SEC Adopts Amendments to the Names Rule Under the 1940 Act (2024)

FAQs

What is the SEC adopts names rule? ›

The SEC estimates that the percentage of registered funds subject to the rule will increase from 60% to 76% under the new Names Rule. The Names Rule prohibits registered funds from using “materially deceptive or misleading” names.

The Names Rule requirement for a fund to invest in accordance with its 80% investment policy “under normal circ*mstances” applies at the time a fund invests its assets. The amendments include a new requirement for a fund to review its portfolio holdings in the 80% basket at least on a quarterly basis.

Also known as the 40 Act or the ICA. The Investment Company Act of 1940 regulates mutual funds and other companies that engage primarily in investing, reinvesting, and trading in securities, and whose own securities may be offered to the investing public (15 U.S.C.

The Names Rule requires that if a Fund's name suggests that the Fund invests in a particular type of investment or investments, or in investments in a particular industry, group of industries, countries, or regions, then such Fund must adopt a policy to invest at least 80 percent of the value of its assets² in such ...

The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market manipulation.

The comment period will remain open for 60 days after the date of publication in the Federal Register.

The Names Rule, as amended, generally requires a fund, when calculating compliance with the 80% investment policy, to value each derivative instrument in its portfolio using its notional amount, as opposed to the market value of the derivative.

Rule 2a-7 is the principal rule governing money market funds. Currently, the rule requires that immediately after acquisition of an asset, a money market fund must hold at least 10% of its total assets in daily liquid assets and at least 30% of its total assets in weekly liquid assets.

Regulation of Custodial Practices under the Investment Advisers Act of 1940 is a comprehensive outline summarizing SEC regulatory requirements for investment advisers that have custody of their client's assets (or that want to avoid having custody).

(i) The 1940 Act provides for the approval of advisory contracts by the fund's directors and shareholders. (ii) The 1940 Act regulates other terms of advisory contracts. (iii) The 1940 Act governs certain of the adviser's transactions with the fund.

What happens when an act is amended? ›

If the Senate changes the language of the measure, it must return to the House for concurrence or additional changes. This back-and-forth negotiation may occur on the House floor, with the House accepting or rejecting Senate amendments or complete Senate text.

The act's purpose, as stated in the bill, is "to mitigate and ... eliminate the conditions ... which adversely affect the national public interest and the interest of investors". Specifically, the act regulated conflicts of interest in investment companies and securities exchanges.

Amended Rule 35d-1 generally requires that a fund, when calculating its assets for purposes of determining compliance with the 80-Percent Policy, use notional amounts to value derivatives, with certain adjustments.

The Rule of 72 is not precise, but is a quick way to get a useful ballpark figure. For investments without a fixed rate of return, you can instead divide 72 by the number of years you hope it will take to double your money. This will give you an estimate of the annual rate of return you'll need to achieve that goal.

The US Securities and Exchange Commission adopted a new rule on 20 September to help crack down on greenwashing and other misleading marketing practices by investment funds. The “names rule” changes mean that investment fund names must match 80% of the fund's portfolio.

Rule 35d-1, initially adopted in 2001, required among other things that certain funds using names suggesting investment in certain types of investments or securities, or in certain countries or geographic regions, to adopt a policy to invest at least 80 percent of its assets in those investments, securities, countries ...

The current names rule generally requires that if a fund's name suggests a focus in a particular type of investment, or in investments in a particular industry or geographic focus, the fund must adopt a policy to invest at least 80% of the value of its assets in the type of investment, or in investments in the industry ...

On September 20, 2023, the SEC amended the names rule to expand the types of names that could be considered materially deceptive or misleading if a fund does not adopt a policy to invest, under normal circ*mstances, at least 80% of the value of its assets in the investment focus that the name suggests.