A great deal of scrutiny and attention has been directed toward how PE sponsors’ performances are calculated and disclosed to investors, which culminated in the recent adoption of amendments to the advertising and cash solicitation rules in Rule 206(4)‑1 under the Investment Advisers Act of 1940 (Marketing Rule). Although the Marketing Rule offers valuable clarity to facilitate non-standard performance calculations by PE sponsors, the SEC will not hesitate to pursue enforcement actions against sponsors that fail to comply with rules around advertising. For example, the Commission settled with an investment adviser that allegedly failed to adequately disclose its use of backtested data in certain marketing materials. This article details the alleged misconduct and the terms of the settlement order. See our three-part series on operational deficiencies in non-standard performance calculations: “Common Process Issues” (Feb. 9, 2021); “Common Recordkeeping and Disclosure Issues” (Feb. 16, 2021); and “Nuts and Bolts of Upgrading Controls” (Feb. 23, 2021).