Investment Company Advertisements and Sales Literature
Much like other securities issuers, investment company advertisements involving new securities are regulated primarily by the Securities Act. Issuers cannot advertise a securities offering before filing a registration statement with the SEC. Any advertisement made by a new issuer before a registration statement becomes effective must be accompanied or preceded by a “statutory” prospectus. After a registration statement becomes effective, broker-dealers must deliver a statutory prospectus to purchasers of the new securities, either when they are delivered or when the sale is confirmed, whichever comes first.
For investment companies, these communication restrictions cause unique problems. Other companies, even while engaged in a public offering of new securities, can advertise their products, such as cars and trucks. With investment companies, however, securities are their product. Almost any advertisement