Rule 206(4)-1 under the Investment Advisers Act of 1940
For marketing teams at registered investment advisers working out what the SEC allows in ads, testimonials and performance figures. This page covers what you need to know and ways to avoid running into issues.
What we've seen reported
The SEC Marketing Rule, Rule 206(4)-1 under the Investment Advisers Act of 1940, sets out what registered investment advisers' advertisements may say, including testimonials, endorsements, third-party ratings and performance figures.1,2
Last updated October 2026 · General information only, not legal advice. Sources.
What the rules cover
These are the kinds of wording the SEC Marketing Rule's general prohibitions and conditions describe, according to its text, and how they tend to show up in adviser advertisements.1,2
| Phrase or term | In practice |
|---|---|
| "Top-rated", "#1 adviser", "award-winning" | A third-party rating shown without its date, the period it covers or who gave it. |
| Client testimonials and reviews | A testimonial posted without saying whether the person is a client or was paid. |
| "Hypothetical", "backtested", "model" returns | Shown to a mass audience on a website, with no process for matching it to the intended audience. |
| "Returned 11.4% a year" (gross) | Gross performance shown without net performance alongside it, at least as prominently. |
| Performance for one period only | Portfolio results shown without the 1, 5 and 10-year periods the text describes. |
| "Can't lose", "risk-free", "no downside" | Potential benefits described without fair and balanced treatment of the material risks. |
| "SEC-approved" | Wording that implies the SEC has approved or reviewed the adviser or its results. |
| Selected winning holdings | Specific investment advice or extracted performance not presented in a fair and balanced way. |
The SEC has already settled charges under the Marketing Rule over performance claims in advertisements.
An investment adviser settled SEC charges over website claims about its strategies' hypothetical performance, including gross figures shown without net figures.
Where it goes wrong
One approved claim ends up in many channels, markets and languages. Along the way it gets shortened, translated and reworded, and some versions end up using the very phrases you are trying to avoid.
"Our Core Growth portfolio returned 9.1% a year, net of fees, over five years."
How Arbitr helps
Read every version by hand? Or use AI to check what you publish against what you've already approved.
FAQ
Further than the performance page. The SEC's December 2025 risk alert describes ratings shown across websites, social media, pitchbooks and emails,3 and we usually find performance figures, ratings and testimonials in:
Start with what they can and can't post about you, in writing. The SEC's December 2025 risk alert reports examiners finding advisers with no reasonable basis for believing endorsements met the rule's conditions,3 so ask promoters to send every post before it goes live and keep each version. More on this is on our marketing compliance page.
One record per figure saves a lot of searching later: the approved wording, the gross and net numbers behind it, the periods shown, the calculation file, who approved it and where it appears. When an examiner asks, you have the trail rather than an inbox to search.
How it applies to a specific claim is a question for your legal adviser. Where that claim appears across your markets and languages is a question Arbitr answers.
Find every live version of each performance figure, rating and testimonial first, including the ones promoters and platforms published for you. Then trace each back to its approval. If your firm is also a broker-dealer, its communications fall under FINRA Rule 2210, and other markets' rules are on our financial promotions hub.
The SEC adopted it in December 2020. According to the adopting release, it took effect on May 4, 2021, and advisers have had to comply with it since November 4, 2022, after an 18-month transition.1
They're separate rules from different regulators. The Marketing Rule covers advertisements by SEC-registered investment advisers, according to its text,1 while FINRA Rule 2210 is FINRA's rule on member broker-dealers' communications with the public.
You update the approved version once. Arbitr checks what's already live against it and shows you every version still using the old wording.
