Substantiation file requirements for material claims

“Substantiation file requirements for material claims requirement” is a simple concept that turns into real exam pain when it is not operationalized: the SEC expects you to have support for what you say in advertisements, and to keep the records that prove it. Under the Marketing Rule, any material statement in an advertisement must be supported; under the books-and-records rule, you must retain required records in a way that you can retrieve them. (17 CFR 275.206(4)-1; 17 CFR 275.204-2)

For a CCO or GRC lead, the goal is not to create a legal memo for every ad. The goal is a repeatable workflow where (1) marketing and IR teams know what counts as a “material claim,” (2) they attach the right proof before Compliance review, (3) Compliance’s approval is tied to that proof, and (4) the whole package is retained with version control. Done well, this reduces rework, speeds approvals, and prevents the classic exam finding: “You made the claim, but you can’t show what you relied on.”

Regulatory text

Requirement (operator summary): Maintain substantiation for material statements in adviser advertisements. (17 CFR 275.206(4)-1)

What this means in practice: For each advertisement you disseminate, you need contemporaneous, reviewable support for each material statement of fact or implication. “Material” should be treated operationally as: a statement a reasonable prospective client would consider important when deciding to engage you or allocate assets (for example, performance, fees, investment process, risk, client outcomes, rankings, and capabilities). The requirement is tightly connected to your recordkeeping obligations for advertisements and related records. (17 CFR 275.206(4)-1; 17 CFR 275.204-2)

Operator must-do: Implement a control that prevents dissemination unless the ad’s material claims have a documented evidence trail (sources, calculations, assumptions, dates, and reviewer sign-off), and retain that package in your records system with the final ad and approvals. (17 CFR 275.206(4)-1; 17 CFR 275.204-2)

Plain-English interpretation

If you say it, you must be able to prove it. If you imply it, you should be able to prove what a reasonable person would take away from the statement. Substantiation is not “we believe this is true.” It is: “here is the source data, here is how we computed the figure or conclusion, here is the date range, and here is why the statement is accurate and not misleading in context.” (17 CFR 275.206(4)-1)

A substantiation file is also your internal safety rail. It forces clarity on:

• What exactly is being claimed (the precise words in the ad).
• What evidence supports it (primary records, calculations, third-party documentation).
• What conditions/assumptions apply (time period, composite rules, fee methodology, universe definition for rankings).

Who it applies to

Entity scope: SEC-registered investment advisers creating or disseminating advertisements, including traditional marketing, pitchbooks, RFP decks, websites, social posts, and certain one-to-one communications that meet the definition of advertisement. (17 CFR 275.206(4)-1)

Operational scope (where this breaks in real life):

• Marketing creates “evergreen” website content and updates it without Compliance re-approval.
• Investor relations or sales edits pitchbooks locally, outside the controlled template.
• Portfolio teams share performance “highlights” that become marketing copy without an evidence trail.
• Third parties (PR firms, placement agents, solicitors, subadvisers) draft content using your claims.

Treat all of these as “advertising production lines” that must feed into the same substantiation-and-approval gate. (17 CFR 275.206(4)-1)

What you actually need to do (step-by-step)

1) Define “material claim” for operations (not theory)

Create a short internal standard that flags categories that always require substantiation:

• Performance (gross/net, time periods, composites, benchmarks).
• Fees and costs (all-in fees, “low fee,” “no hidden fees”).
• Risk statements (“lower volatility,” “downside protection,” “capital preservation”).
• Capabilities and scale (“we manage X,” “global coverage,” “dedicated team”).
• Client outcomes (“helped clients achieve…,” “improved funded status”).
• Rankings, awards, ratings (what was awarded, by whom, selection criteria).
• ESG/impact (“fossil-fuel free,” “carbon neutral,” “impact measured”).
  This is your intake triage so teams know what triggers a substantiation package. (17 CFR 275.206(4)-1)

2) Build a “claim register” inside the ad review workflow

For every ad, require a table with one row per material claim:

Field	What to capture
Claim ID	Unique reference for tracking
Exact claim text	Copy/paste from the ad
Claim type	Performance / fees / ranking / ESG / capability / risk
Evidence source	File name + system of record
Calculation method	If applicable, show steps or link to workbook
Time period / as-of date	Prevents stale or cherry-picked support
Owner	Who attests the evidence is correct
Compliance reviewer	Who checked the package before approval

Gate approval on completion of this register. (17 CFR 275.206(4)-1)

3) Standardize substantiation packages (so they are exam-ready)

A workable package has:

• Final ad (the version disseminated).
• Redline/version history (what changed and when).
• Claim register (above).
• Evidence bundle mapped to claim IDs.
• Approval record (Compliance sign-off, date, approver).
• Distribution log (where/when it was posted or sent), when available under your process. (17 CFR 275.204-2)

Keep the package lightweight but complete. Exams reward retrieval speed and clarity more than volume. (17 CFR 275.204-2)

4) Put substantiation under records retention and access controls

Coordinate with Records/IT so substantiation is:

• Stored in a controlled repository (not personal drives).
• Searchable by campaign name, ad name, and date.
• Permissioned (edit restrictions after approval).
• Retained per your adviser recordkeeping program for advertisements and supporting records. (17 CFR 275.204-2)

5) Add pre-dissemination “stop signs”

Two practical stop signs prevent most failures:

• No-substantiation, no-review: Compliance rejects drafts without a claim register and evidence links.
• No-final-file, no-post: Marketing cannot publish without attaching the approved final PDF/HTML capture and the substantiation package to the record.

This is where a workflow tool like Daydream can reduce friction: it centralizes the claim register, ties evidence to approval, and preserves version history in a way you can export for exam requests without hunting across systems. (17 CFR 275.204-2)

Required evidence and artifacts to retain

Retain evidence that is strong enough to stand alone if the ad author leaves the firm.

Core artifacts ¹:

• Final disseminated ad and format capture (PDF, screenshot, HTML export). (17 CFR 275.204-2)
• Claim register with mapping to evidence. (17 CFR 275.206(4)-1)
• Dated evidence for each claim (examples below). (17 CFR 275.206(4)-1)
• Calculations/workpapers for derived figures. (17 CFR 275.204-2)
• Approvals, including Compliance approval and any required business attestations. (17 CFR 275.204-2)

Evidence examples by claim type (what exam teams expect you to produce):

• AUM/capabilities: custodian statements, internal AUM reports, audited financials, or portfolio accounting extracts with as-of date.
• Performance: performance system reports, composite calculations, benchmark source, fee schedule used for net calculations, and assumptions documented.
• Rankings/awards: issuer methodology, date awarded, universe definition, and proof of what was submitted (if applicable).
• ESG/impact: policy definitions, screening rules, holdings tests, third-party data inputs, and methodology notes.

Common exam/audit questions and hangups

Expect these requests and build your file structure to answer them fast:

• “Produce the advertisement and all substantiation for each material statement.” (17 CFR 275.206(4)-1)
• “Show who approved it, when, and what version was disseminated.” (17 CFR 275.204-2)
• “Show how you calculated this figure and what data sources you used.” (17 CFR 275.204-2)
• “Explain definitions used in the claim (e.g., ‘sustainable,’ ‘downside protection,’ ‘track record’).” (17 CFR 275.206(4)-1)
• “Show that the substantiation existed at the time of dissemination, not recreated later.” (17 CFR 275.204-2)

Hangup pattern: teams can produce “some support,” but it is not tied to the exact claim language or time period. Your claim register solves this.

Frequent implementation mistakes (and how to avoid them)

1. Keeping evidence, but not mapping it to claims
   Fix: require claim IDs embedded in filenames or within the evidence index.

2. Stale substantiation for evergreen claims
   Fix: add “as-of” dates to claims and set an internal refresh trigger (for example, when AUM or strategy details materially change). Keep this trigger policy-based rather than calendar-based if your data changes irregularly. (17 CFR 275.206(4)-1)

3. Performance “highlights” without workpapers
   Fix: if a number required a calculation, retain the workbook or system output and document inputs. (17 CFR 275.204-2)

4. Third-party-created content without your evidence
   Fix: contractually require third parties to provide underlying sources and drafts, then store them in your repository as part of your package. Your obligation does not disappear because someone else drafted the copy. (17 CFR 275.206(4)-1)

5. Approval happens in email, evidence lives elsewhere
   Fix: move approvals into a system or structured workflow that preserves the linkage between ad, evidence, and approval. Daydream can serve as the system of record for that linkage while integrating with your existing file storage. (17 CFR 275.204-2)

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for this requirement, so this page does not list specific cases.

Operational risk is still straightforward: if you cannot substantiate a material claim promptly, you are exposed to findings under the Marketing Rule and recordkeeping expectations, plus downstream client trust and reputational issues. Treat substantiation as an exam readiness control, not a documentation chore. (17 CFR 275.206(4)-1; 17 CFR 275.204-2)

Practical 30/60/90-day execution plan

First 30 days (stand up the control)

• Inventory advertisement channels (website, decks, factsheets, social, email campaigns).
• Publish a one-page “material claim” standard with examples your teams actually use. (17 CFR 275.206(4)-1)
• Deploy a claim register template and make it mandatory for Compliance review. (17 CFR 275.206(4)-1)
• Pick the system of record for packages (or configure Daydream to manage claim packages and approvals end-to-end). (17 CFR 275.204-2)

By 60 days (make it repeatable)

• Train marketing/IR/portfolio SMEs on evidence expectations by claim type.
• Convert top recurring materials (core pitchbook, flagship strategy factsheet, website strategy pages) into fully substantiated “gold” versions.
• Implement version control and lock-down: only approved templates may be used externally. (17 CFR 275.204-2)

By 90 days (make it exam-ready)

• Run a mock exam pull: select a sample of ads and retrieve the full substantiation package quickly from the repository. (17 CFR 275.204-2)
• Close gaps found in retrieval speed, missing evidence types, and inconsistent claim wording.
• Add an ongoing QA check: periodic spot checks of newly disseminated ads for package completeness and dated substantiation. (17 CFR 275.206(4)-1)

Frequently Asked Questions

What counts as a “material claim” for substantiation purposes?

Treat as material any statement a reasonable client would view as important to hiring or allocating to you, including performance, fees, risks, capabilities, rankings, and ESG assertions. Operationally, maintain a defined list of claim categories that always trigger substantiation. (17 CFR 275.206(4)-1)

Do we need substantiation for qualitative statements like “disciplined process”?

Often yes, if the statement implies a verifiable fact (for example, specific controls, repeatable steps, or oversight). Keep process documentation, committee charters, or SOP excerpts that support the claim and match the wording in the ad. (17 CFR 275.206(4)-1)

How detailed does the substantiation file need to be?

Detailed enough that a reviewer can follow the chain from claim text to source data and calculations without relying on tribal knowledge. Over-collection is common; focus on direct support, dates, definitions, and calculation workpapers where needed. (17 CFR 275.206(4)-1; 17 CFR 275.204-2)

Can we store substantiation in SharePoint or a GRC tool?

Yes, if you can preserve version history, approvals, and retrieval, and if records are protected from post-approval edits. Many teams use a workflow system (such as Daydream) to manage claim registers and approvals, while storing evidence files in an approved repository. (17 CFR 275.204-2)

What do we do with third-party rankings and awards claims?

Retain the award/ranking methodology, the date and scope of the award, the universe definition, and proof of what was evaluated or submitted. Tie each element back to the exact ranking language used in the advertisement. (17 CFR 275.206(4)-1)

How do we handle “evergreen” website claims that change frequently (AUM, team size, footprint)?

Add “as-of” dates to the claims, define ownership for updating the underlying metric, and require a lightweight re-substantiation before publishing updates. Keep prior versions and substantiation packages so you can show what was live at any point in time. (17 CFR 275.204-2)

Footnotes

1. 17 CFR 275.206(4)-1