Although investment funds and their advisers are potentially subject to regulation from a wide variety of sources, their primary obligations arise from the following statutes and the rules promulgated thereunder:
Securities Act of 1933 (“1933 Act”)
The 1933 Act regulates the offer and sale of securities. Generally, any offering of securities must either be registered with the SEC, in which case extensive disclosure must be provided to potential investors, or an exemption from registration must be available.
Securities Exchange Act of 1934 (“1934 Act”)
The 1934 Act provides the SEC with broad powers over the securities industry, including the authority to require the registration of broker-dealers, impose ongoing reporting obligations on public companies, restrict insider trading and require disclosure by significant shareholders and insiders.
Investment Advisers Act of 1940 (“Advisers Act”)
The Advisers Act regulates “investment advisers,” which is generally defined to include anyone who receives compensation for providing investment advice. Advisers to investment funds with more than $150 million in assets under management are required to register with the SEC. Advisers to separate account clients will generally be required to register with the SEC if they have more than $100 million in assets under management or are not registered with a state securities regulator.
Investment Company Act of 1940 (“1940 Act”)
The 1940 Act regulates companies that engage primarily in investing, reinvesting, and trading in securities “investment companies”). Investment companies must either register with the SEC or qualify for an exemption from registration. Registered investment companies are subject to significant ongoing reporting and other compliance obligations.
Commodity Exchange Act (“CEA”)
The CEA regulates the trading of commodity futures and imposes registration and ongoing compliance obligations on CPOs, CTAs and other participants in commodity futures markets.
Employee Retirement Income Security Act of 1974 (“ERISA”)
ERISA regulates employee benefit plans and their asset managers.
Blue Sky Laws
To the extent not pre-empted by federal law, each state has its own “blue sky” law regulating securities offerings and investment advisers, broker-dealers and others involved in investment management.