Investment Company Act

Investment Company Act of 1940

Legislation in the United States regulating investment companies such as mutual funds. The act placed restrictions on the activities in which investment companies are allowed to engage. For example, it forbade short selling in many circumstances. It required investment companies to file financial disclosure and set limits on the fees they are allowed to charge; it also required that investment companies with more than a certain number of investors register with the SEC. The Investment Company Act is enforced by the SEC. See also: Investment Advisers Act of 1940.

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Investment Company Act

A 1940 act that regulates the management of investment companies in relation to items such as financial statements, stated investment goals, personnel, debt issuance, and directors. The goal of the Act was to provide adequate disclosure and to curb the management abuses prevalent during the 1920s and 1930s.