SEC Adopts New Names Rule Under the Investment Company 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.

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 Names Rule reflects a basic idea: A fund's investment portfolio should match a fund's advertised investment focus. In essence, if a fund's name suggests an investment focus, the fund in turn needs to invest shareholders' dollars in a manner consistent with that investment focus.

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 ...

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 U.S. Securities and Exchange Commission, or SEC, regulates the offer and sale of all securities, including those offered and sold by private companies.

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 ...

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 Names Rule currently requires registered investment companies whose names suggest a focus in a particular type of investment to adopt a policy to invest at least 80 percent of the value of their assets in those investments (an “80 percent investment policy”).

What is the new ESG rule? ›

On March 6, 2024, the SEC adopted new climate disclosure rules. These rules require companies to publish information that describes the climate-related risks that are reasonably likely to have a material impact on a company's business or consolidated financial statements.

The ESG moniker has become so politicized that it now prevents clear-headed thinking, said Alex Edmans, who teaches at London Business School. He's instead proposing the term “rational sustainability.” It may be bland, he said, but sustainability is about producing long-term value—and that's hard to politicize.

The rule will require that any terms used in the fund's name that suggest an investment focus, or that the fund's distributions are tax-exempt, must be consistent with those terms' plain English meaning or established industry use.

Section 12(d)(1) of the 1940 Act limits the amount an acquiring fund can invest in an acquired fund to 3% of the outstanding voting stock of the acquired fund, 5% of the value of the acquiring fund's total assets in any one other acquired fund, and 10% of the value of the acquiring fund's total assets in all other ...

Vanguard Ventures Investment Co. Next Level Capital Co. Supreme Strategies Investment Co. Impactful Capital Co.

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 ...

For purposes of section 35(d) of the Act (15 U.S.C. 80a-34(d)), a materially deceptive and misleading name of a fund includes: (1) Names suggesting guarantee or approval by the United States Government.

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.