Endexx Corp (EDXC)

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The SEC’s Marketing Rule, officially known as the Investment Advisers Act of 1940, Rule 206(4)-1, was significantly updated in December 2020. This rule governs the marketing activities of investment advisers and aims to modernize the framework to reflect changes in the industry, particularly concerning the use of social media and other digital communication methods. The updates are commonly referred to as the "SEC Marketing Rule."

Part 2 of this rule typically refers to the implementation and specific requirements for marketing communications, including those on social media platforms. Key provisions include:

1. Advertisements Definition: The rule expands the definition of "advertisement" to include communications by advisers via social media, which means that anything shared on these platforms could be subject to SEC regulations.

2. Testimonials and Endorsements: The rule now allows the use of testimonials and endorsements in advertisements, provided specific conditions are met, such as clear and prominent disclosure of whether the testimonial provider is a client and whether they are being compensated.

3. Performance Information The rule outlines requirements for presenting performance information, including a prohibition on including gross performance unless net performance is also presented with equal prominence.

4. Third-Party Ratings: Advisers are permitted to use third-party ratings in their marketing materials if the ratings are based on a reasonable belief that the survey or questionnaire used to obtain the rating was unbiased and not designed to produce a predetermined result.

5. Review and Record-keeping: The rule imposes obligations on advisers to maintain records of all advertisements, including those disseminated through social media, and to ensure that these advertisements are compliant with SEC requirements.

The SEC's Marketing Rule represents a significant shift, particularly with its embrace of modern communication channels, and requires advisers to carefully consider how they use social media and other digital tools in their marketing strategies.