A mutual fund seeking to offer shares in State B submits its SEC prospectus and pays the required notice filing fee. The State B Administrator demands additional disclosure not found in the SEC prospectus. Which is MOST accurate?

1. AThe Administrator may require the additional disclosure before sales begin
2. BThe Administrator cannot require additional disclosure since the fund is a federal covered security✓ Correct answer
3. CFederal law does not pre-empt state disclosure rules for mutual funds
4. DThe fund must also register in State B as a condition of sale

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