The 2020 marketing rule skips exempt reporting advisers

The record

On 22 December 2020 the SEC adopted a single marketing rule for registered investment advisers, replacing the separate advertising rule dating to 1961 and the cash solicitation rule dating to 1979. The adopting release, Release No. IA-5653, states the new rule became effective 4 May 2021 with an eighteen-month transition to the compliance date. The rule itself is now codified at 17 CFR 275.206(4)-1, titled 'Investment adviser marketing.' Both documents, read as of 16 September 2026, describe a rule that reaches performance advertising, testimonials and paid endorsements under one framework rather than two.

What the sources establish

The codified rule states it applies to 'any investment adviser registered or required to be registered' under section 203 of the Advisers Act, and prohibits an advertisement from including untrue or unsubstantiated statements, unbalanced discussion of benefits versus risks, or unbalanced presentation of performance results. It permits testimonials and paid endorsements only if the adviser discloses, clearly and prominently, whether the person was a client, whether compensation was paid, and any material conflicts of interest behind the statement. The adopting release adds the compliance timeline the codified text does not restate, and a footnote stating plainly that the final rule 'will not apply to advisers that are not required to register as investment advisers with the Commission, such as exempt reporting advisers or state-registered advisers.'

Scope and revision

That scope limitation is the detail most easily lost when the rule is summarized as a blanket standard for the industry: a venture fund adviser relying on the section 203(l) exemption and filing only as an exempt reporting adviser sits outside rule 206(4)-1's testimonial and performance-advertising conditions, even though its registered peers are bound by them. The rule does reach amended Form ADV questions about marketing practices that apply more broadly, so an exempt reporting adviser's disclosure obligations are not wholly untouched by the same rulemaking, but the marketing rule's substantive advertising conditions are keyed to registration status, not to whether a firm raises capital from limited partners.

The decision in front of you

An LP or analyst evaluating a performance claim from a fund marketer can ask whether the source is a registered adviser bound by rule 206(4)-1's disclosure conditions on testimonials and performance results, or an exempt reporting adviser not directly subject to them. This is a description of where the rule's own text draws its line, not an assessment of any specific marketing statement's accuracy.

• Is the adviser making the claim registered with the SEC, or reporting under an exemption that falls outside this rule's coverage?
• Does a testimonial or endorsement disclose compensation and conflicts as the rule's conditions require?
• Is performance presented with the balanced treatment of risk the rule's general prohibitions describe?

A single marketing rule replaced two older ones in 2021, but it replaced them only for the population of advisers the rule's own text covers.