Insights 2025: Navigating SEC’s Marketing Rule for Private Funds CFO

As we navigate through the constantly evolving world of finance and securities, one topic that continues to spark debate is the presentation of gross and net performance figures for unrealized portfolio companies. This ongoing discussion has caused some consternation among industry professionals, prompting a closer look at the SEC’s Marketing Rule.

For those unfamiliar, the SEC’s Marketing Rule sets guidelines for how investment managers can promote themselves and their services. It requires that managers present performance figures in a way that is fair and not misleading to potential investors. This includes the disclosure of both gross and net performance figures for unrealized portfolio companies.

The presentation of gross performance figures can sometimes be misleading, as it does not account for expenses or other factors that may impact returns. On the other hand, net performance figures take into consideration these expenses, providing a more accurate representation of the investment’s performance.

To comply with the SEC’s Marketing Rule, investment managers must carefully consider how they present these figures to ensure transparency and accuracy. By providing both gross and net performance figures for unrealized portfolio companies, managers can give investors a more complete picture of the investment’s performance.

Overall, the SEC’s Marketing Rule serves as an important regulatory framework that aims to protect investors and promote fair and transparent practices in the finance and securities industry. As we look ahead to 2025 and beyond, understanding and complying with these regulations will be crucial for all industry professionals.