Quick Answer
Under the USA, the state Administrator may, by rule or order, require the filing of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature aimed at prospective investors. The Administrator can set the timing (before, during, or after use) and can also require affirmative pre-use approval. Exempt securities, exempt transactions, and federal covered securities fall outside this authority.
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.
What Should You Check on Exam Day?
- 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.