Filing Sales Literature with the Administrator
Now that you understand FINRA's federal-level filing requirements, let's look at what the state Administrator can require under the Uniform Securities Act.
USA Section 403: Administrator's Authority
Under USA Section 403, 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.
Timing Flexibility
The Administrator has flexibility to require filing:
- Before use (pre-use)
- Concurrently with use
- After use (post-use)
The specific timing depends on the Administrator's rules or orders. Combined with the classification authority under Section 412(a), the Administrator can apply different filing formulas to different types of securities.
Limitations on Section 403
Section 403 does not apply to:
- Securities or transactions exempt under USA Section 402
- Federal covered securities (securities listed on national exchanges, investment company securities, etc.)
Exam Tip: Gotchas
- Section 403 is discretionary, not automatic. The Administrator "may" require filing; not every communication must be filed.
- Federal covered securities are excluded. State filing requirements do not apply to securities listed on national exchanges or investment company securities.
- Securities exempt under Section 402 are also excluded. The exam may test whether a specific type of sales literature falls within one of these exemptions.
Federal vs. State Filing: A Comparison
| Filing Authority | Who Requires It | Scope |
|---|---|---|
| FINRA (Rule 2210) | FINRA Advertising Regulation Department | Retail communications by broker-dealers |
| USA Section 403 | State Administrator | Sales literature for non-exempt, non-federal-covered securities |
Key distinction: A broker-dealer may need to file communications with both FINRA and the state Administrator, depending on the type of security and the state's rules.
Exam Tip: Gotchas
- Section 403 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.
- A broker-dealer may face filing obligations with both FINRA and the state Administrator for the same communication.