Investment Company Act of 1940 | Securities Lawyer's Deskbook

Affiliate . Companies are affiliated when one company is a minority shareholder of another. In the case of corporate, securities and capital markets, the Securities and Exchange Commission (SEC The affiliated transaction provisions of the Investment Company Act of 1940 (ICA) are traps for the unwary. These strict liability provisions regulate transactions between an investment company (fund) and its "first-tier" or "second-tier" affiliates. Identifying a fund's first-tier affiliates is relatively easy under the ICA. Investment Company Act of 1940: The Investment Company Act of 1940 was created through an act of Congress to require investment company registration and regulate the product offerings issued by Sec. 2 INVESTMENT COMPANY ACT OF 1940 . 4 . ments but has no power to determine that any security or other investment shall be purchased or sold by such company. (2) ‘‘Affiliated company’’ means a company which is an af­ filiated person. (3) ‘‘Affiliated person’’ of another person means (A) any (i) Any investment company for which the member bank or any affiliate of the member bank serves as an investment adviser, as defined in section 2(a)(20) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(20)); and

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