“First, one area that I believe merits significant thought and debate is the emphasis on a principles-based approach to certain of the rule’s requirements,” Herren said.
“If rules are too broad or vague, we may end up circumscribing conduct that we would not intend to capture," she added. "Let’s take for example, the proposal’s approach to whether a performance presentation or the presentation of specific investment advice is ‘fair and balanced.’ I think we can all agree that either type of presentation should be fair and balanced, but is that guideline alone enough information from the Commission for you to apply that standard on a daily basis?” she asked the ballroom of compliance professionals.
Another example is the prohibition of testimonials that are “reasonably likely to cause an untrue or misleading inference to be drawn. Again, does this aspect of the proposal provide sufficient guidance to facilitate compliance?” she asked.
Dalia Blass, director of the SEC’s Division of Investment Management, agreed that the scope of the proposal and “the compliance review aspect of the proposal ... could present potential problems.” The comment period on the proposal expired Feb. 10.
Blass said based on feedback, the SEC is working on a revised proposal that will accommodate the diverse community of RIAs that will be impacted by the advertising and solicitation rules—from retail and institutional advisors to robo-advisors and private fund managers.