the compliance deadline for the SEC Marketing Rule for investment management firms, but how are firms ensuring that they stay within the rules?
A new report from the CFA Institute and the IAA reveals compliance practices of 189 firms, mostly smaller ($1B-$5B AUM), and mid-size ($50B-$250B AUM) firms with 90% claiming compliance with CFA Institute Global Investment Performance Standards.
Karyn Vincent, CFA, CIPM, Senior Head of Global Industry Standards, CFA Institute, said that the SEC Marketing Rule continues to be a hot topic of discussion among impacted firms and noted the substantial overlap between GIPS® and the SEC Marketing Rule.
“Until now, firms have had to rely on anecdotal information for insights into how their peers are complying. The survey results remove this uncertainty,” Vincent said. “As an example, the results show that a majority of investment firms are calculating composite net returns using model fees. This is especially the case for larger asset managers. We hope this new information offers a baseline of understanding for firms to use in assessing their policies for complying with the SEC Marketing Rule.”
The rule, which has been criticized as having ‘fallen short’ of industry expectations in a recent report, applies to SEC-registered investment management firms in the United States and those firms globally who market investment products in the US.
The CFA Institute/IAA report found that the biggest challenge for complying with the SEC Marketing Rule is determining which information is considered “performance” that must be presented on a net basis.
Other key findings include:
There are more findings on the CFA Institute website.
“The SEC’s Marketing Rule
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