U.S. Code, Title 15, Commerce and Trade

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Author: "U.S. Congress, Office of the Law Revision Counsel"

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CHAPTER 2D—INVESTMENT COMPANIES AND ADVISERS

SUBCHAPTER I—INVESTMENT COMPANIES

Sec.

80a–1.     Findings and declaration of policy.

(a)     Findings.

(b)     Policy.

80a–2.     Definitions; applicability; rulemaking considerations.

(a)     Definitions.

(b)     Applicability to government.

(c)     Consideration of promotion of efficiency, competition, and capital formation.

80a–3.     Definitions of investment company.

(a)     Definitions.

(b)     Exemption from provisions.

(c)     Further exemptions.

80a–3a.     Protection of philanthropy under State law.

(a)     Registration requirements.

(b)     Treatment of charitable organizations.

(c)     State action.

(d)     Definitions.

80a–4.     Classification of investment companies.

80a–5.     Subclassification of management companies.

(a)     Open-end and closed-end companies.

(b)     Diversified and non-diversified companies.

(c)     Loss of status as diversified company.

80a–6.     Exemptions.

(a)     Exemption of specified investment companies.

(b)     Exemption of employees’ security company upon application; matters considered.

(c)     Exemption of persons, securities or any class or classes of persons as necessary and appropriate in public interest.

(d)     Exemption of closed-end investment companies.

(e)     Application of certain specified provisions of subchapter to otherwise exempt companies.

(f)     Exemption of closed-end company treated as business development company.

80a–7.     Transactions by unregistered investment companies.

(a)     Prohibition of transactions in interstate commerce by companies.

(b)     Prohibition of transactions in interstate commerce by depositors or trustees of companies.

(c)     Prohibition of transactions in interstate commerce by promoters of proposed investment companies.

(d)     Prohibition of transactions in interstate commerce by companies not organized under laws of the United States or a State; exceptions.

(e)     Disclosure by exempt charitable organizations.

80a–8.     Registration of investment companies.

(a)     Notification of registration; effective date of registration.

(b)     Registration statement; contents.

(c)     Alternative information.

(d)     Registration of unit investment trusts.

(e)     Failure to file registration statement or omissions of material fact.

(f)     Cessation of existence as investment company.

80a–9.     Ineligibility of certain affiliated persons and underwriters.

(a)     Persons deemed ineligible for service with investment companies, etc.; investment adviser.

(b)     Certain persons serving investment companies; administrative action of Commission.

(c)     Application of ineligible person for exemption.

(d)     Money penalties in administrative proceedings.

(e)     Authority to enter order requiring accounting and disgorgement.

(f)     Cease-and-desist proceedings.

(g)     Corporate or other trustees performing functions of investment advisors.

80a–10.     Affiliations or interest of directors, officers, and employees.

(a)     Interested persons of company who may serve on board of directors.

(b)     Employment and use of directors, officers, etc., as regular broker, principal underwriter, or investment banker.

(c)     Officers, directors, or employees of one bank as majority of board of directors of company; exceptions.

(d)     Exception to limitation of number of interested persons who may serve on board of directors.

(e)     Death, disqualification, or resignation of directors as suspension of limitation provisions.

(f)     Officer, director, etc., of company acting as principal underwriter of security acquired by company.

(g)     Advisory boards; restrictions on membership.

(h)     Application of section to unincorporated registered management companies.

80a–11.     Offers to exchange securities.

(a)     Approval by Commission for exchanges of securities on basis other than relative net asset value.

(b)     Application of section to offers pursuant to plan of reorganization.

(c)     Application of section to specific exchange offers.

80a–12.     Functions and activities of investment companies.

(a)     Purchase of securities on margin; joint trading accounts; short sales of securities; exceptions.

(b)     Distribution by investment company of securities of which it is issuer.

(c)     Limitations on commitments as underwriter.

(d)     Limitations on acquisition by investment companies of securities of other specific businesses.

(e)     Acquisition of securities issued by corporations in business of underwriting, furnishing capital to industry, etc.

(f)     Organization and ownership by one registered face-amount certificate company of all or part of capital stock of not more than two other face-amount certificate companies; limitations.

(g)     Exceptions to limitation on ownership by investment company of securities of insurance company.

80a–13.     Changes in investment policy.

80a–14.     Size of investment companies.

(a)     Public offerings.

(b)     Study on effects of size.

80a–15.     Contracts of advisers and underwriters.

(a)     Written contract to serve or act as investment adviser; contents.

(b)     Written contract with company for sale by principal underwriter of security of which company is issuer; contents.

(c)     Approval of contract to undertake service as investment adviser or principal underwriter by majority of noninterested directors.

(d)     Equivalent of vote of majority of outstanding voting securities in case of common-law trust.

(e)     Exemption of advisory boards or members from provisions of this section.

(f)     Receipt of benefits by investment adviser from sale of securities or other interest in such investment adviser resulting in assignment of investment advisory contract.

80a–16.     Board of directors.

(a)     Election of directors.

(b)     Term vacancies.

(c)     Trustees of common-law trusts.

80a–17.     Transactions of certain affiliated persons and underwriters.

(a)     Prohibited transactions.

(b)     Application for exemption of proposed transaction from certain restrictions.

(c)     Sale or purchase of merchandise from any company or furnishing of services incident to lessor-lessee relationship.

(d)     Joint or joint and several participation with company in transactions.

(e)     Acceptance of compensation, commissions, fees, etc.

(f)     Custody and maintenance of securities and investments.

(g)     Bonding of officers and employees having access to securities or funds.

(h)     Provisions in charter, by-laws, etc., protecting against liability for willful misfeasance, etc.

(i)     Provisions in contracts protecting against willful misfeasance, etc.

(j)     Rules and regulations prohibiting fraudulent, deceptive or manipulative courses of conduct.

80a–18.     Capital structure of investment companies.

(a)     Qualifications on issuance of senior securities.

(b)     Asset coverage in respect of senior securities.

(c)     Prohibitions relating to issuance of senior securities.

(d)     Warrants and rights to subscription.

(e)     Application of section to specific senior securities.

(f)     Senior securities securing loans from bank; securities not included in "senior security".

(g)     "Senior security" defined.

(h)     "Asset coverage" defined.

(i)     Future issuance of stock as voting stock; exceptions.

(j)     Securities issued by registered face-amount certificate company.

(k)     Application of section to companies operating under Small Business Investment Act provisions.

80a–19.     Payments or distributions.

(a)     Dividends; restriction; exception.

(b)     Long-term capital gains; limitation.

80a–20.     Proxies; voting trusts; circular ownership.

(a)     Prohibition on use of means of interstate commerce for solicitation of proxies.

(b)     Prohibition on use of means of interstate commerce for sale of voting-trust certificates.

(c)     Prohibition on purchase of securities knowingly resulting in cross-ownership or circular ownership.

(d)     Duty to eliminate existing cross-ownership or circular ownership.

80a–21.     Loans by management companies.

80a–22.     Distribution, redemption, and repurchase of securities; regulations by securities associations.

(a)     Rules relating to minimum and maximum prices for purchase and sale of securities from investment company; time for resale and redemption.

(b)     Rules relating to purchase of securities by members from issuer investment company.

(c)     Conflicting rules of Commission and associations.

(d)     Sale of securities except to or through principal underwriter; price of securities.

(e)     Suspension of right of redemption or postponement of date of payment.

(f)     Restrictions on transferability or negotiability of securities.

(g)     Issuance of securities for services or property other than cash.

80a–23.     Closed-end companies.

(a)     Issuance of securities.

(b)     Sale of common stock at price below current net asset value.

(c)     Purchase of securities of which it is issuer; exceptions.

80a–24.     Registration of securities under Securities Act of 1933.

(a)     Registration statement; contents.

(b)     Filing of three copies of advertisement, pamphlet, etc. in connection with public offering; time of filing.

(c)     Additional requirement for prospectuses relating to periodic payment plan certificates or face-amount certificate.

(d)     Application of other provisions to securities of investment companies, face-amount certificate companies, and open-end companies or unit investment trust.

(e)     Amendment of registration statements relating to securities issued by face-amount certificate companies, open-end management companies or unit investment trusts.

(f)     Registration of indefinite amount of securities.

(g)     Additional prospectuses.

80a–25.     Reorganization plans; reports by Commission.

(a)     Filing of reorganization plan and other information with Commission.

(b)     Advisory report by Commission at request of shareholders.

(c)     Enjoinder of plan of reorganization.

(d)     Application of section to reorganizations under title 11.

80a–26.     Unit investment trusts.

(a)     Custody and sale of securities.

(b)     Substitution of securities.

(c)     Binding contract or agreement embodying applicable provisions deemed to qualify non-complying instrument by which securities were issued.

(d)     Liquidation of unit investment trust.

(e)     Exemption.

80a–27.     Periodic payment plans.

(a)     Sale of certificates; restrictions.

(b)     Exemptions.

(c)     Sale of certificates; requirements.

(d)     Surrender of certificates; regulations.

(e)     Refund privileges; notice; rules.

(f)     Charges, statement; rules; surrender of certificates; regulations.

(g)     Governing provisions; election.

(h)     Sale of certificates; restrictions.

(i)     Applicability to registered separate account funding variable insurance contracts.

80a–28.     Face-amount certificate companies.

(a)     Issuance or sale of certificates.

(b)     Asset requirements prior to sale of certificates.

(c)     Certificate reserve requirements.

(d)     Provisions required in certificate.

(e)     Liability of holder to legal action for unpaid amount of certificate.

(f)     Optional right to paid up certificate in lieu of cash surrender value.

(g)     Application of section to company issuing certificates only to holders of previously issued certificates.

(h)     Declaration or payment of dividends.

(i)     Application of section to certificates issued prior to effective date of section.

80a–29.     Reports and financial statements of investment companies and affiliated persons.

(a)     Annual report by company.

(b)     Semi-annual or quarterly filing of information; copies of periodic or interim reports sent to security holders.

(c)     Minimizing reporting burdens.

(d)     Reports under this section in lieu of reports under other provisions of law.

(e)     Semiannual reports to stockholders.

(f)     Additional information.

(g)     Certificate of independent public accountants.

(h)     Duties and liabilities of affiliated persons.

(i)     Disclosure to church plan participants.

(j)     Notice to Commission.

80a–30.     Accounts and records.

(a)     Maintenance of records.

(b)     Examinations of records.

(c)     Limitations on disclosure by Commission.

(d)     Definitions.

(e)     Regulatory authority.

(f)     Exemption authority.

80a–31.     Accountants and auditors.

(a)     Selection of accountant.

(b)     Selection of controller or other principal accounting officer.

(c)     Reports of accountants and auditors.

80a–32.     Filing of documents with Commission in civil actions.

80a–33.     Destruction and falsification of reports and records.

(a)     Willful destruction.

(b)     Untrue statements or omissions.

80a–34.     Unlawful representations and names.

(a)     Unlawful representation of guarantee by United States or agency thereof.

(b)     Unlawful representation of sponsorship by United States or agency thereof.

(c)     Statement of registration under securities provisions.

(d)     Deceptive or misleading names.

80a–35.     Breach of fiduciary duty.

(a)     Civil actions by Commission; jurisdiction; allegations; injunctive or other relief.

(b)     Compensation or payments as basis of fiduciary duty; civil actions by Commission or security holder; burden of proof; judicial consideration of director or shareholder approval; persons liable; extent of liability; exempted transactions; jurisdiction; finding restriction.

(c)     Corporate or other trustees performing functions of investment advisers.

80a–36.     Larceny and embezzlement.

80a–37.     Rules, regulations, and orders.

(a)     Powers of Commission.

(b)     Filing of information and documents.

(c)     Good faith conformance with rules, regulations, and orders.

80a–38.     Procedure for issuance of rules and regulations.

80a–39.     Procedure for issuance of orders.

(a)     Notice and hearing.

(b)     Application verified under oath admissible as evidence.

(c)     Parties.

80a–40.     Hearings by Commission.

80a–41.     Enforcement of subchapter.

(a)     Investigation.

(b)     Administration of oaths and affirmations, subpena of witnesses, etc.

(c)     Jurisdiction of courts of United States.

(d)     Action for injunction.

(e)     Money penalties in civil actions.

80a–42.     Court review of orders.

80a–43.     Jurisdiction of offenses and suits.

80a–44.     Disclosure of information filed with Commission; copies.

80a–45.     Reports by Commission; hiring and leasing authority.

(a)     Omitted.

(b)     Hiring and leasing authority.

80a–46.     Validity of contracts.

(a)     Waiver of compliance as void.

(b)     Equitable results; rescission; severance.

80a–47.     Violation of subchapter.

(a)     Procurement.

(b)     Obstructing compliance.

80a–48.     Penalties.

80a–49.     Construction with other laws.

80a–50.     Separability.

80a–51.     Short title.

80a–52.     Effective date.

80a–53.     Election to be regulated as business development company.

(a)     Eligibility.

(b)     Form and manner of notification; effect.

(c)     Revocation or withdrawal of election.

80a–54.     Acquisition of assets by business development companies.

(a)     Permissible assets; percentage.

(b)     Valuation of assets.

80a–55.     Qualifications of directors.

(a)     Non-interested persons.

(b)     Vacancies; suspension of provisions.

80a–56.     Transactions with certain affiliates.

(a)     Transactions involving controlling or closely affiliated persons.

(b)     Controlling or closely affiliated persons.

(c)     Exemption orders.

(d)     Transactions involving noncontrolling shareholders or affiliated persons.

(e)     Noncontrolling shareholders or affiliated persons; executive officer.

(f)     Approval of proposed transactions.

(g)     Transactions in the ordinary course of business.

(h)     Inquiry procedures.

(i)     Rules and regulations of Commission.

(j)     Warrants, options, and rights to purchase voting securities; loans to facilitate executive compensation plans.

(k)     Restriction on brokerage commissions.

(l)     Persons subject to brokerage commission restrictions.

(m)     Receipt of fee or salary from transaction participant.

(n)     Profit-sharing plans.

(o)     Required majority for approval of proposed transactions.

80a–57.     Changes in investment policy.

80a–58.     Incorporation of subchapter provisions.

80a–59.     Functions and activities of business development companies.

80a–60.     Capital structure.

(a)     Exceptions for business development company.

(b)     Compliance.

80a–61.     Loans.

80a–62.     Distribution and repurchase of securities.

80a–63.     Accounts and records.

(a)     Exception for business development company.

(b)     Risk factors statement; availability.

80a–64.     Preventing compliance with subchapter; liability of controlling persons.

SUBCHAPTER II—INVESTMENT ADVISERS

80b–1.     Findings.

80b–2.     Definitions.

80b–3.     Registration of investment advisers.

(a)     Necessity of registration.

(b)     Investment advisers who need not be registered.

(c)     Procedure for registration; filing of application; effective date of registration; amendment of registration.

(d)     Other acts prohibited by subchapter.

(e)     Censure, denial, or suspension of registration; notice and hearing.

(f)     Bar or suspension from association with investment adviser; notice and hearing.

(g)     Registration of successor to business of investment adviser.

(h)     Withdrawal of registration.

(i)     Money penalties in administrative proceedings.

(j)     Authority to enter order requiring accounting and disgorgement.

(k)     Cease-and-desist proceedings.

80b–3a.     State and Federal responsibilities.

(a)     Advisers subject to State authorities.

(b)     Advisers subject to Commission authority.

(c)     Exemptions.

(d)     Filing depositories.

(e)     State assistance.

80b–4.     Reports by investment advisers.

80b–4a.     Prevention of misuse of nonpublic information.

80b–5.     Investment advisory contracts.

(a)     Compensation, assignment, and partnership-membership provisions.

(b)     Compensation prohibition inapplicable to certain compensation computations.

(c)     Measurement of changes in compensation.

(d)     "Investment advisory contract" defined.

(e)     Exempt persons and transactions.

80b–6.     Prohibited transactions by investment advisers.

80b–6a.     Exemptions.

80b–7.     Material misstatements.

80b–8.     General prohibitions.

(a)     Representations of sponsorship by United States or agency thereof.

(b)     Statement of registration under Securities Exchange Act of 1934 provisions.

(c)     Use of name "investment counsel" as descriptive of business.

(d)     Use of indirect means to do prohibited act.

80b–9.     Enforcement of subchapter.

(a)     Investigation.

(b)     Administration of oaths and affirmations, subpena of witnesses, etc.

(c)     Jurisdiction of courts of United States.

(d)     Action for injunction.

(e)     Money penalties in civil actions.

80b–10.     Disclosure of information by Commission.

(a)     Information available to public.

(b)     Disclosure of fact of examination or investigation; exceptions.

(c)     Disclosure by investment adviser of identity of clients.

80b–10a.     Consultation.

(a)     Examination results and other information.

(b)     Effect on other authority.

(c)     Definition.

80b–11.     Rules, regulations, and orders of Commission.

(a)     Power of Commission.

(b)     Effective date of regulations.

(c)     Orders of Commission after notice and hearing; type of notice.

(d)     Good faith compliance with rules and regulations.

80b–12.     Hearings.

80b–13.     Court review of orders.

(a)     Petition; jurisdiction; findings of Commission; additional evidence; finality.

(b)     Stay of Commission’s order.

80b–14.     Jurisdiction of offenses and suits.

80b–15.     Validity of contracts.

(a)     Waiver of compliance as void.

(b)     Rights affected by invalidity.

80b–16.     Omitted.

80b–17.     Penalties.

80b–18.     Hiring and leasing authority of Commission.

80b–18a.     State regulation of investment advisers.

(a)     Jurisdiction of State regulators.

(b)     Dual compliance purposes.

(c)     Limitation on capital and bond requirements.

(d)     National de minimis standard.

80b–19.     Separability.

80b–20.     Short title.

80b–21.     Effective date.

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