California Investment Adviser Advertising and Disclosure Rules

California-registered investment advisers must ensure every advertisement and client communication is not false or misleading, and that any performance and testimonial-style content meets the SEC Marketing Rule baseline while also satisfying California’s anti-fraud standard. Operationalize this by implementing a pre-use review workflow, standardized disclosures, and retention of substantiation and approvals for each advertisement. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)

Key takeaways:

• Treat the SEC Marketing Rule as your floor, then test every claim against California’s anti-fraud prohibition. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)
• Build a documented, repeatable ad review and approval process that covers websites, email, pitchbooks, social posts, and third-party lead gen. (17 CFR 275.206(4)-1)
• Keep proof: approvals, versions, substantiation for claims, performance calculation support, and the exact final content that was distributed. (17 CFR 275.206(4)-1)

“Advertising” for an investment adviser is broader than most marketing teams assume. It includes websites, decks, factsheets, newsletters, mass emails, social media posts, and many third-party distributed materials if you are promoting advisory services. For a California-registered investment adviser, the compliance job is to run a single program that (1) prevents false or misleading statements, and (2) meets the SEC’s detailed marketing conditions, especially around performance, testimonials/endorsements, and presentation of results. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)

California adds a straightforward but unforgiving overlay: anti-fraud principles apply to any device, scheme, or artifice to defraud in connection with securities activity, which includes misleading advertising practices by an adviser. That means “technically compliant language” still fails if the overall net impression misleads, if material conditions are omitted, or if you cannot substantiate what you claim. (California Corporations Code Section 25235)

This page is written for a CCO/GRC lead who needs to operationalize the california investment adviser advertising and disclosure rules requirement quickly: who is in scope, what controls you need, how to evidence them, and what exam teams commonly probe.

Requirement: California investment adviser advertising and disclosure rules requirement (operational standard)

Plain-English interpretation

You must ensure that all adviser advertisements are fair and not misleading, and that performance and other promotional statements include the disclosures and conditions required under the SEC Marketing Rule. California expects the same baseline controls, plus strict adherence to anti-fraud principles: no untrue statements of material fact, no omissions that make statements misleading, and no “net impression” that misleads a prospective client. (17 CFR 275.206(4)-1; California Corporations Code Section 25235; NASAA Model Rule 502(c))

Who it applies to (entity and operational context)

In scope

• California-registered investment advisers and their supervised persons producing or distributing advertising about advisory services. (California Corporations Code Section 25235)
• Communications distributed through third parties (marketing consultants, lead generators, placement agents, social media influencers) when the content promotes your advisory services or performance and you are involved in adoption, approval, or distribution. Your controls must cover these channels because they create the same misleading-advertising risk. (17 CFR 275.206(4)-1)

Operationally in scope

• Websites, landing pages, blogs, podcasts/webinars, mass emails, newsletters
• Pitchbooks, DDQs, RFP responses, one-pagers, factsheets
• Social media posts (firm accounts and employee accounts used for business development)
• Performance reporting presented as marketing (model performance, strategy composites, extracted portfolio results)
• Testimonials/endorsements/ratings content and any compensatory arrangements tied to promotions (17 CFR 275.206(4)-1)

Not the question, but a common boundary issue

• One-to-one, purely bespoke communications can still create risk if they are used repeatedly or function like marketing. Treat any “template” language as advertising and run it through review. (17 CFR 275.206(4)-1)

Regulatory text

Regulatory baseline you must meet:
“It is unlawful for any person to employ any device, scheme, or artifice to defraud in connection with the offer, purchase, or sale of securities. State-registered investment advisers in California must ensure advertisements are not false or misleading and comply with both federal and California securities laws.” (California Corporations Code Section 25235; 17 CFR 275.206(4)-1)

What that means for an operator

• You must control the creation, review, approval, distribution, and retention of advertisements so you can prevent and detect false or misleading statements. (California Corporations Code Section 25235)
• You need a Marketing Rule–aligned program for definitions, prohibited practices, performance advertising conditions, and required disclosures. Use it as your standard even if you are state-registered, because it is the clearest operational benchmark for adviser advertising. (17 CFR 275.206(4)-1)
• California’s anti-fraud framing means examiners can challenge the net impression and the completeness of disclosures, even when individual sentences are literally true. (California Corporations Code Section 25235)

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

1) Define “advertisement” internally and map your channels

Create an inventory that answers two questions for each channel: (a) who can publish, and (b) what approval is required.

• List channels: website pages, social accounts, pitch decks, factsheets, email templates, webinar decks, partner/third-party pages. (17 CFR 275.206(4)-1)
• Assign an owner (Marketing, IR, Portfolio, Compliance) and a required review path.

Deliverable: Advertising channel inventory + RACI for approvals.

2) Implement a pre-use review and approval workflow (no exceptions without documentation)

Build one intake path for all advertising:

• Intake ticket includes: draft content, target audience, distribution method, claims requiring substantiation, and whether performance/testimonials/endorsements/ratings are included. (17 CFR 275.206(4)-1)
• Compliance review checks (minimum):
  • False/misleading risk and omissions under California anti-fraud standard. (California Corporations Code Section 25235)
  • Marketing Rule conditions for performance and any testimonial/endorsement-like content. (17 CFR 275.206(4)-1)
  • Consistency with Form ADV disclosures and actual services offered (avoid “phantom capabilities”). (17 CFR 275.206(4)-1)
• Approval produces: approver name, date, version, and conditions (required footnotes, required links, required legends).

Practical control: “No publish without approval ID” embedded into your CMS/social tool where possible; otherwise require screenshots and post-publication capture.

3) Standardize required disclosures and legends (use templates)

Maintain a controlled library:

• Performance legends (gross vs net, time period, material conditions, calculation methodology notes) aligned to Marketing Rule requirements. (17 CFR 275.206(4)-1)
• Risk disclosure snippets tied to strategies you market (so you don’t hand-write them under deadline).
• Third-party content rules: if a third party posts on your behalf, require clear identification and compliance-approved language to reduce misleading impressions. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)

Tip that prevents rework: Put the “mandatory disclosure blocks” in a locked section of templates so marketing cannot delete them casually.

4) Build a substantiation file for every material claim

Under anti-fraud principles, the operational question is simple: “Show me your support.” (California Corporations Code Section 25235)

• Maintain substantiation for:
  • Performance numbers (source data, calculation workbook/system output, period covered). (17 CFR 275.206(4)-1)
  • “Best,” “top,” “industry-leading,” or similar comparative claims (avoid unless you have objective, current support; otherwise rewrite).
  • Statements about process, risk management, fees, and personnel (org charts, bios, policies, fee schedules).
• Store substantiation with the ad approval record so you can produce it in an exam.

5) Control third parties who market you

Where a third party is involved in marketing distribution:

• Contractually require: compliance with your ad policy, pre-approval of content, and retention of distributed materials. (17 CFR 275.206(4)-1)
• Operationally require: samples of posts/emails, distribution lists (if applicable), and takedown rights.
• Monitor periodically: spot-check third-party pages and social posts for drift.

This is a common failure point because business teams treat third parties as “outside the program.” Examiners usually do not.

6) Retain books and records for advertisements (organized and retrievable)

Design retention so you can answer: what was said, when, to whom, who approved it, and what support existed.

• Keep the final disseminated version (PDF, screenshot, HTML capture).
• Keep drafts with tracked changes when the edits relate to compliance concerns.
• Keep approval logs and substantiation. (17 CFR 275.206(4)-1)

Daydream fit (earned): If you are managing approvals in email threads and shared drives, Daydream can centralize the ad intake checklist, attach substantiation, and preserve an exam-ready audit trail without asking Marketing to change how they write.

Required evidence and artifacts to retain (exam-ready list)

Use this as your audit evidence index:

• Advertising policy and procedures aligned to Marketing Rule concepts and California anti-fraud expectations. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)
• Channel inventory and approval RACI.
• Ad review checklist (with specific tests for performance/testimonials/endorsements/ratings). (17 CFR 275.206(4)-1)
• Approval log (unique ID, approvers, date, version).
• Final copies of disseminated ads (screenshots/exports).
• Substantiation files for every material claim. (California Corporations Code Section 25235)
• Third-party marketing agreements + monitoring records.
• Training records for Marketing, IR, and supervised persons who post publicly. (17 CFR 275.206(4)-1)

Common exam/audit questions and hangups

Expect questions that test governance, scope coverage, and substantiation:

• “Show me your definition of advertisement and which channels are covered.” (17 CFR 275.206(4)-1)
• “How do you prevent unapproved social media posts by supervised persons?” (17 CFR 275.206(4)-1)
• “Produce support for this claim and show who approved it.” (California Corporations Code Section 25235)
• “Walk me through how you calculate and present performance in marketing.” (17 CFR 275.206(4)-1)
• “Which third parties market you, and how do you supervise their content?” (17 CFR 275.206(4)-1)

Frequent implementation mistakes (and how to avoid them)

1. Treating California as “lighter” because you are state-registered.
   Fix: Adopt the Marketing Rule operating model as your baseline and document California anti-fraud overlay in the same procedure. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)

2. Approving language but not substantiation.
   Fix: Require a substantiation attachment for every performance figure and objective claim before approval. (California Corporations Code Section 25235)

3. Letting “sales enablement” materials bypass review.
   Fix: Define pitchbooks, one-pagers, and email templates as advertisements and route them through the same intake. (17 CFR 275.206(4)-1)

4. No control over third-party marketers.
   Fix: Put pre-approval and takedown rights in contracts, then evidence monitoring. (17 CFR 275.206(4)-1)

5. Failure to capture what actually went out.
   Fix: Store a screenshot/PDF of the final published page/post and tie it to the approval ID. (17 CFR 275.206(4)-1)

Enforcement context and risk implications (practical)

You do not need a complicated theory of harm. Advertising issues become enforcement or exam findings because they are easy to test: regulators compare public claims against your records, your ADV disclosures, and your ability to substantiate statements. California’s anti-fraud standard means omissions and “net impression” problems can matter as much as literal falsehoods. (California Corporations Code Section 25235) The Marketing Rule provides specific condition sets, so weak process controls (no review trail, no calculation support, inconsistent legends) create clear, documentable deficiencies. (17 CFR 275.206(4)-1)

Practical execution plan (30/60/90)

Numeric day counts are helpful for planning, but this guidance avoids promising outcomes tied to a calendar. Use these phases as a sequence, then set dates internally.

Phase 1: Immediate

• Freeze uncontrolled publishing: require compliance approval for new pitchbooks, factsheets, website edits, and firm social posts until the workflow is live. (17 CFR 275.206(4)-1)
• Build the channel inventory and assign owners.
• Stand up an intake form + approval log (even a simple system) and start capturing final disseminated versions. (17 CFR 275.206(4)-1)

Phase 2: Near-term

• Publish the advertising policy and a one-page “what needs review” job aid for Marketing/IR.
• Create disclosure templates for performance and strategy risk statements. (17 CFR 275.206(4)-1)
• Backfill substantiation for your most-used materials (homepage, flagship deck, core factsheets). (California Corporations Code Section 25235)

Phase 3: Ongoing

• Implement periodic testing: sample live website pages, social posts, and third-party pages against approved versions; document results and remediation.
• Train new hires and supervised persons with public-facing roles on what counts as advertising and how to request approval. (17 CFR 275.206(4)-1)
• Tighten third-party oversight: contract refresh, monitoring cadence, and escalation path for noncompliant posts. (17 CFR 275.206(4)-1)

Frequently Asked Questions

Does California require something different from the SEC Marketing Rule?

You should treat 17 CFR 275.206(4)-1 as the operating standard for what an advertisement is and how performance and promotional content must be presented. California adds anti-fraud risk: even technically true statements can be problematic if they omit material facts or create a misleading net impression. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)

Are one-on-one pitch decks “advertisements”?

If you reuse a deck or template language across prospects, it functions like marketing and should be reviewed and retained as advertising. Even bespoke materials can create anti-fraud exposure if they contain unsupported claims or omit key conditions. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)

What’s the minimum evidence I need to keep for each ad?

Keep the final disseminated version, the approval record (who/when/version), and substantiation for each material claim, especially performance. Examiners focus on what was actually distributed and whether you can support it. (17 CFR 275.206(4)-1; California Corporations Code Section 25235)

How should we handle social media by supervised persons?

Define what business-related posting is permitted, require pre-approval for promotional posts, and implement monitoring for drift from approved language. Train staff that “informal” does not mean “outside advertising rules.” (17 CFR 275.206(4)-1)

We use a third party for lead generation. Do we need to supervise their content?

Yes, if the third party is promoting your advisory services or performance, you need contractual controls, pre-approval rights, and monitoring evidence. Treat them as part of your advertising distribution chain. (17 CFR 275.206(4)-1)

Can we just add disclaimers to fix aggressive marketing copy?

Disclaimers help, but they do not cure a misleading net impression or unsupported statements. Start by rewriting claims to be accurate and supportable, then use disclosures to add necessary conditions and context. (California Corporations Code Section 25235)