The presentation of hypothetical or backtested performance results in marketing materials can be a minefield for advisers. The SEC continues to scrutinize advisers’ use of backtested results, including their policies and procedures governing that use. The SEC’s recently settled enforcement action against an SEC‑registered investment adviser is a reminder that the agency will take advisers to task over inadequate policies and procedures governing performance advertising – even when the advertisements in question may not be materially misleading. Although the alleged misconduct took place prior to the SEC’s adoption of its new marketing rule, which contains specific requirements for the presentation of backtested and other hypothetical performance results, the lessons from the settlement remain relevant. This article analyzes the alleged misconduct and the terms of the settlement, with commentary from Christine Lombardo, partner at Morgan Lewis. For coverage of the new marketing rule, see “Navigating the SEC’s New Marketing Rule” (Jul. 8, 2021); as well as our two-part series: “Key Takeaways for Private Fund Managers” (Mar. 18, 2021); and “Next Steps for Legal and Compliance” (Mar. 25, 2021).