Investment companies have become an important part of the financial system. This case book is designed to familiarize students with the special laws governing investment companies: their creation, structure, corporate governance, operations (including the distribution of shares and the management of the portfolios), dissolution and, time permitting, taxation. In particular, the case book focuses on the Investment Company Act of 1940 and on the practice in this area before the Securities and Exchange Commission.
Introduction to Investment Management
The Investment Management Industry, The Pattern of Investment Management Regulation.
The Investment Advisers Act
The Investment Advisers Act: History and Outline, The Basic Definition: Who is an Adviser?, The Relationship Between Federal and State Law, Fiduciary Duty of Advisers, Registration and Disclosure Requirements, Regulation of Advisers.
What is an Investment Company?
Introduction to the Basic Definition, Who is an Issuer? Definition of Investment Company by the Nature of Its Business and by the Nature of Its Assets, Classification of Investment Companies.
Companies Not Covered by the Investment Company Act
Exceptions for Operating Companies, "Special Situation" Companies, Venture Capital Companies, and Business Development Companies, Private Investment Companies, Banks and Savings and Loan Associations, Insurance Companies, Financing, Factoring, and Real Estate Companies, Charitable Corporations, Pension Plans.
Financial Products Outside the 1940 Act
Pools Used to Securitize Financial Assets, Offshore Funds, Commodity Pools.
Registration and Disclosure
Registration Under the Investment Company Act, B. Disclosure: The Prospectus and the Statement of Additional Information, Efforts to Enhance Effectiveness of Prospectus Disclosure, Electronic Delivery of Disclosure, Prospectus Updates, Liability for a Misleading Prospectus, Advertising, Periodic Reporting Requirements.
Fund Management:
The Advisory Function, Fees and Contract Terms
Structuring Advisory Services, Regulatory Response to the Potential Conflicts of Interest Posed by the Determination of the Adviser's Fees, The Advisory Contract.
Corporate Governance:
Fund Directors and Shareholder Voting
Relationship between State Law and the Investment Company Act, Composition of the Board, The Role of the Board, Shareholder Voting, Proposals for Reform of Corporate Governance Model.
Capital Structure
Issuance of Stock. Redeemability, Issuance of Senior Securities.
The Investment Company as Investor
Restrictions on Investments of Investment Companies, Effecting Trades. Restrictions on Relationship with Broker-Dealers and Underwriters, The Role of the Investment Company in the Portfolio Company's Board Room, Custody of Investment Company Assets, Personal Investment Activities of Investment Company Personnel, Portfolio Managers' Access to Information.
Distribution of Investment Company Shares
Regulation of Sales Loads; Different Methods of Paying for Distribution, Retail Price Maintenance, Buying Mutual Fund Shares on Margin, Exchanging Investment Company Shares.
Protection Against Conflicts of Interests
The Coverage of Section 17, Affiliates Acting as Principal, Conflict of Interest in Joint Transactions, Conflict of Interest in Agency Transactions, Conflict of Interest by Underwriters.
Money Market Funds
The History of Money Market Funds, Regulatory Framework, Enforcement.
Unit Investment Trusts
Regulation of UITs, 1940 Act Regulation Which Does Not Apply to UITs.
Closed-End Investment Companies
Use and Nature of Closed-End Investment Companies, Distribution of Closed-End Fund Shares. The Puzzle of Closed-End Investment Companies: Their Shares Sell at a Discount from Their Net Asset Value, Proposed Solutions to the Discount Problem, Repurchases, Capital Structure of Closed-End Investment Companies.
Variable Insurance Products
The History and Structure of Variable Insurance Products, The Status of Variable Products as Securities, The Status of "Mixed" Contracts as Securities, The Status of Separate Accounts as Investment Companies, 1940 Act Regulation of Variable Products.
Ethical Issues
The Investment Management Industry, Responsibility of Lawyers for Securities Violations of Their Clients, Responsibility of Lawyers to Disclose Clients' Misdeeds, In-House Counsel, Behavior of Lawyers Engaged in Non-Lawyering Occupations, Investment Managers' Ethical Issues, Issues Regarding Fund Directors.