Securities Regulation Daily Wrap Up, NASAA NEWS AND SPEECHES—NASAA seeks comment on proposed amendments to Investment Adviser ads, (Jul 30, 2025)
Organizations Mentioned:North American Securities Administrators Association
By Suzanne Cosgrove
The proposal would update NASAA’s rules to align them more closely with the SEC’s current investment adviser advertising standards.
The North American Securities Administrators Association (NASAA) is seeking public comment on proposed amendments to four rules related to investment adviser advertising, allowing them to better conform with federal standards.
“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 NASAA President Leslie Van Buskirk in a statement. “We welcome public input and thank the Investment Adviser Regulatory Section Policy and Review Project Group for their work on this proposal.”
If approved, the resulting amendments would be a long-form model rule consistent with the SEC Marketing Rule, and an option for incorporation by reference.
Comments should be submitted to NASAA on or before August 28.
SEC guidance. The SEC adopted Release IA-5653 on December 22, 2020, to rescind existing rules that addressed investment adviser advertising and cash solicitation by investment advisers and replace them with the Marketing Rule. The Marketing Rule also implemented changes to Form ADV and recordkeeping rules related to marketing by investment advisers.
The “SEC Marketing Rule” became effective on May 4, 2021.
The most notable changes made by the SEC Marketing Rule included the allowance of previously prohibited advertising activities by SEC-registered advisers if they complied with conditions imposed by the rule. Testimonials, endorsements, third-party ratings and performance advertising are permitted provided the investment adviser complies with various conditions imposed by the specific subrules.
Current prohibitions. Under existing NASAA model rules, testimonials, endorsements and third-party ratings are explicitly prohibited, and past specific recommendations are restricted unless the investment adviser also provides full information about all recommendations made by the investment adviser, including the name of each security, the date and nature of the recommendation, the price at the time, the price at which the recommendation was to be acted upon, and the most recently available market price of each security.
Under the SEC Marketing Rule, some advertising activities specifically prohibited for state-registered investment advisers are permitted. The ability of federal-covered advisers to advertise in ways that state-registered advisers may not could put state-registered advisers at a competitive disadvantage.
Proposal components. The Model Marketing Rule is a long-form version of the SEC Marketing Rule for members to adopt should they choose to do so. In addition, the Project Group proposes modifications to related recordkeeping provisions if members implement the SEC Marketing Rule, whether by reference or in the long-form version.
The proposal suggests the following changes:
Advertising. The SEC Marketing Rule and the Model Marketing Rule define “advertisement” to also include endorsements and testimonials that are paid for directly or indirectly by the adviser. This is an expansion of the Advertising Rule, which did not specifically address endorsements or testimonials.
Oversight. The SEC Marketing Rule and Model Marketing Rule also impose oversight and compliance responsibilities on advisers. As was required under the cash solicitation rule, under the marketing rules the adviser and the provider of the testimonial or endorsement must enter into a written agreement. Under the SEC or the Model Marketing Rule, the agreement must include the scope of activities and terms of compensation for those activities.
Ratings. The Model Marketing Rule, like the SEC Marketing Rule, conditionally allows the use of third-party ratings to be used by investment advisers to promote their businesses. A “third-party rating” under the Model Marketing Rule is a rating or ranking of an investment adviser provided by a person who is not a related person of the investment adviser.
Performance claims. NASAA’s Project Group, like the SEC in the SEC Marketing Rule Release, found that performance advertising raises special concerns that justify requirements and restrictions beyond the basic prohibition against advertisements being misleading. The final SEC Marketing Rule permits performance advertising – but only under specific circumstances and with certain limitations, as does the proposed amendment to NASAA’s model Marketing Rule.
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