Once a fund manager is registered, Rule 206(4)-1 imposes additional restrictions on advertising that the SEC has determined would be fraudulent deceptive or manipulative. That means public presentations could be considered an advertisement.
First I want to look back at the definition of an “advertisement” for purposes of the rule. An advertisement for purposes of the rule 206(4)-1 is:
“[A]ny notice, circular, letter or other written communication addressed to more than one person, or any notice or other announcement in any publication or by radio or television, which offers (1) any analysis, report, or publication concerning securities, or which is to be used in making any determination as to when to buy or sell any security, or which security to buy or sell, or (2) any graph, chart, formula, or other device to be used in making any determination as to when to buy or sell any security, or which security to buy or sell, or (3) any other investment advisory service with regard to securities.”
In meeting with potential investors, invariably, someone will pull out a Powerpoint presentation to discuss the fund manager, their past performance, and future business plan. In looking at the definition of advertisement, a purely oral presentation would not be an advertisement. One the projector lights up, the presentation starts moving into the realm of an advertisement.
The final straw is leaving a copy of the presentation behind. Now the presentation is clearly a “written communication.”
And don’t forget about the requirements of Regulation D regarding advertising and disclosure requirements for privately-offered securities.
