Rule 3a-4: Are Your Model Portfolios Really Investment Companies? - Jacko Law Group (2024)

FAQs

What is the rule 3a-4 of the investment company Act? ›

In 1997, the SEC adopted Rule 3a-4 of the Investment Company Act of 1940 (the “Rule”) which provides a non-exclusive safe harbor to exclude certain similarly-managed accounts, such as model portfolios, from the definition of an investment company ( e.g., a mutual fund).

Rule 3a-4 provides a nonexclusive safe harbor from the definition of investment company for certain programs under which investment advisory services are provided to advisory clients ("investment advisory programs").

Under new rule 38a-1 of the Investment Company Act of 1940, as amended (the “1940 Act”), the board of a registered investment company (a “Board”), including a majority of the independent directors, must approve an investment company's Compliance Procedures, which must include provisions for the investment company to ...

In accordance with the Investment Company Act of 1940, investment companies must register with the SEC before they can offer their securities in the public market. The Act also lays out the steps an investment company is required to take during this registration process.

The Rule 3a4-1 Safe Harbor

The associated person must not be compensated in connection with the sale of the issuer's securities by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities.

Section 3(a)(1)(C) of the Investment Company Act defines an investment company as an issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities, and owns or proposes to acquire “investment securities” having a value exceeding 40 percent of the value ...

Rule 3a4-1, referred to as the issuers' exemption, provides a non-exclusive safe harbor for employees of an issuer. However, the rule defines a broker very broadly and includes any person engaged in the business of effecting transactions in securities for the account of others.

CYP3A4 is the main human enzyme responsible for phase I metabolism of dietary compounds, prescribed drugs and xenobiotics, steroid hormones, and bile acids. The inhibition of CYP3A4 activity might impair physiological mechanisms, including the endocrine system and response to drug admission.

Grapefruit juice can block the action of intestinal CYP3A4, so instead of being metabolized, more of the drug enters the blood and stays in the body longer.

Rule 17a-4 applies to all Broker-Dealers registered with the SEC, including those engaged in securities trading, clearing, and self-regulatory activities. The rule aims to protect investors' interests, facilitate audits and investigations, and maintain market stability.

What is 38a 2 under the Investment Company Act? ›

The Commission has proposed rules 206(4)-9 under the Advisers Act and 38a-2 under the Investment Company Act that would require advisers and funds to adopt and implement cybersecurity policies and procedures addressing a number of elements in the Investment Management Cybersecurity Release.

Rule 22e-4 under the Act [17 CFR 270.22e-4] requires an open-end fund and an exchange-traded fund that redeems in kind (“In-Kind ETF”) to establish a written liquidity risk management program that is reasonably designed to assess and manage the fund's or In-Kind ETF's liquidity risk.

The 4% rule limits annual withdrawals from your retirement accounts to 4% of the total balance in your first year of retirement. That means if you retire with $1 million saved, you'd take out $40,000. According to the rule, this amount is safe enough that you won't risk running out of money during a 30-year retirement.

In other words, even if it doesn't consider itself as an investment-related business, an operating company that has 40% or more of its assets invested in stocks, bonds, or other securities (even conservative corporate bonds held for cash preservation purposes) is an “investment company” and is subject to the ...

Rule 3a-2 provides a one-year safe harbor during which certain “transient investment companies” need not register as an investment company even though they otherwise would satisfy the statutory definitions set forth in Sections 3(a)(1)(A) or 3(a)(1)(C).

Abstract: Rule 32a-4 exempts a fund from the requirements of section 32(a)(2) of the Investment Company Act -- that shareholders ratify or reject the selection of the fund's independent public accountant -- if, among other things, the fund has an audit committee composed wholly of independent directors.

Rule 3a-1 provides a safe harbor from investment company status for issuers that fail the 40% test but are not primarily engaged in an investment business. The Rule takes into consideration the nature of an issuer's assets and the sources of its income.

Rule 3c-5(a)(4)(ii) includes a second category of knowledgeable employee, which is expressed as an employee of a Covered Fund, of a Covered Fund's investment adviser, or of certain other affiliated persons who regularly participate in the investment activities of the Covered Fund and have been performing these ...