SEC Adopts New Names Rule Under the Investment Company Act (2024)

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SEC Adopts New Names Rule Under the Investment Company Act? ›

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.

Under the current Names Rule, if a registered investment company's name suggests it has a focus in particular investment types, industries, or geographies, or that it has tax-exempt status, the fund must adopt a policy to invest at least 80 percent of the value of its assets consistent with its name.

Section 35(d) of the 1940 Act prohibits registered investment companies from adopting names that the Commission finds are “materially deceptive or misleading.”⁵ The Names Rule as currently in effect generally requires that if a fund's name suggests a focus in a particular “type of investment” or “investment in a ...

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 ...

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 new Private Fund Adviser rules were adopted on August 23, 2023. Prohibits advisers from granting preferential redemption or information rights about portfolio holdings that would have a material, negative effect on other investors in the private fund or a similar pool of assets.

The SEC has expanded the Names Rule to require a fund to adopt an 80% Investment Policy if its name suggests a focus⁷ “in investments that have, or whose issuers have, particular characteristics.”⁸ The amendments identify growth, value and terms indicating that a fund's investment decisions incorporate one or more ESG ...

The Investment Company Act of 1940 Regulates the structure and operations of investment companies through a combination of registration and disclosure requirements and restrictions on day‑to‑day operations. The Investment Company Act requires the registration of all investment companies with more than 100 investors.

Any person (which includes funds, trusts and other entities) who acquires beneficial ownership of more than 5% of a class of covered equity securities must report their beneficial ownership on Schedule 13D, unless an exception allows them to report on Schedule 13G (a shorter form that requires less disclosure than ...

Section 12D-1A's restrictions limits state that a fund cannot: Acquire more than 3% of a registered investment company's voting shares. Invest more than 5% of its assets in a single registered company. Invest more than 10% of its assets in registered investment companies3

What is the SEC ESG fund naming rule? ›

Under these proposals, if a fund has any ESG-related words in its name, a minimum of 80% of its investments should be used to meet the fund's environmental or social characteristics or sustainable investment objectives in accordance with the binding elements of the investment strategy as disclosed in the pre- ...

The U.S. Securities and Exchange Commission recently expanded rules that require funds to invest the majority of their assets in investments that reflect the fund's name.

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 ...

On September 20, 2023, the SEC issued a release (the “Release”) adopting changes to the Names Rule, Rule 35d-1 under the 1940 Act (as amended, the “Final Rule”), and related form amendments.

Rule 34b-1 deems to be materially misleading any investment company (“fund”) sales literature required to be filed with the Securities and Exchange Commission (“Commission”) by Section 24(b) of the Investment Company Act (15 U.S.C.

Rule 17j-1 under the Investment Company Act addresses these conflicts of interest by: (i) prohibiting fraudulent, deceptive or manipulative acts by fund affiliates and certain other persons in connection with their personal transactions in securities held or to be acquired by the fund; (ii) requiring funds and their ...

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.

80 Percent Investment Policy Requirement: The Names Rule's existing 80 percent investment policy requirement requires funds whose names suggest a focus on particular investments, industries, or geographical regions to invest at least 80 percent of their fund assets in the type of investment, industry, or geographic ...

The SEC custody rule applies to RIAs and how their clients' assets are held. The rules require that: RIAs maintain their clients' assets and securities via a financial institution or entity that meets the criteria for a qualified custodian.