July 20, 2022

Jeff Blumberg Comments on the SEC’s New Marketing Rule With FundFire

In an article titled “Industry Braces for Impending Marketing Rule Implementation Deadline,” investment management partner Jeff Blumberg spoke with FundFire about the Securities and Exchange Commission’s new rule governing industry advertisements and marketing.

Blumberg explained that the marketing rule is a positive for the industry since it removes prohibitions that “just didn’t make sense anymore,” such as testimonials, and provides guidance on the broader use of social media.

“The rule has a significant effect on what the compliance officer has to do as far as record keeping, and sort of making sure the firm isn’t stepping on any hidden landmines,” Blumberg said. “Historically, you haven’t been allowed to use testimonials, and a lot of traditional [registered investment advisers] — especially the salespeople — all they see is that testimonials are now allowed.”

Blumberg noted that there is still compliance legwork involved with testimonials, such as determining who qualifies as a client and who does not, and whether clients are paid to give testimonials. “There’s a lot of underlying disclosure that has to be put in place,” he added.

Further, Blumberg discussed how certain social media platforms post challenges. “Chances are my client is going to say something in their tweet that crosses a line,” he said. “If I retweet that now, I’ve crossed that same line.”

Regarding firms revising policies and procedures ahead of the rule, Blumberg stated that these revisions could be a heavier lift for smaller firms, who may need to work with third-party software providers to help them comply with the new rule.

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