CandleFocus Glossary Editor
The Investment Company Act of 1940 is a US law that regulates the establishment of investment companies and outlines their activities. It is made up of 11 sections which have been updated through the decades in order to keep up with the changing financial landscape. The legislation is overseen by the Securities and Exchange Commission (SEC) and companies may be eligible for an exemption from the product obligations and requirements of the act.
The origins of the Investment Company Act of 1940 dates back to the Wall Street Crash of 1929 and the Great Depression that followed. The legislation was designed and enacted to help protect investors from risky investment practices and provide a greater safety net for investors when investing in mutual funds, securities, and other investments.
The Investment Company Act of 1940 was part of the Securities Act of 1933 and the Securities and Exchange Act of 1934. The 1933 Securities Act provided disclosure requirements for promotional materials and the 1934 Act provided new regulations on exchanges and various practices, such as insider trading. The 1940 Act focused specifically on investment companies, defining them, and outlining the requirements of how they must operate.
The Act was amended in 1970 to provide greater regulation and guidance and to protect against abuses of financial instruments like mutual funds. The Securities and Exchange Commission also made changes to the structure and format of the Act in 1979 and 1986 to ensure that it remains accurate and up to date with the changing marketplace.
The Investment Company Act of 1940 is an important piece of legislation that has evolved over the years in order to keep investors safe from risky investment practices. It is overseen by the SEC and companies may be eligible for an exemption from the product obligations and requirements. The act was designed to provide greater security for investors and has gone through several amendments to ensure that it remains accurate and relevant to investors in the modern financial landscape.
The origins of the Investment Company Act of 1940 dates back to the Wall Street Crash of 1929 and the Great Depression that followed. The legislation was designed and enacted to help protect investors from risky investment practices and provide a greater safety net for investors when investing in mutual funds, securities, and other investments.
The Investment Company Act of 1940 was part of the Securities Act of 1933 and the Securities and Exchange Act of 1934. The 1933 Securities Act provided disclosure requirements for promotional materials and the 1934 Act provided new regulations on exchanges and various practices, such as insider trading. The 1940 Act focused specifically on investment companies, defining them, and outlining the requirements of how they must operate.
The Act was amended in 1970 to provide greater regulation and guidance and to protect against abuses of financial instruments like mutual funds. The Securities and Exchange Commission also made changes to the structure and format of the Act in 1979 and 1986 to ensure that it remains accurate and up to date with the changing marketplace.
The Investment Company Act of 1940 is an important piece of legislation that has evolved over the years in order to keep investors safe from risky investment practices. It is overseen by the SEC and companies may be eligible for an exemption from the product obligations and requirements. The act was designed to provide greater security for investors and has gone through several amendments to ensure that it remains accurate and relevant to investors in the modern financial landscape.