The Commodity Futures Trading Commission has amended its Regulation 4.41, which governs advertising by commodity pool operators (CPOs), commodity trading advisors (CTAs), and their principals. The amended regulation, which is effective March 26: (i) restricts the use of testimonials; (ii) clarifies the required placement of the prescribed simulated or hypothetical performance disclaimer; and (iii) makes explicit that advertisement through electronic media is included within the regulation’s coverage.

Under the revised regulation, advertisements that refer to a testimonial must include certain prominent disclosures regarding the testimonial—specifically, that such testimonial may not be representative of all clients’ experiences, that it is not a guarantee of future performance or success, and, if more than a nominal sum is paid, that it is a paid testimonial. The amended regulation also requires that the prescribed disclaimer for simulated or hypothetical performance be placed “in immediate proximity” to such performance information. These amendments generally conform the CFTC regulation with the terms of the National Futures Association Compliance Rule 2-29.