Sunday, August 30, 2009

regulation of investment companies

Investment companies are heavily regulated at the federal level through such laws as the investment company act and the investment Advisers act, both passed by congress in 1940. Registration of investment company securities and periodic reports to the Securities and Exchange Commission (SEC) are mandatory. policies for investing funds are determined by the investment company‘s shareholders, who also elect at least two thirds of the company‘s directors. The portfolio held by an investment company is managed by a separate management company or investment advisory service, which levies a substantial fee for its services. the management fee is typically a percentage of the fund‘s performance. Any contractual arrangements between the investment advisory service and the investment company must be approved by the latter‘s stockholders and must come up for renewal or revision every two years. Most investment advisory services are provided by either life insurance firms or securities specialists.

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