Rule 206(4)-1(d)(6)

Performance: hypothetical performance — policies, info needs, conditions/limitations

performancehypothetical-performanceconditionsrisks-limitations

Excerpted verbatim from the rule

An advertisement may not include any hypothetical performance unless the adviser: (i) adopts and implements policies and procedures reasonably designed to ensure that the hypothetical performance is relevant to the likely financial situation and investment objectives of the intended audience of the advertisement; (ii) provides sufficient information to enable the intended audience to understand the criteria used and assumptions made in calculating such hypothetical performance; and (iii) provides (or, if the intended audience is an investor in a private fund, provides or offers to provide promptly) sufficient information to enable the intended audience to understand the risks and limitations of using such hypothetical performance in making investment decisions.

Source: 17 CFR § 275.206(4)-1 on eCFR.

What violations look like

Our backtested strategy would have returned 19% annualized over the past decade.

Why it's flagged: "Backtested" returns are hypothetical performance — generally incompatible with a public LinkedIn post because the rule requires the adviser to have policies for verifying audience eligibility before disseminating hypothetical performance.

Compliant rewrite

Remove from LinkedIn. Hypothetical performance may be presented only to audiences whose eligibility you can verify (e.g., one-on-one client conversations).

Run Rule 206(4)-1(d)(6) on your own copy.

Paste any draft — LinkedIn post, newsletter, website copy — and Safe to Publish flags the Rule 206(4)-1(d)(6) issues with citations to the rule and a suggested rewrite.

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This page is for educational purposes and is not legal advice. Safe to Publish is not a law firm. Compliance decisions remain the responsibility of the registered investment adviser. See Terms.