SEC Marketing Rule - Benchmark Selection and Disclosure Standards

To meet the SEC Marketing Rule’s benchmark selection and disclosure standards requirement, you must ensure any benchmark you cite in an advertisement is not presented in a false or misleading way, and you can substantiate why it is appropriate and how it was used. Operationally, this means pre-approving benchmark claims, documenting benchmark methodology, and retaining an audit-ready substantiation file for each marketing piece. (17 CFR 275.206(4)-1)

Key takeaways:

• Treat every benchmark reference as a “claim” that needs written substantiation and a controlled disclosure package. (17 CFR 275.206(4)-1)
• Standardize benchmark governance: selection criteria, mapping to strategies, fee/return treatment, and change control. (17 CFR 275.206(4)-1)
• Expect exam attention because the SEC has stated Marketing Rule compliance is an exam focus area. (2025-exam-priorities)

“Benchmark misuse” under the SEC Marketing Rule usually happens in ordinary marketing workflows: a pitchbook compares a strategy to an index that doesn’t match risk, investability, or mandate; performance is shown gross of fees against a net benchmark; or disclosures do not explain how and why the benchmark was selected. The rule does not require you to use benchmarks, but if you do, the comparison must not be false or misleading, and you need to be able to prove it with records. (17 CFR 275.206(4)-1)

For a CCO or GRC lead, the fastest way to operationalize this requirement is to implement benchmark governance the same way you govern performance advertising: pre-dissemination review, claim-by-claim substantiation, and immutable archiving of final materials and their disclosure versions. The SEC has also signaled ongoing exam focus on Marketing Rule compliance, so you should assume benchmark selection and presentation will be tested through document requests and targeted sampling across channels. (2025-exam-priorities)

This page translates the requirement into an implementation checklist you can assign to Marketing, Investor Relations, and portfolio teams, with concrete artifacts to retain and the exam questions you should be able to answer on day one.

Regulatory text

Regulatory requirement (excerpt): “It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business… for any investment adviser to disseminate any advertisement that includes any untrue statement of a material fact, or that is otherwise false or misleading.” (17 CFR 275.206(4)-1)

Operator interpretation: If your advertisement uses a benchmark in a way that could mislead a reasonable investor (by implication, omission, or mismatched comparability), you have a Marketing Rule problem. “Benchmark selection and disclosure standards” is the practical application: pick an appropriate benchmark, explain the comparison clearly, and maintain documentation proving the claim is fair and not misleading. (17 CFR 275.206(4)-1)

Plain-English interpretation of the requirement

You can compare performance, attribution, volatility, Sharpe, drawdowns, ESG scores, or any other metric to a benchmark, but you must be able to show:

• Why that benchmark fits the strategy or mandate being advertised.
• How the benchmark data was constructed (provider, tickers, rebalancing rules, total return vs price return, currency, hedging).
• How your returns are presented relative to the benchmark (fees, taxes, dividends, reinvestment assumptions, composite inclusion, time period alignment).
• What a reader needs to know so the comparison is not misleading (material limitations and key assumptions). (17 CFR 275.206(4)-1)

Who it applies to (entity and operational context)

Applies to: Registered Investment Advisers and their supervised persons involved in creating, approving, or distributing advertisements. (17 CFR 275.206(4)-1)

Operationally relevant teams and channels:

• Marketing, Investor Relations, and product teams producing pitchbooks, factsheets, RFP/RFI content, websites, social posts, newsletters, and market commentary that includes comparative statements.
• Portfolio management and analytics teams that source benchmark series, run comparisons, and provide talking points.
• Third parties involved in content production (design shops, PR firms, placement agents) when they draft or distribute your materials. You still own the compliance outcome.

Why it matters now: The SEC Division of Examinations has indicated it will focus on compliance with rules including the Marketing Rule. Plan for benchmark claims to be sampled across channels, not just flagship pitchbooks. (2025-exam-priorities)

What you actually need to do (step-by-step)

1) Create a benchmark governance standard (one-page, enforced)

Define a small set of approved benchmark types and how they can be used:

• Primary benchmark (strategy comparator)
• Secondary benchmarks (risk-free proxy, peer group, blended benchmark)
• Custom benchmarks (blends, policy benchmarks)

Set minimum selection criteria you can defend:

• Strategy/asset class alignment and investment universe comparability
• Risk profile comparability (duration, credit quality bands, market cap, geography, sector constraints)
• Currency and hedging alignment
• Data integrity (reputable provider, version control, survivorship bias controls when relevant)

Deliverable: Benchmark Selection Standard (policy/procedure) mapped to ad review.

2) Build a “benchmark substantiation file” template and require it

Treat benchmark statements as “claims” that require support. Your template should capture:

• Advertisement name/version, channel, intended audience
• Benchmark name, provider, and identifier (ticker/index code) plus data source link reference
• Rationale for selection (short narrative + bullet mapping to mandate constraints)
• Methodology summary (total return vs price return; rebalancing; constituents; currency; hedging; index maintenance)
• Comparison methodology (time period alignment; frequency; fee treatment; net/gross alignment; composite rules)
• Required disclosures (limitations, material differences, and what the benchmark does not represent)
• Approvals (Marketing owner, performance/analytics owner, Compliance approver)
• Retention location and immutable archive pointer

Deliverable: Benchmark Substantiation File per ad, stored with the final advertisement and approval record. (17 CFR 275.206(4)-1)

3) Implement pre-dissemination compliance approval with claim-by-claim references

Operationalize review so a benchmark can’t “sneak in”:

• Require marketing to tag each benchmark reference in the draft (tables, charts, footnotes, captions, speaker notes).
• Compliance reviews for misleading implications, missing material limitations, and internal consistency.
• Approver must record where support lives (e.g., benchmark methodology source, performance calculation workbook, composite report).

This is the fastest control to reduce risk because it prevents publication of weak comparisons. (17 CFR 275.206(4)-1)

4) Standardize benchmark disclosure blocks (modular, controlled)

Create reusable disclosure language that can be selected based on the benchmark type. Keep versions controlled so you can prove “what disclosure was in effect” at dissemination time:

• Index description and provider attribution
• Material differences (investability, fees, trading constraints, reinvestment assumptions)
• Return type alignment (price vs total return)
• Currency/hedging notes
• Any blending methodology (weights, rebalance frequency) for custom benchmarks

Deliverable: Controlled disclosure library with versioning and an owner.

5) Lock down performance + benchmark calculation integrity

Benchmark comparisons often fail because data pipelines vary across teams. Define:

• Approved data sources and who can change them
• Calculation conventions (monthly vs daily; inception dates; partial periods)
• QA checks (spot-check time period alignment, benchmark series continuity, and fee/return basis consistency)

Deliverable: Performance/benchmark calculation SOP tied into marketing review. (17 CFR 275.206(4)-1)

6) Run periodic cross-channel sampling and remediation logging

Do sampling across website, social, pitchbooks, commentary, and RFP content for:

• Inconsistent benchmarks for the same strategy
• Missing or stale benchmark disclosures
• Benchmark changes without documented rationale

Log findings, corrective action, and updated substantiation files. This becomes exam-ready evidence of ongoing supervision. (17 CFR 275.206(4)-1)

Required evidence and artifacts to retain

Keep these in an immutable archive and make them easy to produce:

• Final disseminated advertisements (PDF, webpage capture, video, slides, social posts) (17 CFR 275.206(4)-1)
• Draft history and compliance approvals with timestamps and approver identity (17 CFR 275.206(4)-1)
• Benchmark substantiation file for each advertisement (rationale + methodology + calculation notes)
• Benchmark data source documentation (provider methodology excerpt or reference, index identifiers)
• Disclosure version used in the final ad (linked to the final material)
• Sampling/testing logs and remediation tickets (showing ongoing oversight)
• Third-party content review evidence if a third party drafted/distributed content under your name

Practical tip: auditors and exam teams move faster when each ad has a single “substantiation packet” folder.

Common exam/audit questions and hangups

Expect questions that force you to connect selection, calculation, and disclosure:

• “Why did you pick this benchmark for this strategy, and where is that documented?” (17 CFR 275.206(4)-1)
• “Is the benchmark total return? Are your returns net or gross? Where do you disclose differences?” (17 CFR 275.206(4)-1)
• “Show me all materials that mention Benchmark X in the last period and the approvals.” (17 CFR 275.206(4)-1)
• “How do you ensure website and pitchbook benchmarks match?” (17 CFR 275.206(4)-1)
• “What is your process when a portfolio changes mandate or the benchmark changes?” (17 CFR 275.206(4)-1)
• “How do you supervise third parties involved in marketing content?” (17 CFR 275.206(4)-1)

Hangup: firms can describe the process verbally but cannot produce consistent substantiation packets quickly.

Frequent implementation mistakes and how to avoid them

Mistake 1: Benchmark chosen by convenience, not comparability

Avoidance: require a written benchmark rationale tied to mandate language and investment universe. If it’s a blended benchmark, document weights and rebalance rules. (17 CFR 275.206(4)-1)

Mistake 2: Misaligned fee basis or return type

Common examples: gross performance vs net benchmark, or total return benchmark vs price return portfolio reporting.
Avoidance: enforce a checklist item in ad review: “fee/return basis aligned or clearly disclosed.” (17 CFR 275.206(4)-1)

Mistake 3: Disclosures exist, but aren’t attached to the specific claim

Avoidance: modular disclosure blocks mapped to benchmark type, with version control and mandatory inclusion rules. (17 CFR 275.206(4)-1)

Mistake 4: Different channels tell different benchmark stories

Website might show one benchmark while pitchbooks show another.
Avoidance: maintain a central “benchmark mapping” by strategy and test cross-channel consistency through periodic sampling. (17 CFR 275.206(4)-1)

Mistake 5: No immutable archive of what was actually disseminated

Avoidance: archive the final disseminated version plus the approval and the disclosure version in a write-once location. (17 CFR 275.206(4)-1)

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for this requirement, so this page does not list specific actions.

Risk still trends high in practice because the SEC has indicated Marketing Rule compliance is an exam focus area, which increases the likelihood of requests focused on advertising controls, substantiation, and recordkeeping. (2025-exam-priorities) Benchmark issues create compounding exposure: a misleading benchmark comparison can taint multiple downstream materials copied from a “golden” pitchbook.

A practical 30/60/90-day execution plan

First 30 days (stabilize and stop new issues)

• Inventory all live materials that reference benchmarks (website, pitchbooks, factsheets, RFP templates).
• Put a temporary rule in place: no new benchmark references without a substantiation file and compliance approval. (17 CFR 275.206(4)-1)
• Draft the benchmark substantiation template and the benchmark disclosure block library.

Days 31–60 (standardize and retrofit priority materials)

• Publish the Benchmark Selection Standard and train Marketing/IR and performance teams.
• Retrofit substantiation files for top-used materials (flagship strategies, homepage content, most-used factsheets).
• Establish a single system of record for benchmark mapping by strategy and owner assignment.

Days 61–90 (test, monitor, and make it exam-ready)

• Run cross-channel sampling to find inconsistencies and log remediation. (17 CFR 275.206(4)-1)
• Tabletop an exam request: produce substantiation packets for a sample set of ads within the same business day.
• If you use Daydream for marketing compliance workflows, configure pre-approval gates, link each benchmark claim to its substantiation evidence, and preserve immutable archives of the final disseminated versions and disclosures. (17 CFR 275.206(4)-1)

Frequently Asked Questions

Do we have to use a benchmark in marketing materials?

No rule in the provided text requires benchmarks, but if you include them, the comparison must not be false or misleading and must be supportable with records. (17 CFR 275.206(4)-1)

Can we use a peer group instead of an index?

You can, but treat it as a benchmark claim with the same substantiation expectations: define the peer universe, inclusion/exclusion rules, and why it’s comparable, and disclose material limitations. (17 CFR 275.206(4)-1)

What if the benchmark changes over time for a strategy?

Document the rationale, effective date, and what materials were updated. Keep archived copies showing what was disseminated before and after the change, with approvals and updated disclosures. (17 CFR 275.206(4)-1)

How detailed do benchmark disclosures need to be?

Include enough detail to prevent a misleading implication about comparability, calculation basis, and limitations. If a reasonable investor could misunderstand the comparison without the disclosure, treat it as required for that ad. (17 CFR 275.206(4)-1)

Are website pages and social posts held to the same benchmark standard as pitchbooks?

Yes, the standard is tied to whether it is an advertisement and whether the statement is false or misleading; the channel changes how you format disclosures, not whether you need them. (17 CFR 275.206(4)-1)

What’s the minimum recordkeeping set for benchmark claims?

Maintain the final disseminated communication, evidence of compliance approval, the benchmark substantiation support, and the disclosure version used. Make it retrievable by strategy and date. (17 CFR 275.206(4)-1)