On October 7th, the SEC adopted a new rule and related changes that will put into place a comprehensive regulatory framework for arrangements where funds invests in one or more other funds (“fund of funds” arrangements). The new rule reflects the decades of experience the SEC has with fund of funds arrangements and should foster a consistent and efficient rules-based regime for the formation and oversight of funds of funds. The new rule and amendments are being adopted under the Investment Company Act of 1940 and are designed to streamline and enhance the regulatory framework for fund of funds arrangements. The SEC also is rescinding Rule 12d1-2 under the Act and most exemptive orders granting relief from sections 12(d)(1)(A), (B), (C), and (G) of the Act. Finally, related amendments to Rule 12d1-1 under the Act and Form N-CEN are being implemented.
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