What is a diversified investment company under the Investment Company Act of 1940?
Section 5(b) (1): "'Diversified company' means a management company which meets the following requirements: At least 75 per centum of the value of its total assets is represented by cash and cash items (including receivables), Government securities, securities of other investment companies, and other securities for the ...
What is the definition of an investment company under the Investment Company Act of 1940?
Section 3(a)(1) of the 1940 Act defines the term “investment company.” Specifically, Section 3(a)(1)(A) of the 1940 Act defines “investment company” to mean “any issuer which is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in ...
What companies are subject to the Investment Company Act of 1940?
The Investment Company Act applies to all investment companies, but exempts several types of investment companies from the act's coverage. The most common exemptions are found in Sections 3(c)(1) and 3(c)(7) of the act and include hedge funds.
Which of the following are defined as investment companies under the Investment Company Act of 1940 quizlet?
The Investment Company Act of 1940 defines 3 types of investment companies; face amount certificate companies, unit investment trusts, and management companies.
What is the Investment Company Act of 1940 definition of affiliate?
(3) “Affiliated person” of another person means (A) any person directly or indirectly owning, controlling, or holding with power to vote, 5 per centum or more of the outstanding voting securities of such other person; (B) any person 5 per centum or more of whose outstanding voting securities are directly or indirectly ...
What does the Investment Company Act of 1940 regulate quizlet?
The Investment Company Act of 1940 regulates the investment of one investment company in another investment company, states that Open-end investment companies are Mutual Funds and that investment companies employ custodians to hold company assets.
What is one of the purposes of the Investment Company Act of 1940 quizlet?
However, the Investment Company Act of 1940 provides additional regulation to ensure investors are fully informed and fairly treated by the management of investment companies.
Who is exempt from the Investment Company Act of 1940?
The 3(c)(7) exemption refers to the Investment Company Act of 1940's section permitting qualifying private funds exemption from some SEC regulations. Private funds must not plan to issue an IPO, and their investors must be qualified purchasers to qualify for the 3C7 exemption.
What qualifies as an investment company?
Investment companies are primarily in the business of investing, reinvesting, or trading securities. There are several types of investment products a company can offer. Common examples are stocks, bonds, money market funds, index funds, and exchange-traded funds (ETFs).
Who is exempt from the Investment Advisers Act of 1940?
Other IA Act Exemptions
a. Banks (unless the bank advises a Registered Investment Company). b. Lawyers, Accountants, Engineers and/or Teachers whose advisory activities are solely incidental to the practice of his/her/its profession.
What are the three types of investment companies?
The three types of investment companies are mutual funds, closed-end funds, and unit investment trusts.
What are the two basic types of investment companies?
There are two main types of investment companies: mutual funds and exchange-traded funds (ETFs). Both types of investment companies offer investors a way to pool their money and invest in a basket of securities.
Which of the following is not an investment company?
Final answer:
A separate account in a variable annuity is not an investment company. While it does have an investment component, it is primarily an insurance product and does not meet the criteria of an investment company like mutual funds, closed-end companies, and hedge funds do.
What is the fiduciary duty of Investment Company Act of 1940?
The Investment Advisers Act of 1940 (“Advisers Act”) lays out the two basic fiduciary duties that all investment advisers owe to their clients: the duty of care and the duty of loyalty. An adviser must always serve the best interests of its client and cannot put its own interests ahead of the interests of its client.
What is the Investment Company Act of 1940 Rule 38a 1?
Under new rule 38a-1 of the Investment Company Act of 1940, as amended (the “1940 Act”), the board of a registered investment company (a “Board”), including a majority of the independent directors, must approve an investment company's Compliance Procedures, which must include provisions for the investment company to ...
What is the legal definition of an affiliate company?
What Are Affiliated Companies? Companies are affiliated when one company is a minority shareholder of another. In most cases, the parent company will own less than a 50% interest in its affiliated company. Two companies may also be affiliated if they are controlled by a separate third party.
What is a regulated investment company?
A regulated investment company (RIC) is a domestic corporation that acts as an investment agent for its shareholders, typically investing in corporate and government securities and distributing income earned from the investments as dividends (for example, a mutual fund or exchange-traded fund).
Why was the investment Act of 1940 created?
The original impetus of the Investment Advisers Act of 1940, as with several other landmark financial regulations of the 1930s and 1940s, was the stock market crash of 1929 and its disastrous aftermath, the Great Depression.
Does Investment Company Act of 1940 regulate ETFs?
ETFs are a type of exchange-traded investment product that must register with the SEC under the 1940 Act as either an open-end investment company (generally known as “funds”) or a unit investment trust.
Is a hedge fund an investment company?
A hedge fund is a "private investment partnership (for U.S. investors) or an off-shore investment corporation (for non-U.S. or tax-exempt investors) in which the general partner has made a substantial personal investment, and whose offering memorandum allows for the fund to take both long and short positions, use ...
What is the difference between the Investment Company Act of 1940 and the Investment Advisers Act of 1940?
The 1940 Act regulates open- and closed-end investment companies, as well as their investment advisers and principal underwriters. The Advisers Act regulates investment advisers.
Which of the following is not included in the definition of an investment company under the Investment Company Act of 1940?
Holding companies are not included in the definition of "investment company".
Who must register under the Investment Company Act of 1940?
Investment Advisers Act of 1940
Since the Act was amended in 1996 and 2010, generally only advisers who have at least $100 million of assets under management or advise a registered investment company must register with the Commission.
What is the threshold for the Investment Company Act of 1940?
Under the Investment Company Act of 1940, companies which hold more than 40% of their assets as securities must register with the SEC as an investment company.
Who must register under the Investment Company Act?
If an investment company is organized or otherwise created under the laws of the United States or of a State, meets the definition of an investment company, and cannot rely on an exception or an exemption from registration, generally it must register with the Commission under the Investment Company Act and must ...
