JD Supra Presents Regulatory Updates for February and March 2025

Welcome to our February and March 2025 Regulatory Roundup, providing practical advice on the latest regulatory headlines. This issue begins with clarifications about performance advertising under the SEC’s Marketing Rule and a new rule requiring Commission approval before the Division of Enforcement can utilize its investigative powers. The SEC’s stance on crypto assets has evolved, indicating a more cautious regulatory approach. The Division of Corporate Finance has relaxed the “general solicitation” Rule 506(c) under Regulation D, giving issuers more discretion in determining investor accreditation. The new U.S. President exercises executive power by mandating White House reviews of all new regulations. The Treasury Department has eased beneficial ownership reporting requirements under the Corporate Transparency Act. Additionally, the SEC has granted institutional investment managers a one-year exemption from reporting short sale data until February 17, 2026. The issue also covers some recent SEC settlement orders. Enjoy!

SEC Eases up on Extracted Performance and Portfolio Characteristics in New Marketing Rule FAQs

Private fund managers received guidance as SEC staff issued two new FAQs on the Marketing Rule (Advisers Act Rule 206(4)-1) related to performance advertisement and investment portfolio statistics. Two FAQs issued on March 19, 2025, clarify that firms do not have to use both gross and net performance in certain instances.

In the new FAQs, the staff discussed the use of “extracted performance” in advertisements, allowing for gross performance presentation without accompanying net performance if specific conditions are met. The second FAQ addresses the presentation of portfolio characteristics, providing guidance on what constitutes performance under the rule. Compliance with the Marketing Rule is essential to avoid misrepresentation of fees and expenses in client communications.

(updated content for elucidation)

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