Filing Sales Literature with the Administrator

This is the state-law counterpart to FINRA's own filing rules for communications with the public. FINRA's rule governs filing with FINRA; the USA governs filing with the state Administrator, and the two operate independently.

What Can the Administrator Require to Be Filed?

Under the USA, the state Administrator may by rule or order require the filing of any:

• Prospectus
• Pamphlet
• Circular
• Form letter
• Advertisement
• Other sales literature or advertising communication

The filing requirement applies to materials addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser.

When Can the Administrator Require Filing?

The Administrator has flexibility to require filing:

• Before use (pre-use)
• Concurrently with use
• After use (post-use)

The Administrator may also go further and require affirmative approval before the material is used. That is a separate, stronger formula than mere pre-use filing, and the USA recognizes it explicitly: selling a security in violation of a rule requiring affirmative pre-use approval of sales literature is one of the grounds for civil liability.

The specific timing depends on the Administrator's rules or orders. Combined with the Administrator's classification authority, the Administrator can apply different filing formulas to different types of securities.

What Falls Outside the Filing Requirement?

The filing requirement does not apply to:

• Securities or transactions exempt under the USA's exempt-securities provisions
• Federal covered securities (securities listed on national exchanges, investment company securities, etc.)

Exam Tip: Gotchas

• The filing requirement is discretionary, not automatic. The Administrator "may" require filing; not every communication must be filed.
• Federal covered securities are outside this filing authority. The sales-literature filing requirement does not reach them. Read that narrowly: it does not mean a state can never require any filing for a covered security. The Administrator may still require notice filings for investment company covered securities, which is a different requirement under a different provision.
• Exempt securities AND exempt transactions are also outside it. The carve-out is written as "the security or transaction." Sales literature used in an exempt transaction escapes the filing requirement even when the security itself is not exempt.
• The filing requirement covers all types of sales literature, not just advertisements; pamphlets, circulars, form letters, and prospectuses are all included.
• The Administrator can require filing before, during, or after use. Timing is flexible and set by the Administrator's rules or orders.

Does Filing Mean the Administrator Approved the Content?

Consistent with the registration-is-not-approval principle, the Administrator receiving or reviewing marketing materials does not constitute endorsement of the content.

• Filing is a compliance obligation, not a seal of approval
• Even if the Administrator reviews a filing and does not object, that is not an endorsement of the investment
• No filing formula converts into an endorsement of the investment's merits

Exam Tip: Gotchas

Two senses of "approval" are often confused:

• Merits: nothing the Administrator does (registering a person or a security, granting an exemption, receiving a filing) means the state passed on the merits of, recommended, or endorsed an investment. Saying otherwise is unlawful. "The Administrator approved this security" is never true.
• Process: separately, a state may by rule or order require sales literature to be affirmatively approved before it is used, and selling a security in violation of such a rule is a basis for civil liability. "The Administrator approved this advertisement's use" can be literally true as a process matter.

The "registration is not approval" theme is about merits, not about whether a document ever gets cleared for use.

What Should You Check on Exam Day?

• A filing, or the Administrator's review of one, is never an endorsement of the investment's merits, even where a rule requires affirmative pre-use approval of the material itself.
• The Administrator's filing authority is discretionary: the Administrator "may" require filing, not "must."
• Timing is flexible (before, during, or after use), and the Administrator can go further and require affirmative pre-use approval.
• Exempt securities, exempt transactions, and federal covered securities are outside this state-law filing authority, even though a covered security may still owe a separate notice filing.
• This is state-law filing with the Administrator, distinct from FINRA's own filing requirements with FINRA's Advertising Regulation Department.