In an interpretive guidance letter issued to a registered closed-end fund in June 2017, FINRA permitted the use of “related performance information” in communications that are distributed solely to institutional investors. In connection with their marketing processes, funds with limited or no track records often seek to display the performance history of other accounts managed by the adviser and employing a substantially similar investment strategy.17
In the letter, FINRA made clear that the use of this type of information would only be permitted in institutional communications. FINRA restated its position that furnishing this type of information to retail investors would not be consistent with the standards of Rule 2210, FINRA’s communication rules. This outcome is similar to FINRA’s views relating to, for example, pre-inception (“backtested”) performance for proprietary indices.18
Our more detailed article about FINRA’s new guidance may be found here.