Private Fund Marketing Rules: What You Can and Can't Say
What you may say, to whom, and where — decided before you build a deck or a website, not after.
Private fund marketing in the US is governed principally by how the offering is conducted (Rule 506(b) versus 506(c) under Regulation D) and, for registered investment advisers, by the SEC Marketing Rule. The two questions to settle first: may you solicit publicly at all, and what may you say about performance.
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Get in touch506(b) versus 506(c): the foundational choice
| Rule 506(b) | Rule 506(c) | |
|---|---|---|
| General solicitation | Not permitted | Permitted |
| Who may invest | Accredited investors (plus limited exceptions) | Accredited investors only |
| Verification standard | Reasonable belief, generally self-certification | Reasonable steps to verify — a materially higher bar |
| Practical effect | Pre-existing substantive relationships required | You may market publicly, but verify everyone |
Under 506(b) you cannot generally solicit, which in practice means approaching investors with whom you have a pre-existing substantive relationship. That constraint is precisely why introductions matter so much in private fundraising — and why an introducer's relationship with an investor has real regulatory relevance, not just commercial value.
506(c) permits public marketing but replaces self-certification with an obligation to take reasonable steps to verify accredited status for every investor — reviewing tax documents or financial statements, or obtaining written confirmation from a lawyer, accountant, broker-dealer or investment adviser. Managers frequently underestimate how much friction that adds at subscription.
The SEC Marketing Rule
For SEC-registered investment advisers, the Marketing Rule governs advertisements including private fund materials. Its core requirements are principles-based but strict, and several specific areas catch managers out:
- No untrue or unsubstantiated statements. You must be able to substantiate material claims on demand.
- Fair and balanced presentation. Benefits cannot be presented without associated risks or limitations.
- Gross performance requires net. Gross performance generally cannot be presented without net performance shown with at least equal prominence and comparable calculation.
- Hypothetical performance is restricted. Including targets, projections and back-tests — permitted only with policies ensuring relevance to the recipient and specified disclosures.
- Extracted performance. Showing a subset of investments requires the full portfolio's performance to be provided or offered.
- Testimonials and endorsements. Permitted subject to disclosure of compensation and material conflicts, and to oversight requirements.
- Third-party ratings. Subject to conditions on how they were obtained and how they are presented.
The rule applies to registered advisers, but the underlying antifraud principles reach further. Even where the rule does not apply directly, presenting performance in a misleading way carries risk under general antifraud provisions.
What this means for a website
A publicly accessible website describing a specific fund offering can itself constitute general solicitation. That is why many managers keep public sites limited to firm-level information — who they are, strategy in general terms, team, contact — and place fund-specific material and any performance data behind a gate.
Educational content about an asset class or a process is generally far safer than material describing a live offering. This is worth confirming with counsel for your specific situation rather than reasoning by analogy from other firms' websites, which may be operating under different exemptions.
Practical guidance
Decide 506(b) or 506(c) before you build anything
It determines whether you may market publicly and what verification burden you accept. Retrofitting is difficult and sometimes impossible.
Have compliance review every outward document
Deck, tear sheet, website, DDQ responses, conference material. Consistency across them matters as much as each in isolation.
Keep substantiation files
For every material claim and performance figure. If you cannot substantiate it on request, do not publish it.
Be careful with targets and projections
Hypothetical performance is among the most heavily conditioned categories, and target returns in a deck are exactly that.
Take advice on cross-border marketing separately
Other jurisdictions have their own regimes and US analysis does not travel.
Frequently asked questions
What is general solicitation?
Public advertising or general marketing of a securities offering — advertisements, public websites describing a live offering, unrestricted seminars or social media promotion. Under Rule 506(b) it is not permitted; under Rule 506(c) it is, but with a materially higher investor verification burden.
What is the difference between Rule 506(b) and 506(c)?
506(b) prohibits general solicitation and generally permits reliance on investor self-certification of accredited status. 506(c) permits public marketing but requires the issuer to take reasonable steps to verify accredited status for every investor, which adds significant friction at subscription.
What is the SEC Marketing Rule?
A rule governing advertisements by SEC-registered investment advisers, including private fund materials. It prohibits untrue or unsubstantiated statements, requires fair and balanced presentation, requires net performance alongside gross, restricts hypothetical performance, and conditions testimonials, endorsements and third-party ratings.
Can I show target returns in a pitch deck?
Target returns are hypothetical performance, which the SEC Marketing Rule restricts for registered advisers — permitted only with policies ensuring relevance to the recipient and with specified disclosures. Even where the rule does not apply directly, unsubstantiated targets carry antifraud risk.
Can my website describe my fund?
A publicly accessible page describing a specific offering can itself constitute general solicitation, which is not permitted under 506(b). Many managers therefore keep public sites to firm-level and educational content, with fund-specific material and performance behind a gate. Confirm your position with counsel.
Do these rules apply outside the United States?
No. Other jurisdictions have their own marketing regimes — AIFMD and national private placement regimes in Europe, separate frameworks across Asia-Pacific and the Middle East. US analysis does not travel, and local advice is needed in each jurisdiction where investors sit.
SeRuM provides introduction and networking services. We are not a registered broker-dealer, not a placement agent, and not an investment adviser. We do not offer, solicit or sell securities, we do not provide investment, legal, tax or accounting advice, and we do not make recommendations regarding any investment. Nothing on this website constitutes an offer to sell or a solicitation of an offer to buy any security, and no such offer will be made except through definitive offering documents provided by the issuer. All investment decisions, due diligence and negotiations are the sole responsibility of the parties involved. Investing in private funds and private companies involves substantial risk, including illiquidity and total loss of capital. Past performance is not indicative of future results.
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