SEC on social media and investment manager advertising.

The SEC has issued guidance to assist investment managers in applying Sec. 206(4) of the Investment Advisers Act of 1940 to their use of social media. The guidance seeks to assist investment managers in developing compliance policies and procedures reasonably designed to address marketing through social media.

Section 206(4) of the Advisers Act generally prohibits any investment manager from directly or indirectly publishing, circulating or distributing any advertisement which refers, directly or indirectly, to any testimonial of any kind concerning the investment manager or concerning any advice, analysis, report or other service rendered by such investment.

The term "testimonials" includes a "statement of a client's experience with, or endorsement of, an investment manager."

Whether public commentary on a social media site is a testimonial depends upon the facts and circumstances relating to the...