The SEC proposed new rules to modernize how advisors can advertise or solicit new customers. Current rules include broad restrictions on what it considers advertising and on testimonials and endorsements–limitations that have proven difficult for advisors in the age of new technologies and social media.

It will take time for lawyers to fully review and comment on the 507-page document laying out the new standards, but here are a few highlights:

  • The definition of an advertisement is broadened to encompass promotional communications disseminated by “any means” including text, instant message, social media, podcast and other technologies that SEC had not anticipated in their original rules.
  • Removal of prohibition of certain types of advertisements such as testimonials and endorsements.
  • An amendment to the Form ADV advisor registration form and Rule 204-2 books and records rule that will reflect these changes.

The proposed changes are subject to a 60-day comment period, so expect to hear more in the coming weeks on this topic. In the meantime, for more information, read the SEC’s news release and this article by ThinkAdvisor.