The Creation Of The Investment Company Act

by David Jenyns on August 8, 2008

The key to the provisions of the Investment Company Act was the experience of the business. The provisions of the Investment Company Act may be divided into two broad categories:

Investment companies are defined as companies engaged primarily in the business of investing, reinvesting, and trading in securities. This excludes companies, which may own securities but are mainly engaged in operating businesses other than investment companies. Also excluded are brokers, underwriters, banks, insurance companies, small loan companies, factors, and the like.

Persons guilty of security frauds are barred from serving as officers and directors of investment companies. Transactions between investment companies and their officers, directors, and other insiders are prohibited except on the approval of the Commission. Pyramiding of such companies and cross-ownership of their securities also are prohibited.

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