SEC Marketing Rule Performance Representation Standards

To meet the sec marketing rule performance representation standards requirement, treat every performance claim as a regulated statement that must be true, not misleading, and supported by records before it is published. Operationally, you need a pre-dissemination review process, claim-by-claim substantiation, consistent disclosures across channels, and immutable archiving of the final ad and its approval trail.

Key takeaways:

• Performance presentations must not include any untrue material statement or create a misleading impression. (17 CFR 275.206(4)-1)
• You need documented substantiation for each performance claim and a repeatable review workflow before publication.
• SEC exams continue to prioritize Marketing Rule compliance, so weak controls around performance advertising are exam risk. (2025-exam-priorities)

Performance advertising is one of the fastest ways advisers create avoidable exam findings: a chart pasted into a pitch deck without sourcing, a “since inception” return that omits a material limitation, or a social post that implies “safety” or future results. Under the SEC Marketing Rule’s general prohibitions, an advertisement becomes problematic when it includes an untrue statement of material fact or is otherwise false or misleading. (17 CFR 275.206(4)-1)

For a CCO or GRC lead, the goal is not to debate marketing copy line-by-line after it ships. The goal is to implement a control system where performance claims are (1) defined consistently, (2) calculated from controlled data, (3) presented with required context and plain-language limitations, (4) reviewed and approved before dissemination, and (5) archived with the evidence that proves the claim was reasonable when made. This page gives requirement-level implementation guidance you can put into production, aligned to SEC exam focus on the Marketing Rule. (2025-exam-priorities)

Regulatory text

Rule excerpt (general prohibition): “It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of section 206(4) of the Act 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: For performance representations, you must prevent (a) false statements about results and (b) presentations that are technically “true” but still misleading because they omit necessary context, cherry-pick time periods, imply guarantees, or obscure material assumptions. Your control design should assume the SEC will ask, “Show me how you knew this performance claim was accurate and not misleading at the moment you published it.”

Plain-English interpretation (what the requirement means in practice)

You can advertise performance, but only if:

• The numbers are based on actual results from controlled sources, not estimates, “illustrative” outputs presented as real, or back-of-the-envelope calculations.
• The presentation does not mislead through selection bias (best accounts only), time-period manipulation (only favorable windows), or missing assumptions (fees, benchmark construction, reinvestment, currency, valuation approach).
• Disclosures are not an afterthought. Put the key limitations where the audience will see them, and ensure they match the claim being made.
• You can prove it. A performance claim without substantiation is an exam problem even if it happens to be accurate.

Who it applies to (entity and operational context)

Applies to: Registered Investment Advisers and their supervised persons creating or disseminating “advertisements,” including marketing teams, investor relations, portfolio teams supplying performance, and any third party marketers acting on your behalf. The requirement is rooted in the SEC Marketing Rule’s prohibition on untrue or misleading advertising. (17 CFR 275.206(4)-1)

Where it shows up operationally:

• Pitch decks, factsheets, one-pagers, due diligence questionnaires
• Website performance pages, blog posts discussing results
• Social posts, webinars, podcasts, conference slides
• RFP responses and model/strategy summaries
• Third party platforms where you submit performance content

Why it is urgent: The SEC’s Division of Examinations has stated it will focus on Marketing Rule compliance. (2025-exam-priorities) If your performance ads are decentralized across teams and channels, inconsistency becomes the risk, not just any single document.

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

1) Define “performance representation” and standardize claim types

Create a short internal standard that defines what counts as a performance claim. Include:

• Return figures (gross/net, cumulative/annualized)
• Benchmark comparisons and alpha statements
• Drawdown, volatility, Sharpe, capture ratios
• “Outperformance” statements (even without showing numbers)
• Safety/low-risk implications tied to performance (“downside protected,” “stable”)

Deliverable: Performance Advertising Standard (1–3 pages) that marketing and IR can apply consistently.

2) Build a claim-by-claim substantiation workflow (pre-dissemination)

Implement a required review gate before any performance ad is published:

1. Intake: Marketing submits the draft plus the “performance packet” (see evidence section).
2. Claim inventory: Compliance (or an assigned reviewer) lists each discrete performance claim in the piece.
3. Substantiation mapping: Each claim gets a citation to internal books/records, calculation worksheets, or approved performance reports.
4. Misleadingness check: Reviewer assesses whether the claim omits a material qualifier or creates an implication that could mislead a reasonable investor. (17 CFR 275.206(4)-1)
5. Disclosure alignment: Confirm disclosures match the specific claims and are placed where the reader will see them (not buried or detached from the chart).
6. Approval + version lock: Approve the final, locked version; prohibit “post-approval edits” without re-review.

Control note: This maps directly to a practical best practice: pre-dissemination compliance approval with explicit claim-by-claim substantiation references.

3) Control performance data inputs and calculations

Most failures start upstream. Set minimum controls:

• Source-of-truth designation: Identify the official system/report for each product’s performance.
• Calculation ownership: Assign who calculates, who reviews, and who signs off (portfolio ops, finance, or performance team).
• Assumption catalog: Fees, expense treatment, pricing/valuation, benchmark methodology, reinvestment assumptions.
• Change control: If calculation methodology changes, require documented approval and impact assessment.

Practical test: If an examiner asks, “Where did this number come from?” the answer should be a controlled report and a reproducible calculation trail, not a screenshot in a shared drive.

4) Standardize required disclosures and prohibited implications

Create modular disclosure blocks that can be assembled based on claim type. Focus on what makes performance misleading:

• Gross vs. net clarity
• Fee/expense assumptions
• Time period and whether performance is hypothetical, backtested, or model-based (if applicable)
• Benchmark construction differences
• Material limitations and risks
• Explicitly avoid language that implies future performance, guarantees, or investment safety tied to performance

Tie each disclosure module to a claim category so reviewers can check completeness quickly.

5) Cross-channel consistency monitoring (sampling)

Even with pre-approval, drift happens across channels. Set a recurring sampling process:

• Pull a sample from website, social, pitch decks, and third party listings.
• Check for: mismatched numbers, stale time periods, missing disclosures, “edited” charts, inconsistent risk language.
• Log findings, remediation actions, and preventive changes.

This aligns to the best practice control: periodic cross-channel sampling to detect inconsistent claims, disclosures, or risk language and log remediation.

6) Archive immutable records (final + approvals + substantiation)

For each disseminated item, store:

• Final distributed artifact (PDF, webpage capture, video recording/transcript as applicable)
• Approval record (who approved, when, what version)
• Substantiation packet and disclosure version used
• Distribution evidence (where posted/sent)

This aligns to the best practice control: maintain immutable archives of final disseminated communications, approval records, and linked disclosure versions.

Where Daydream fits (earned mention): Daydream can act as the workflow backbone for marketing reviews by forcing claim-by-claim substantiation links at approval time, locking versions, and producing an exam-ready audit trail without chasing emails across teams.

Required evidence and artifacts to retain (exam-ready list)

Use this as your retention checklist per advertisement:

• Advertisement final version (exactly as disseminated) and date first used
• Claim inventory (a table listing each performance statement/chart and where it appears)
• Substantiation for each claim (source report, calculation worksheet, benchmark source/method note)
• Disclosure set attached to the ad (the exact language/version used)
• Pre-dissemination approval record with reviewer name/title and timestamp
• Change log if updated (what changed, why, re-approval evidence)
• Cross-channel monitoring results if the item was part of a sample review

Common exam/audit questions and hangups

Expect questions shaped like these:

• “Show me your process to prevent untrue or misleading statements in advertisements.” (17 CFR 275.206(4)-1)
• “Who approves performance advertising before it is published? Show the evidence.”
• “How do you substantiate performance numbers in pitch decks and on the website?”
• “How do you ensure disclosures are consistent across channels?”
• “How do you supervise third parties who post or distribute your performance content?”
• “What testing do you do to confirm ongoing compliance?” (Marketing Rule remains an exam focus. (2025-exam-priorities))

Hangups that slow teams down:

• Marketing treats disclosures as “boilerplate” rather than claim-specific.
• Performance data changes (restatements, corrected valuations) without downstream ad updates.
• Social/short-form content omits qualifiers that are present in long-form pieces.

Frequent implementation mistakes (and how to avoid them)

1. Approving the document, not the claims
   Fix: Require a claim inventory and substantiation mapping for each performance statement.

2. Stale performance windows posted on one channel
   Fix: Maintain a channel register (where performance appears) and run scheduled sampling.

3. “True but misleading” charts
   Fix: Add a reviewer prompt: “What would a reasonable investor infer?” If the inference is stronger than the data supports, revise.

4. Post-approval edits (a designer changes a footnote, a marketer updates a number)
   Fix: Lock files after approval and require re-review for any edits.

5. Third party distribution without supervision
   Fix: Contractually require pre-approval or use only firm-hosted, firm-controlled performance materials; retain evidence of what the third party used.

Enforcement context and risk implications

The Marketing Rule’s general prohibition frames misleading ads as fraudulent, deceptive, or manipulative acts. (17 CFR 275.206(4)-1) Practically, that means performance advertising issues can escalate beyond “marketing sloppiness” into regulatory risk that drives remediation, investor communications, and reputational fallout. The SEC has also flagged Marketing Rule compliance as an examination focus. (2025-exam-priorities) Treat this requirement as a standing control set, not a one-time project.

Practical 30/60/90-day execution plan

First 30 days (stabilize and stop the bleeding)

• Inventory all places performance appears (pitch templates, website pages, factsheets, social templates, third party portals).
• Turn on a mandatory pre-dissemination approval gate for anything containing performance.
• Publish a one-page interim standard: “No performance claim without substantiation + required disclosures.”

Days 31–60 (standardize and document)

• Build the Performance Advertising Standard and disclosure modules by claim type.
• Implement the claim inventory + substantiation template in your workflow tool (or Daydream).
• Define system-of-record for performance and benchmark data; document owners and change control.

Days 61–90 (test and harden)

• Run cross-channel sampling; log defects and fix root causes (templates, training, access controls).
• Train marketing, IR, and portfolio teams on “true but misleading” risk and required substantiation.
• Prepare an exam packet: one recent campaign with full evidence (final ad, approvals, substantiation, disclosures, distribution proof).

Frequently Asked Questions

Do we need compliance approval for every piece that includes a performance chart?

If it is an advertisement and includes performance, you need a control that prevents untrue or misleading statements before dissemination. A pre-dissemination approval workflow is the cleanest way to prove supervision and substantiation. (17 CFR 275.206(4)-1)

What counts as “substantiation” for a performance claim?

Substantiation means you can tie each claim to a controlled source (official performance report) and reproduce the calculation assumptions. Keep the exact backup you relied on at the time of publication.

Can we post abbreviated performance content on social media if full disclosures are on the website?

The short-form post can still be misleading if key limitations are missing where the claim is made. Treat each channel as its own advertisement and ensure the disclosures needed to avoid misleading implications are present and visible. (17 CFR 275.206(4)-1)

How do we handle performance updates (month-end/quarter-end) without constant re-approvals?

Use approved templates with controlled data feeds and define what changes are “data refresh” versus “content change.” If disclosures, time periods, or claims change, re-approval should trigger.

We use third parties (placement agents/platforms) who repost our materials. What’s the control?

Require that third parties distribute only firm-approved, version-locked materials, and keep records of what they disseminated. Build contractual and operational checks so performance content cannot be modified outside your review process.

What is the exam-risk signal that our program is weak?

Inability to produce an audit trail quickly: who approved, what version went out, and how each performance statement was supported. The SEC has stated Marketing Rule compliance is an exam focus. (2025-exam-priorities)