Journal Article

Seventy-fifth anniversary of the Investment Company Act of 1940

Fink, Matthew P

2015

Overview

The Investment Company Act of 1940 was not enacted in isolation, but was part of the broad financial reform movement of the first half of the twentieth century. In order to understand the Act's history, its impact, and its likely future the author needs to consider that reform movement and subsequent events. The principal purpose of the Investment Company Act was to protect investors. As one commentator has observed, the main objectives were to prevent abuses of position, fraud, and conflicts of interest that had occurred in prior periods. The Act sought to accomplish its goal of investor protection by setting forth a series of extremely detailed do's and don'ts targeted at specific abuses, such as excessive use of leverage and fund managers dumping securities into their funds. The Investment Company Act is likely to remain in place. However, if present trends continue, he would not be surprised if over time the 1940 Act were supplemented with major elements of bank-type regulation.

• Publisher: Aspen Publishers, Inc
• Subject: 20th century / Aldrich, Nelson W / Banking industry / Central banks / Commercial banks / Congressional elections / Impact analysis / Investment bankers / Investment companies / Investments / Legislation / Political representation / Presidents / Reforms / Regulation of financial institutions / SEC regulations / Securities industry / Stock exchanges / Treasuries