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Adviser Regulatory & Compliance News

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Investment Mgmt Regulation Textbook—Publisher’s Discount

January 17, 2020

We're pleased to announce that Karl is co-author of the first new textbook about the '40 Acts in over 30 years! "Investment Management Regulation: An Introduction to Principles and Practices." Available now at cap-press.com. Just click on the headline to this blurb above to be taken to the publisher's site. As Members you are entitled to a 10% discount and free shipping at the Carolina Academic Press's site.

SEC Proposes to Modernize Regulation of the Use of Derivatives by Registered Funds and BDCs

January 17, 2020

In late Nov. 2019, the SEC again addressed the complicated subject of the use of derivatives by registered fund and BDCs, including mutual funds,ETFs and closed-end funds. The newly proposed rules supersede those proposed in 2015. The focus of the proposal is proposed Rule 18f-4 under the '40 Act, which would set forth the conditions under which open-end funds (including ETFs but excluding money market funds), closed-end funds and BDCs could enter into derivatives transactions. In addition, the proposal includes new rules under the Exchange Act and Advisers Act that governing sales practices for leveraged/inverse funds. The sales and use of such funds by brokers and advisers has been the source of some controversy in recent years. Finally, the proposal also includes new reporting requirements related to the use of derivatives by registered funds and BDCs. The attached article includes links to the SEC's proposal and to articles and analyses prepared by law firms. Updated by Karl Hartmann 01-17-2020

You Too May Be an “Accredited Investor!”

January 10, 2020

You don't have to be rich or super smart to be an "accredited investor" under the proposal made by the SEC recently. Traditionally, certain types of private investments such as private funds have been available only to investors who meet the standards for being an accredited investor, meaning that they met certain standards regarding wealth and sophistication. Under new rules proposed Dec. 18, 2019, the definition would be expanded to include more qualitative standards such as education/certification (e.g., Series 7 brokers) and employment (e.g., by a hedge fund). In addition, the SEC is seeking comments on whether clients of a registered investment adviser or broker-dealer but do not otherwise meet the financial thresholds should be considered accredited. The attached article contains a variety of analyses and reference materials.

CFTC Simplifies CPO and CTA Registration/Exemption

January 10, 2020

In late November, the Commodity Futures Trading Commission ( “CFTC”) finalized two new rule amendments which simplify and clarify the commodities registration/exemptions for investment advisers, investment companies and business development companies ("BDCs"). Historically, funds have filed notices under CFTC Rule 4.5 to claim exemption from registration as commodity pool operators ("CPOs"). In short, the new rules rationalize the approach by having fund advisers claim such exemptions and add a similar provision for BDC advisers. Additional provisions also codify a variety of no-action positions by adopting exemptions from CPO and CTA registration for qualifying “family offices.” Please refer to the attached article for links to the CFTC releases and additional reference materials. Updated Jan. 10, 2019 by Karl Hartmann