How do emerging and mid-sized hedge fund managers navigate the complex world of hedge fund marketing and advertising compliance?

A single error in your marketing materials can result in big-dollar penalties, damage to your reputation, and, worse, your firm getting shut down. But if you think you can’t do any marketing or advertising, think again.

This hedge fund manager’s guide provides practical advice to confidently and compliantly market your fund to raise assets and revenue.

Why Do Hedge Fund Marketing?

Many hedge fund managers have been cautious about marketing, often due to regulatory complexity or a preference for discretion and exclusivity. Some managers have historically viewed marketing as unnecessary or even inappropriate for sophisticated investment strategies.

However, investors now expect expert communication and transparency. Marketing no longer risks your reputation; in fact, effective marketing may build your visibility, trustworthiness, and engagement with investors.

Build investor confidence

When you share your strategy and, Investors can see a disciplined investment process. This may help build long-term trust with clients who value consistency and accountability.

Increase market visibility

Effective marketing can also help you establish expertise and credibility, and attract sophisticated investors whose objectives and risk tolerance align with your investment philosophy.

Strengthen investor engagement

Ongoing communication reinforces your firm’s value. Insightful content can keep clients and prospects informed and asking for more.

What Are the Key SEC Hedge Fund Marketing Rules?

Before exploring what you can—and cannot—do, it’s important to start with the key rules hedge fund managers must follow.

The foundation of hedge fund marketing compliance is SEC Rule 206(4)-1, known as the Marketing Rule, which became effective in November 2022. Hedge fund managers’ marketing rules fall under several agencies:

• Securities and Exchange Commission (SEC) The SEC’s Investment Advisers Act of 1940, specifically Rule 206(4)-1 (the “Marketing Rule”), sets out primary requirements for hedge fund marketing communications.
• Financial Industry Regulatory Authority (FINRA) FINRA Rule 2210 governs broker-dealer advertising and communications with the public.
• Commodity Futures Trading Commission (CFTC) Commodity funds must comply with the CFTC’s rules, mainly under the Commodity Exchange Act and Regulation 4.7.

Hedge Fund Advertising You Can Do

The Marketing Rule defines “advertisement” to include virtually all permitted marketing communications. The Rule covers basic materials such as websites, pitch books, fact sheets or tear sheets; digital media, such as social posts, newsletters, and emails; sales platforms like seminars, roadshows, and events; and more.

“The SEC, in creating this rule, was thoughtful enough to say if material is distributed to more than one person, it is considered an advertisement,” said Will Clark, Director at Vigilant, a leading national legal and compliance services firm.

The medium does not matter; the standards remain the same.

The standard is clear: all advertising must be fair and balanced. “Some firms present first drafts with superlative statements,” said Mr. Clark. “An issue they typically don’t get right is remembering to treat topics in a fair and balanced light.”

Hedge fund website marketing

Managers can maintain an informative website that outlines their team, investment philosophy, and approach. But every claim must be substantiated, all data must be accurate, and performance information, if presented, must comply with all applicable requirements.

You can share factual information about your firm, your high-level philosophy, strategy,  experience, and provide educational content.

“One of the biggest risks I see in website marketing is version control,” said Mr. Clark. “Most material is drafted in Microsoft Word, Google Docs, or as PDF documents. However, I’ve seen firms that forget to update their websites to the correct version.”

Financial planning investment advisors who also manage a hedge fund or funds typically have two websites—one for their wealth management RIA business, and one for their hedge fund family.

Where should they place thought leadership content? According to Nicholas Bourque, a fund compliance expert, “As an investment advisor, a firm can distribute content across both platforms, provided it doesn’t directly market specific products.”

Performance advertising

Great performance data is wonderful, and many managers love to tout their results. The SEC Marketing Rule imposes strict requirements on how firms can present returns. If you include performance, you must show:

• Net of fees results for one-, five-, and ten-year periods or since inception
• Gross and net returns with equal prominence
• The same time period and calculation methodology

And, of course, you must clearly disclose that past performance does not guarantee future similar performance.

Yes, hedge fund managers can use social media

The Marketing Rule recognizes how people actually communicate today. This means hedge fund managers can use social media for investor communication.

For example, managers can share insights and communicate with prospects on social media platforms like LinkedIn and X, and specialized investor groups such as those on Reddit, Facebook, and Seeking Alpha.

However, every post, tweet, and video can be considered an advertisement subject to the Marketing Rule’s requirements. Performance data, endorsements, or testimonials you post on social media must comply with disclosure rules, as well as recordkeeping rules.

Some hedge fund managers may think that their ideal prospects are not on social media. Which, depending on the manager, fund, and objectives, may or may not be correct.

However, notes Tim Spangler of Practus, a global law firm with broad financial services expertise, including complex alternative fund compliance and advertising issues, “People in your ecosystem, such as analysts, chief financial officers, RIAs, and family office decision makers, are likely on social media. And you may want to engage with them.”

For those who use social media, you must:

Create and enforce a policy on comment sections. Many firms disable comments on blogs and social media because comments can be treated by regulators as firm advertising. If a firm highlights third‑party posts, particularly regarding performance, the SEC may view the content as a general solicitation approved by the firm and therefore be subject to the Marketing Rule and anti‑fraud standards. Selectively deleting negative remarks can also create unfair, misleading threads.

Monitor employees’ social media. Employees with firm training and pre-clearance may post personal content, but firms are responsible for reviewing linked, reposted, or referenced materials.

Identify if posts are paid promotions. You must disclose whether you have paid compensation for social media promotion. Equally important, you are responsible for ensuring the people you pay are not “bad actors,” who are individuals or organizations who have criminal convictions, injunctions, or sanctions under SEC Rule 506(d) . The rule disqualifies individuals with serious legal or regulatory violations from participating in certain exempt securities offerings.

Newsletters, emails, and pitch books

Can you email a pitch book or newsletter, and if so, how?

“Emails and other forms of direct communication from hedge funds must carry the same rigorous compliance standards as your website and all other advertising vehicles,” said Mr. Bourque.

“Every claim in a pitch book presentation, or mass emails of newsletters must be documented and substantiated,” Mr. Bourque said. “Firms must have a structured process for documentation and record-keeping, as regulators may request specific items during potential examinations.”

Testimonials and endorsements

The modernized Marketing Rule permits testimonials and endorsements— but proceed with caution. Hedge fund managers must disclose whether the statement is from a current or prospective client or non-client, whether any cash or non-cash compensation was provided, and any material conflicts of interest. The rule became effective May 4, 2021.

Most managers continue to shy away from endorsements or testimonials. “I have not seen wide adoption,” said Mr. Clark. “Testimonials typically carry little weight for affluent investors.”

Third-party ratings and rankings

Are you interested in advertising a positive ranking or rating you received from a third-party? Third-party ratings can be powerful, but must follow guidelines. You must, for example,  prominently disclose the rating date, the period it covers, the third party’s identity, and whether you provided compensation.

What’s more, firms should use reprints only while the rating is reasonably current, typically not more than one calendar quarter, and not superseded by materially worse results. 

Required disclosures must appear close to the rating in a clear, readable typeface. If you license a logo or reprint from the rating provider, expect additional fees and limits on how and where you can use it.

Hedge Fund Marketing You Cannot Do

Despite the modernized rules, some practices are prohibited.

No mass advertising

Hedge fund managers are strictly prohibited from advertising their investment opportunities to the general public through broadcast media, social media, mass-market newspapers, magazines, podcasts, or online.

Mass advertising to retail investors could mislead those without adequate investment knowledge or experience with complex performance projections.

“Managers also cannot host seminars or events where attendees were invited through general advertising channels, or speak publicly to media outlets about current investment opportunities available in your fund,” said Mr. Bourque. “All marketing must be targeted exclusively to qualified, pre-screened sophisticated investors. In addition, hedge fund managers can host events, but they would only be able to speak about their firm, not the firm’s products.”

No incomplete or buried information

Similarly, hedge fund managers cannot omit risks or fees associated with their investment fund or service. You cannot, for example, present disclosures in illegible fonts or use formatting that obscures or hides important limitations.

Sometimes it’s what you don’t say that matters.

According to Mr. Spangler of Practus, “The importance of accurate and truthful content is critical. Managers must have internal controls for reviewing omissions of material facts.”

A typical violation is hiding conflicts of interest from investors. The SEC has penalized hedge fund managers who didn’t reveal they received financial incentives for directing client money into specific investments, even when better or less expensive options existed. An omission is material if a reasonable investor would consider the hidden conflict important when deciding where to invest.

Tim also explained that “Common issues with marketing communications involve failing to consider the broader context of a manager’s disclosures and statements, which can highlight inconsistencies in existing materials.”

Any fund advertising must be consistent with what is in the firm’s Private Placement Memorandum (PPM) and Form ADV. These documents are the official descriptions of the fund’s objective, investment strategy, risks, fees, and more. Regulators can view any marketing that contradicts or goes beyond those documents as materially misleading.

No false statements

You cannot include any untrue statements, suggest your fund is appropriate for all investors or should be part of all portfolios, or embellish your capabilities. You also cannot claim to be “conflict-free” when conflicts exist, overstate your team’s qualifications or experience, or make claims about awards or rankings you have not actually received.

No forward-looking statements

Hedge fund managers cannot make projections about future performance or state that investors can expect specific rates of return. You cannot guarantee returns or imply that past track records will continue.

No cherry-picked results

Hedge fund managers also cannot highlight only successful performance. This may sound obvious, but it must be spelled out for some, nonetheless. You cannot:

• Excluding certain time periods
• Fail to disclose whether returns included reinvested dividends
• Present only realized investments while omitting unrealized positions
• Omit material facts that make other statements misleading
• Discuss potential benefits without equally addressing material risks

In addition to what you can and cannot say, how you keep your records is of paramount importance for hedge fund managers. “To ensure proper record-keeping, firms must maintain records of all business communications on approved platforms for at least five years,” said Mr. Bourque. “This includes written communications, emails, texts, and phone calls.”

Nicholas noted that using unapproved firm communication platforms with encryption technology, such as WhatsApp, can pose risks to the retrieval and storage of information.

Hypothetical Performance

Based on the SEC’s updated Marketing Rule 206(4)-1 under the Investment Advisers Act of 1940, hedge fund managers can use hypothetical or back-tested performance—but only if strict conditions are met. The marketing rule became effective on November 4, 2022.

Among other notable rules, firms must have written policies to ensure hypothetical performance is shown only to appropriate recipients. Advertisements must explain how the hypothetical or back-tested performance was created, and the assumptions and calculations used.

Managers must also disclose the risks of relying on hypothetical results when making investment decisions, and ensure that prospective investors can reasonably understand them.

Differences Between Compliance for Mutual Fund Marketing and Hedge Fund Marketing

The key differences between compliance for mutual fund marketing and hedge fund marketing revolve around regulatory strictness, investor protection, and what funds can present to prospective clients.

Mutual fund marketing is regulated under the Investment Company Act of 1940. All performance, fees, and risks must be standardized, regularly updated, and made publicly available. You cannot use testimonials or present hypothetical or back-tested returns.

Hedge fund marketing generally faces fewer regulations but is still subject to SEC anti-fraud provisions and the Investment Advisers Act Marketing Rule. Here’s a summary:

Special Considerations for Commodity Funds Advertising Compliance

Many regulations for commodity funds and commodity-based funds are similar to those for hedge funds. However, a key difference is that these funds must also register with the Commodity Futures Trading Commission (CFTC) and comply with the Commodity Exchange Act.

Commodity-based hedge funds—those that trade commodities, futures, options, or foreign exchange swaps—must register and submit Form 7-R and Form 8-R documents, pay fees, provide principal and AP details, pass background checks, and meet proficiency standards.

Commodity funds that invest mainly in physical commodities like oil, metals, or agricultural products, or commodity futures contracts, must also register with the CFTC as a Commodity Pool Operator (CPO) and follow National Futures Association (NFA) rules.

The rules’ focus is on transparency and risk control for audits, disclosures, and investor statements. The rules on commodity funds are complex; for additional detail, consult your legal people. 

Accredited Investors

A key concept for hedge fund managers is the “accredited investor” standard. An accredited investor is considered financially sophisticated enough to evaluate and bear the risks of private investments without the protections offered by a public offering.

An individual may qualify as an accredited investor if they have an annual income of over $200,000 (or $300,000 with a spouse or partner) for the past two years, with a reasonable expectation of earning the same or more in the current year; have a net worth of over $1 million alone or with a spouse or partner, excluding their primary residence; or certain professional licenses or status with regulated institutions.

Frequently Asked Questions About Hedge Fund Marketing Compliance

Q: What is the SEC definition of an advertisement?

According the SEC, an advertisement means “Any direct or indirect communication an investment adviser makes to more than one person, or to one or more persons if the communication includes hypothetical performance, that offers the investment adviser’s investment advisory services with regard to securities to prospective clients or investors in a private fund advised by the investment adviser or offers new investment advisory services with regard to securities to current clients or investors in a private fund advised by the investment adviser, but does not include:

1. Extemporaneous, live, oral communications;
2. Information contained in a statutory or regulatory notice, filing, or other required communication, provided that such information is reasonably designed to satisfy the requirements of such notice, filing, or other required communication; or
3. A communication that includes hypothetical performance that is provided: [followed by the detailed conditions for hypothetical performance carve-outs in the rule].”

Q: Can hedge fund managers use videos or podcasts in their marketing?

Video and podcast content are permitted under the Marketing Rule but require the same compliance as written materials. Every claim must be substantiated, performance data properly disclosed, and content archived. Videos present additional challenges in that visual elements may distract from required disclosures, and editing must not create misleading impressions. 

Q: Can I include news articles or third-party research mentioning my hedge fund on my website?

Yes, but you must be fair and balanced: you cannot selectively present favorable coverage while omitting negative performance or commentary, or information that creates a misleading impression of your performance or reputation. You must also verify that the information about your fund in any article you post on your website or social media is materially accurate.

The Price of Doing it Wrong

“Failure to comply with hedge fund marketing regulations can be severe,” said Mr. Spangler.  Some recent examples:

Forced shutdowns. In the five years ended September 2025, the SEC mandated the closure or liquidation of more than ten funds due to fraud, Ponzi schemes, or major compliance violations. In March 2024, the SEC shut down an Atlanta-based hedge fund for misrepresenting investment returns and misappropriating investor funds. The fund’s principals faced injunctions, asset freezes, and industry bans.

Public censures. In April 2025, two major investment advisers were censured and fined $45 million each for violations involving whistleblower deterrence in agreements, failures in investment model governance, and custody rule lapses. The penalties required both firms to create additional compliance controls and ongoing cooperation with regulators.

Harm to reputation. The SEC sanctioned a hedge fund manager in June 2024 for presenting returns of a single investor as the fund’s overall performance. They claimed a 44.8 percent return when the fund lost 5.7 percent. The penalty was $100,000 and reputational damage.

The SEC considers cooperation a mitigating factor when determining penalties. Several firms received reduced fines specifically because they identified and corrected problems before the SEC examination. However, firms should first evaluate this issue with their counsel.

In Summary: Essential Rules Every Hedge Fund Manager Must Know

Yes, asset managers can market hedge funds; it’s not as limited as you might think.

“I don’t want Compliance to be the ‘department of no,’ said Mr. Clark. “We are a function of the growth of the business, which is to attract assets. However, it’s crucial to do it the right way.”

Hedge fund marketing compliance is complex but navigable. With proper understanding of SEC rules, strategic communication practices, and careful documentation, managers can effectively market their funds to current and prospective institutional and high-net-worth investors while maintaining regulatory compliance.

Schedule a complimentary strategy session with Dan Sondhelm, CEO of Sondhelm Partners, to learn more about how to market and grow your hedge fund.

Frank Serebrin is the Content Marketing Director for Sondhelm Partners. He leads strategic and creative content and marketing services for our asset management and wealth management clients.