Ep 34. The Long-Short | New SEC marketing rules. Are you ready?

Published: 06 July 2022

The Long-Short is a podcast by the Alternative Investment Management Association, focusing on the very latest insights on hedge funds and private credit.

Each episode will examine topical areas of interest from across the alternative investment universe with news, views and analysis delivered by AIMA’s global team, as well as a host of industry experts.

A 60 year old marketing rule which determines how investment advisors can market and advertise is changing, and firms that qualify (RIAs) have just four months  to comply with a regulation on November 4th, that runs to hundreds of pages, containing opportunities and challenges for the industry. 

In a not to be missed podcast for all RIAs, joining us on the Long-Short this week are Mike McGrath, Partner at K&L Gates and Suzan Rose, Senior Advisor to AIMA’s government and regulatory affairs, to discuss this very important topic.

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Host: Tom Kehoe, AIMA

Guests: Mike McGrath, Asset Management and Investment Funds Partner at K&L Gates; Suzan Rose, AIMA's Senior Advisor on Government Affairs

Interlude: Sharon Dagostino; AIMA

Tom Kehoe, AIMA  00:05

Hello and welcome to The Long-Short, a new podcast brought to you by AIMA, The Alternative Investment Management Association, focusing on the very latest insights on hedge funds and private credit. My name is Tom Kehoe. AIMA is the global representative of the Alternative Investment Industry with around 2,000 corporate members spread across 60 countries. Of these, our fund manager members account for approximately two and a half trillion dollars in hedge fund and private credit assets. Each weekly episode of The Long-Short will examine topical areas of interest from across the alternative investment universe with news, views and analysis delivered by AIMA's global team as well as a host of industry experts. So, whether you're a hedge fund or private credit industry veteran, a student of the industry, or just someone interested in learning more about hedge funds and private credit, this podcast will be your ideal companion to help navigate you to the long and short of this fascinating industry.

Hello, and you're very welcome to episode 34 of the Long-Short. A 60-year-old marketing rule which determines how Investment advisers can market and advertise is changing. And firms that qualify have just over four months to comply with a regulation that runs to hundreds of pages containing opportunities and challenges for the industry. Given a firm's current practices, compliance with the new rule can be a significant process, and firms need to make sure that they're on top of this.

As a measure of the importance of this topic, AIMA has been running a series of webinars titled 'The SEC marketing 360', regularly drawing several hundred viewers, and my colleagues in the US tell me that industry events where this topic has been discussed tends to be standing room only, so we thought we would give it the Long-Short treatment. And joining me today is my New York based colleague, Suzan Rose, Senior Advisor of AIMA's government and regulatory affairs team, and Mike McGrath, partner at K&L Gates to tell us more. Suzan and, Mike, welcome to The Long-Short.

Mike McGrath, K&L Gates  02:02

Thank you so much, Tom. Thanks for having me.

Tom Kehoe, AIMA  02:03

So Suzan, let's start from the top then, why have the SEC decided to bring out this new rule?

Suzan Rose, AIMA  02:10

Thanks, Tom. Well, as you mentioned, the existing rules governing marketing practices are woefully outdated. This new role replaces the old advertising and cash solicitation rules introduced in 1961, and 1979, respectively, plus supplemental guidance provided along the years but still out of step with today's world. Consider that social media did not exist and the internet itself was more than 20 years away. When the advertising rule was released in 1961, marketing meant TV ads, newspaper articles, billboards, and little else. These rules were definitely not written with digital marketing in mind. So as a result, compliance has been difficult to manage to say the least. Policies have been pieced together from the original rules and almost a hundred changes to interpretation through cases, no action letters, and one off statements issued by the SEC. So, this new marketing role is written with a principles-based approach to compliance replacing the current advertising rules broadly drawn limitations. This marks a shift in rulemaking approach to this area. And contrary to popular belief, while the marketing rule does seek to create a unitary framework for advisory compliance, it is more than a mere codification of existing rules and guidance.

Tom Kehoe, AIMA  03:22

Mike, Suzan tells me that the rules itself run to over 400 pages. Can you take us then through the high level points of these rules?

Mike McGrath, K&L Gates  03:35

Certainly, Tom. So as Suzan mentioned, the core of the rule is seven principles-based prohibitions, and rather than running through the seven I will address them at a high level. These prohibitions essentially prohibit misleading statements in communications that are deemed to be advertisements by an SEC, a US SEC registered advisor. Those misleading statements could, for example, pertain to performance. They could, for example, pertain to a communication that identifies a specific holding or a case study in an advertisement. But at their core, they are designed to ensure that communications are not misleading and are presented in a fair and balanced manner. But in addition to those principle-based prohibitions, there are a handful of very specific requirements in the rule, primarily pertaining to the presentation of performance in advertisements, and when an investment advisor includes performance in an advertisement, the investment advisor is required to show that performance on if the advisor seeks to show performance on a gross of fee basis, the advisor must also show it on a net a fee basis showing the fees that were paid or, would be paid by clients of the advisor. In addition, there's a requirement in certain circumstances to present performance across standardised timeframes, one-, five-, and 10-year periods, and additional requirements when showing hypothetical performance, or the performance of an investment team that produced the performance at a prior employer. So, when thinking about this rule, it is a little bit dangerous to view it as purely principles based, because there are elements of the rule that require showing certain information in certain ways. And in a lot of cases, that is what's tripping up clients. We understand what it is to not be misleading and to present information in a fair and balanced manner. But the specific requirements around performance are a place where advisors that are registered with the SEC should really pay attention under this new rule

Tom Kehoe, AIMA  05:49

Suzan then, how do these new rules differ versus that of its predecessor?

Suzan Rose, AIMA  05:56

A lot has changed as it would in an overhaul like this. The definition of what is an advertisement change, casting a wider net for the definition, but providing far more leeway with what information can be included in an advertisement, under certain conditions, of course. Perhaps most notably, the marketing role reversed the previous ban on the use of testimonials and advisor advertising and includes a clear framework for the use of testimonials, endorsements and third-party ratings, replete with accompanying requirements, of course. Clarity and guidance has been provided for the use of social media in a manner that accommodates most advisors, practices and intentions. The prior guidance was of no comfort.

My personal favorite, which is always presented as a struggle for managers seeking to explain their strategy or provide a more holistic view into their performance, is the expanded ability to discuss specific investments. It's now known as specific investment recommendations, when they were previously referred to as, past specific recommendations, and had a very tight framework. Of course, the marketing role replaced both advertising and cash solicitation roles. So, it is sort of a surprise merger. Unsurprisingly, there's less enthusiasm regarding the new requirements for performance presentations. And the SEC still remains skeptical regarding the presentation of hypothetical and predecessor performance. As a result, there are higher hurdles to present this type of performance information, if you use it, I would say those are the high notes.

Mike McGrath, K&L Gates  07:27

Suzan, I would if I could add one thing real quickly. I think the thing that you touched on, that I think is very important, is that this rule, in essence replaces over a hundred pieces of guidance that have come out of the SEC and its staff for the preceding 60 years. So, you highlighted specific investment advice, which would be holdings or case studies in advertisements as one area where advisors have more degrees of freedom. But, I would also point out that it establishes a standard that's somewhat more difficult for compliance officers to address and by that what I mean is, compliance officers now have the opportunity to decide what is or is not a fair and misleading presentation. But that's also a burden in some ways, because under prior guidance, there were a set universe of safe harbors for presenting this type of information. Those safe harbors have been removed, as has the general prohibition on showing specific investment. That's very good from the perspective of investor relations and marketing professionals, because it allows them to exercise some creativity in the way to show that information. But, it's going to be a real challenge for compliance officers who will now have an unlimited universe of opportunities to interpret the rule, and may feel a little bit of pressure to do it in a way that is accurate and consistent with the SEC's expectations.

Suzan Rose, AIMA  08:58

Of course, the determination of what is fair and balanced, often is a subjective one. And, it's going to take advisors a while to get comfortable with the definition of fair and balanced and where the hardline boundaries are to that. I hope it won't take enforcement actions to identify the absolute boundaries for some though.

Tom Kehoe, AIMA  09:17

And Mike, many other jurisdictions have had a consultative approach to rulemaking. So, I'd have thought that this then, will be a welcome change in the US?

Mike McGrath, K&L Gates  09:25

You know, I have to both agree with that, and also mention that there are some areas where the industry is a little bit frustrated by this rule. Now, in the first instance, I will point out that this is a rule that the SEC and its staff have been considering amendments for many years, and, over two years ago, we did see a proposed rule, and this allowed a consultative process whereby the industry could give comments to the rule. And, the staff and the SEC did make some changes to the rule in response to those comments, but, also rejected a number of the comments, and I think that as relevant to this audience, the take home would be that the SEC and its staff really were concerned not to the exclusion of other types of audiences, but were primarily concerned with the protection of less sophisticated retail audiences. And, they appear to be willing to place additional burdens on managers that manage alternative products, or, that manage separate accounts for large institutions, in the interest of ensuring that there were certain limitations that could not be broached with respect to a retail audience. So, there was a consultative element to the rulemaking process. But now that we have the rule, and now that the process is done, I anticipate that we will all be working with this rule as written, and the guidance contained in the release for quite some time, rather than seeing a number of additional interpretations, at least over the next couple of years.

Tom Kehoe, AIMA  11:11

Suzan, this has been an exceptionally busy time for the funds industry in the US, with the SEC issuing a raft of new proposals over the past year, to put it mildly. When we had our DC based colleague, Daniel Austin, on the podcast last month, he mentioned that AIMA's US government and regulatory affairs team, of what you're a part of, has submitted over a dozen responses to various SEC consultation since the beginning of this year alone, and remarked that adding to this burden is the short comment period, associated with many of these consultations. So did you have the same experience then regarding this rule?

Suzan Rose, AIMA  11:53

Well, this rule was a bit different. It was a different commission, comprised of a different chair as well. But that being said, if you go back through the past year, we have close to two dozen proposals now, with more to come as indicated by the recently released Regulatory Flexibility agenda. Many of these proposals, as you mentioned, had notably short comment periods, though, in some cases supplemented thereafter, by a slight change to the due date, or extensions to the periods themselves. In all, they cover anywhere between 30 to 60 days post publication, and not always contiguous periods, which is challenging when you're trying to gather data and input for responses by the comment deadline. So, that being said, the marketing rule itself was proposed on November 4 of 2019. It gave 60 days from the date of publication in the Federal Register, which was December 10, of 2019. So, comments were due by February 10 of 2020. But then additional feedback was requested by the Commission, and it was given, with AIMA and The MFA, jointly submitting further responses on request as far in as September of 2020. So, it's definitely a different approach, but, until existing proposals on final rules, it's hard to say what the experience ultimately will be.

Tom Kehoe, AIMA  13:11

And Mike, the rule itself was released, as Suzan said in December of 2020, with the compliance date set for the 4th November this year. So, that's what, 120 days or so as we put out this podcast. Has that been enough time for the relevant parties, that would qualify under this new rule, to prepare themselves for the required changes?

Mike McGrath, K&L Gates  13:35

Well, if you were to ask the SEC staff, I think they would tell you that they feel this is more than enough time. You know, and to be fair, I think that for firms, that began the process of assessing what this rule means to them, and the changes that would be necessary, it probably is enough time. That said, there are many aspects of the rule that do require some interpretation, and some significant changes. And, not all firms were ready to begin addressing those changes at the time that the rule came out. At that time, there was a hope and, in some quarters an expectation, that additional guidance would be given with respect to the rule prior to the compliance date of the rule. And now here we are just a couple of months out and very little guidance has been given. So many firms, did delay or delayed in certain aspects of preparing for compliance. At this point, there's a lot left to do. And many, many firms in the industry are feeling time pressure to get that all done. One additional point that I will make is, as Suzan referenced, that this rule does replace a prior rule that imposed requirements with respect to the engagement of solicitors on behalf of an advisor, and in addition, extended requirements, not only to solicitors that are engaged to solicit separate account clients, but also to placement agents and other solicitors that help in the marketing of private funds. That requires participation and engagement with placement agents. And, that's an area where really advisors aren't acting alone. They need to, in some cases, at least, repaper placement agent agreements and establish arrangements with placement agents for oversight of the placement agent activities by the advisor. I think that many firms, and perhaps the SEC staff as well, did not appreciate a couple of years ago, that that's a process that does not happen quickly, and one that is a little bit delayed. So, to those on the call that are listening to this well in advance of the compliance date, that's an area where I would suggest they focus resources in the short-term. Because, if you don't engage in those conversations with placement agents until a month or two before the compliance date, that's going to be very challenging to get done on time.

Suzan Rose, AIMA  16:15

The other thing I'd add to that is, I don't look at this as some sort of measured delay. Look at what's happened since this rule was released. You look at the 18 months that was given for implementation, up to the compliance date of November 4, look at what's happened in the past year and a half. It would be challenging, under the best conditions, to be able to focus just solely on this and go through everything to get it in order in time, but then add to the mix, market conditions, the pandemic and so forth. You can understand why this may not have been top of mind and instead, the longer implementation period was looked at as some time to get ready. But here we are.

Tom Kehoe, AIMA  17:03

Indeed, Mike, are you seeing or hearing about any fund managers working under the new rule?

Mike McGrath, K&L Gates  17:13

So, Tom, I have and there are a handful of fund managers that we work with that have elected to come into compliance with the new rule early, and that's expressly contemplated in the new rule, the manager can come into compliance with the rule, at any point after the effective date of the rule, as long as the fund manager does come into compliance no later than November 4 of this year. But, I will say that is a distinct minority, probably less than than 5% of the clients that we work with that have elected to come into compliance early. And, Suzan just made a very good and very important point about all of the things that managers have had to deal with over the last year and a half. There, really has not been a lot of bandwidth to accelerate the timing of compliance with this rule. Even at managers that I spoke with a year, or a year and a half ago, that at that time had plans to come into compliance early to take advantage of some of the relaxations within the rule. They have ultimately had to delay that date out into September, October or, November this year.

Suzan Rose, AIMA  18:25

One thing to add as well, Tom, your listeners may not be aware of, is that the rule is an all or nothing proposal in terms of implementation. You couldn't start implementing it, picking certain spots that you wanted to comply with and practice under the existing rules for the rest of it. It was all or none. So, the process of planning for this is a bit more daunting, it couldn't occur on a rolling basis.

[Interlude] Sharon Dagostino, AIMA 18:55

This fall, the eighth annual AIMA global investor forum will be returning, in person, to the Ritz Carlton Toronto on October 13 and 14th. Last year's event virtually convened over 425 attendees from 26 countries, making it the global investor conference for the global association. This flagship investor conference will convene institutional allocators, family offices, managers, and service providers over one and a half days, with 1/3 of delegates being investors. PSP investments CIO Edward van Gelderen, chairman of AIMA global investor board, will be welcoming you with a keynote and panels discussing private market allocation trends, the global impact of ESG, diversity, equity and inclusion, digital assets and more, within the hedge fund, private credit and private equity worlds. So, join leaders from Blackstone, IMCO, Bridgewater, Blackrock Alternative Advisors, OP Trust, University Pension Plan, Morgan Stanley Wealth Management Canada and more, at the Ritz Carlton Toronto in October. Go to www.aima.org for more details.

Tom Kehoe, AIMA  20:07

Yes, so, taking that point that Suzan, and also, Mike mentioned a challenge being having to have that conversation with placement agents, and having those conversations take place now. What are the other challenges then that fund managers are facing in implementing these changes?

Suzan Rose, AIMA   20:34

Well, other than the obvious challenges of getting together with stakeholders and reviewing this all in detail to come to a level of comfort with how to approach some of the newer approaches to advertising, In terms of the rule itself, the hotspots have been, certain aspects of the role could use additional clarification and could ultimately spur requests for no action relief. For example, hypothetical performance could really use further clarification. And I can tell you that when working on this, this is one area where the commission showed the most concern from the IM staff to the commissioners themselves, and it resulted in months of focus dialogue. But they seem genuinely interested in understanding the legitimate use of hypothetical performance in its many forms. And I think the final rule reflected that to a degree.

The entanglement standard for indirect communications is another area that's causing a lot of confusion. The commission was clear in stating, just to paraphrase, that an advisor would not be held accountable for unapproved changes that a third party may make to its material. But, the ever present facts and circumstances judgment statement was also made, and there are additional passages on solicitation that appear to muddy the water on to what extent an advisor can review a document that's being produced without being seen as having a material role in its production by that third party. And then, of course, there are certain requirements for net performance to be shown, particularly, where fees essentially would be modeled. Those are concerning because they appear to be misleading at face value, and, false and misleading are always at the heart of the SEC's concerns for advertising. It's going to take advisors a while to get comfortable with the SEC’s definition of fair and balanced in the new principles based approaches to certain marketing material content. And while it's a welcome change, FAQs, and examples, will go a long way in addressing this.

Mike McGrath, K&L Gates  22:31

Suzan, I have to agree with everything that you said. But I I want to highlight one of the points that you made very early on in your response, which is the importance of engagement with stakeholders. And one of the aspects of this rule that's a little bit different from some other rules that we've seen, is that it doesn't only introduce interpretive challenges, and the need to establish or amend a number of internal policies. But, it does require changes to many marketing materials. And, some firms have dozens of these, some firms have hundreds of these, that have been used routinely over the preceding several years. And, that really requires engagement by a variety of business units, not only the marketing group, but also the group that's responsible for the calculation, and presentation of (fund) performance. And getting all of that together is a very heavy lift for many managers, and that needs to be coordinated. So, as an example, I have a number of clients who had planned to wait until November to come into compliance with the rule, but instead are electing to move that up a little bit to October, so that they're not in a situation where they issue a hundred pieces of material demonstrating September 30th numbers, and then reissue them again a couple of weeks later. So, that is something that that we didn't appreciate at the outset. But, that has really been imposed by the marketing teams within managers because they don't want to reproduce those materials twice in the course of a week. That makes a lot of sense. But this really involves so many different business units within the advisor, and, that's been a big challenge at a lot of managers.

Tom Kehoe, AIMA  24:17

So, if there are investment advisors out there that are hearing this for the first time, what I understand from both of you is, it's not too late to get started, but you really need to get a move on right Mike?

Mike McGrath, K&L Gates  24:31

I was about to say it's never too late to get started. But I will say that if you find yourself in October and you have not started then that would be a material problem. Look, it's not too late to get started. But, for firms that have not started yet, the first recommendation that I would make is, do not let this issue languish in the legal and compliance departments of your firm. Immediately involve your marketing, and your performance measurement, and your investor relations teams, because even if the compliance group is ready, those other teams may not be ready if you don't give them enough time to make the changes that they need to make, to come into compliance with the requirements of the rule, and the new policies that you establish to satisfy those requirements.

Suzan Rose, AIMA Senior Advisor on Government Affairs  25:24

Yeah, Tom, writing policies and procedures is not akin to just complying with the rule. There's so much involved in this, and like Mike, I like to believe it's never too late. But time is winding down kind of quickly. There's less than four months, and there's a lot of work if it hasn't been started, at least meaningfully. If it were me, I'd start by taking a few examples of existing advice, advertising material, mock them up to comply with the new rule, and then meet with stakeholders, now, as soon as possible. And that's management, IR, anyone you'd need data pulled by such as (your) risk (department), and show them what things would look like under the rule, as well as what additional content could be provided. It's very hard to have a conversation about changes without being able to illustrate them, not just discuss them in theory. From there, you can get a collective agreement on core elements for advertising, and then get to work on writing policies and procedures to make those happen.

Tom Kehoe, AIMA  26:21

Now, we've got the transition period, obviously, you're working through it now as it goes into law on, the 4th November, right, with 120 days away. Is there a grace period if the fund managers could not get everything sorted by the deadline? Or, are we right now in this grace period?

Suzan Rose, AIMA Senior Advisor on Government Affairs  26:38

There is no grace period.

Mike McGrath, K&L Gates  26:39

The technical answer is certainly no. As a practical matter, we do anticipate that the SEC staff understands that there are some areas that managers, even managers acting in absolute good faith, will struggle with understanding and will struggle with implementing. It is my hope, and, my expectation based on some statements made by SEC staff, that the staff will not be overly aggressive in bringing enforcement actions against managers who are acting in good faith to do this right, at least in the first six months to a year after the compliance date. That does not mean that you have a grace period. And we should be very clear about that. But it does mean that that the SEC staff understands that managers acting in good faith may need some extra time to sort all of this out. And I would not view that as a safe harbor or a grace period. But there is an element of understanding that this is a hard transition. And, we don't anticipate that they (SEC) will jump directly to enforcement actions, in November of this year. But they could.

Tom Kehoe, AIMA  27:59

Suzan then, who qualifies and who is in scope? Is it just fund managers in the US in scope, or do others qualify?

Suzan Rose, AIMA Senior Advisor on Government Affairs  28:12

So, all advisors registered as an investment advisor with the SEC are in scope. Exempt reporting advisors and other advisors, qualifying for exemption from SEC registration, are not in scope. But, it's clear with this rule, the best practices have been defined. Others can use them as best practice guidelines, but their only obligation otherwise is to not violate the anti fraud provisions of the investment advisors Act, the dreaded rule 206, that applies to all market participants, regardless of registration status.

Mike McGrath, K&L Gates  28:46

Well, Suzan, should we address which funds are in scope as well? Because I think that will be important to the AIMA membership. Yeah, so, all US, all investment advisors registered with the SEC, as Suzan pointed out, are within scope of the rule, as it pertains to the marketing of advisory services, right, separate accounts. In addition, any marketing communications, or advertisements with respect to private funds, and that's defined as a fund that relies on section 3(c) (1) or 3(c) (7) to be offered and managed in the United States, are also in scope. So, these are hedge funds, private equity funds, but, out of scope are US registered funds for managers that manage mutual funds or registered closed-end funds in the US, and, also out of scope are pooled vehicles that are offered entirely and exclusively outside of the United States. So UCITS and AIFs, for example, are out of scope, provided that they are not marketed into the US on a private placement basis. Consequently, the rule will, for many managers, apply to some of their communications, but not others. That said, I echo and I endorse Suzan's point, that the rule establishes best practices that managers will most likely want to apply, across the entirety of their marketing activities. Even if a handful of those activities, or are for a non US manager registered with US, with the SEC, perhaps a large amount of those activities technically fall outside of the rule.

Tom Kehoe, AIMA  30:29

And, Mike, what form of compliance do you think we're likely to see from the SEC, regarding enforcement around the new rule? You did say that it will likely be a six-month period before we see enforcement? But you did say that, equally, it may well be that enforcement comes in from day one. What do you expect to see?

Mike McGrath, K&L Gates  30:48

The Commission certainly has the authority to enforce the rule from day one. And, I think that if they see managers that they believe, are not acting in good faith, or have not made it, (more precisely, have not made a good faith attempt to comply with the rule). I would not be surprised to see enforcement on that basis. But more generally, we anticipate that in the first six months to a year, the SEC staff through routine examinations, and possibly through some sweep examinations, which are limited scope examinations, on particular topics here on the marketing rule, will seek to gather information regarding the manner in which registrants are complying with the rule. They will look for areas that that they feel are best practices, they will look for areas where they feel notwithstanding good faith efforts to comply with the rule, that managers are coming up short. And in, let's say, roughly a year's time, could be six months could be 18 months, I would expect to see a statement from SEC staff, perhaps in the form of a guidance update or perhaps in the form of some other informal communication, that highlights areas that the staff feels require some better work from registrants. After that happens, assuming that those initial steps are taken, then I think that the staff will be more aggressive about identifying areas under the marketing rule, that they feel managers have not complied with. Referring those concerns to the SEC enforcement staff, who will then bring enforcement. Now, Suzan has pointed out, as have I, all of that is perspective. All of that is speculative. The SEC certainly has the authority to bring enforcement beginning November 4th, or even earlier, for managers that come into compliance prior to November 4, but, we anticipate that there will be this information gathering period prior to aggressive enforcement actions, at least as to advisors acting in good faith to comply with the rule.

Suzan Rose, AIMA   33:03

Tom, this is a learning process for both sides, but, that being said, they're going to watch this very closely. So, anyone that thinks that because it's new, or you know, perhaps implying a bit of a grace period, or that the SEC will go easy on this, they should disavow themselves with those assumptions. They will watch closely. And, as Mike referenced, they will come out with observations, you often see this in exam priorities, as well as risk alerts that are released, but at the end of the day, they have the authority, from day one of adoption of this rule, to pursue any concerns that they may have. And I mean, in terms of adoption, I mean, the advisor adopting the role.

Mike McGrath, K&L Gates  33:49

One more point that I would make on this. I know we're piling on a bit on this topic, but it's an important onet, is for foreign investment advisors that are examined, shortly after the compliance date of the rule, those advisors will certainly receive deficiency comments, from the SEC staff, regarding their compliance with the rule. If they do not address those comments fully and completely, I think that the SEC staff on their next examination, would view that as recidivist behavior, and put those managers in a very, very dangerous position. So, for managers that do get examined, survive that examination without a referral to enforcement, it's going to be extremely important for those managers to tidy up their practices, and tidy them up promptly.

Tom Kehoe, AIMA  34:40

And Mike, for fund managers who are struggling with implementation around all of this, I guess they contact you guys right?

Mike McGrath, K&L Gates  34:49

Well, I'm not going to disagree with that Tom. And we certainly devoted a lot of resources to understanding this rule, and helping managers with implementation, but, I do want to say that that there are other resources. I think that Suzan, and the rest of the team at AIMA, have done an incredible job putting together, not only webinars and working groups, but also a very impressive reference guide to comply with the rule. So, while I will never turn down that call from a manager, I will say that there's a raft of good resources out there that are free and available, that managers may want to look to first, before reaching out to counsel.

Tom Kehoe, AIMA  35:35

And we'll leave the last word which you Suzan, so where can fund managers, and other relevant parties that will qualify under this rule, find out more about this rule? And, we did mention at the top of the podcast, AIMA’s 360 series, so I'm guessing that is one such avenue?

Suzan Rose, AIMA   35:52

Absolutely. There are a plethora of legal alerts and so forth that are out there. But, to break down the actual rule, that doesn't happen as often. And I credit Mike, for a number of very successful and very detailed webinars that we've done this far.

As far as additional guidance from the SEC, don't go expecting any, however, Mike and I are actually working toward that aim right now by collecting questions to submit to the SEC, because they did set up a dedicated email for the public to submit questions on the marketing world, it just hasn't been used. You'll see there are two questions that are answered in the FAQ section. So, without that influx of questions, they don't see themselves as needing to answer anything.

Meanwhile, the industry had, as Mike indicated, perhaps waited a bit for additional guidance or color on how to approach some of these newer aspects of the rule. So, we're going to try to break that logjam up a bit by submitting questions directly to the Commission on behalf of AIMA members. And certainly, there's more to come for the marketing rule series. And, AIMA will continue to post resources on its website, whether they're AIMA resources, or third parties, such as those coming from K&L Gates.

Tom Kehoe, AIMA  37:11

Well, all of that's left for me then, is to thank you both for your time today. Mike, thank you for joining the Long-Short and Suzan, pleasure as always to talk to you.

Suzan Rose, AIMA  37:19

Thank you so much.

Mike McGrath, K&L Gates  37:20

Thank you.

Tom Kehoe, AIMA  37:20

And for those of you who are looking to find out more about this new marketing rule, which comes into law on the fourth of November, please go to AIMA’s website www.aima.org.

Drew Nicol, AIMA  37:36

The last show is brought to you by AIMA, The Alternative Investment Management Association, the global representative for the Alternative Investment Industry. As always, you can get the latest episodes by subscribing to The Long-Short on Spotify, Apple podcasts and Google podcasts or by streaming episodes directly from our website, AIMA.org, thanks for listening.


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