Part 4ADVERTISING SECURITIES

Section § 25300

Explanation

If you're planning to advertise a security for sale in California, you need to file a copy of the advertisement with the state's commissioner at least three business days before publishing, unless given special permission for a shorter timeframe. However, there are exceptions. These exceptions include ads by licensed brokers not part of the distribution, ads for certain exempt securities or transactions, ads for registered securities under federal securities law, and ads for certain securities and entities as allowed by other specific laws. The commissioner may also exempt other ads by rule.

(a)CA Corporations Code § 25300(a) No person shall publish any advertisement in this state concerning any security sold or offered for sale in this state unless a true copy of the advertisement has first been filed in the office of the commissioner at least three business days prior to the publication or a shorter period as the commissioner may by rule or order allow.
(b)CA Corporations Code § 25300(b) Subdivision (a) of this section does not apply to:
(1)CA Corporations Code § 25300(b)(1) Any advertisement for any security published by a licensed broker-dealer if the broker-dealer is not effecting transactions in that security as an underwriter or other participant in a distribution for the issuer;
(2)CA Corporations Code § 25300(b)(2) Any advertisement for any security published by an issuer or any underwriter or other participant in a distribution for the issuer if the security or transaction is exempted by the provisions of Chapter 1 (commencing with Section 25100) of Part 2 of this division;
(3)CA Corporations Code § 25300(b)(3) Any advertisement for any security in a nonissuer transaction if the security is exempted by Section 25100 or an offer of the security is exempted by subdivision (g) of Section 25104;
(4)CA Corporations Code § 25300(b)(4) Any advertisement permitted or required by Section 5(b)(2) or Section 2(a)(10)(b) of the Securities Act of 1933 with respect to a security which has been registered under the Securities Act of 1933 and qualified for sale in this state;
(5)CA Corporations Code § 25300(b)(5) Any advertisement with respect to (A) a security that is subject to Sections 25100.1 and 25101.1 and the advertisement is permitted or required under the Securities Act of 1933, (B) a transaction that is subject to Section 25102.1 and the advertisement is permitted or required under the Securities Act of 1933, or (C) an investment adviser that is subject to Section 25230.1 and the advertisement is permitted or required under the Investment Adviser Act of 1940; or
(6)CA Corporations Code § 25300(b)(6) Any other advertisement exempted by rule of the commissioner.
advertisement filing security sales licensed broker-dealer underwriter exemptions nonissuer transactions federal securities registration investment adviser advertisement California securities exemptions commissioner rule exemptions business days filing requirement
(Amended by Stats. 2019, Ch. 143, Sec. 49. (SB 251) Effective January 1, 2020.)

Section § 25301

Explanation

This law section mandates that any ads from a broker-dealer that don't need to be filed under certain conditions must still be approved by a top-level person at the company. This approval needs to be done before the ads are used. Additionally, a copy showing that it was approved has to be kept on file for three years, and it should be available for the commissioner to check.

All advertisements published by any broker-dealer that are exempted from filing by paragraph (1) or paragraph (6) of subdivision (b) of Section 25300 shall be approved prior to use by signature or initial of an officer, partner, or responsible supervisory official of the broker-dealer and the signed or initialed copy shall be retained by the broker-dealer in an appropriate file for a period of three years, subject to examination by the commissioner.
broker-dealer advertisements approval requirements advertisement exemption signature of officer supervisory official advertisement retention compliance check three-year file retention commissioner examination broker-dealer regulations initialed copy retention responsible supervisory official advertisement approval broker-dealer compliance advertisement file
(Amended by Stats. 1997, Ch. 391, Sec. 30. Effective January 1, 1998.)

Section § 25302

Explanation

This law says you can't run ads for securities (like stocks or bonds) in California if the ad is misleading or leaves out important details. If the state commissioner says your ad is problematic, you'll get a written notice and won't get a hearing beforehand. You can ask for a hearing to overturn this decision, which must start within 15 business days. However, certain ads are excluded from this rule if they are already regulated by specific agencies like the Insurance Commissioner or the Federal Reserve.

(a)CA Corporations Code § 25302(a) A person shall not publish any advertisement concerning any security in this state after the commissioner finds that the advertisement contains any statement that is false or misleading or omits to make any statement necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading and so notifies the person in writing. This notification may be given summarily without notice or hearing. At any time after the issuance of a notification under this section, the person desiring to use the advertisement may in writing request that the order be rescinded. Upon the receipt of the written request, the matter shall be set for hearing to commence within 15 business days after receipt unless the person making the request consents to a later date. After the hearing, which shall be conducted in accordance with the provisions of the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), the commissioner shall determine whether to affirm and continue or to rescind the order, and the commissioner shall have all the powers granted under the act.
(b)CA Corporations Code § 25302(b) This section does not apply to any advertisement for any security which is subject to the supervision, regulation or examination of any of the following:
(1)CA Corporations Code § 25302(b)(1) The Insurance Commissioner.
(2)CA Corporations Code § 25302(b)(2) The Commissioner of Financial Protection and Innovation.
(3)CA Corporations Code § 25302(b)(3) The Public Utilities Commission.
(4)CA Corporations Code § 25302(b)(4) The Comptroller of the Currency of the United States.
(5)CA Corporations Code § 25302(b)(5) The Federal Deposit Insurance Corporation.
(6)CA Corporations Code § 25302(b)(6) The Board of Governors of the Federal Reserve System.
security advertisement false or misleading statements commissioner notification hearing request Administrative Procedure Act exempted agencies Insurance Commissioner Commissioner of Financial Protection and Innovation Public Utilities Commission Comptroller of the Currency Federal Deposit Insurance Corporation Board of Governors of the Federal Reserve System regulation exemption advertisement compliance
(Amended by Stats. 2022, Ch. 452, Sec. 78. (SB 1498) Effective January 1, 2023.)