SEC Rule 206(4)-1

The rules defines an advertisement as any direct or indirect communication an investment adviser makes to one or more people that:

• includes hypothetical performance
• offers advisory services with regard to securities to prospective clients or investors
• offers new investment advisory services with regard to securities to current clients or investors

Under the rule an advertisment may not:

• include any untrue statement of a material fact;
• omit to state a material fact that would ensure a statement is not misleading;
• include a material fact that the adviser does not have a reasonable basis for (and is able to substantiate this);
• include information that would “reasonably be likely to cause an untrue or misleading implication or inference to be drawn” concerning a material fact;
• discuss benefits with clients without providing a fair and balanced treatment of material risks or limitations;
• include a reference to specific investment advice that is not presented in a fair and balanced manner;
• include or exclude performance results in a manner that is not fair and balanced;
• otherwise be materially misleading.

The rule includes detailed requirements for testimonials and endorsements used to market investments with an exemption for those obtained for either no or de minimis compensation.

The rule also covers third party ratings and key stipulations around the inclusion of investment performance in marketing material.