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SEC Guidance on Names Rule

Rule 35d-1 release.

By John M. Baker, Esq.


The SEC’s Division of Investment Management released answers to frequently asked questions on new Rule 35d-1 under the Investment Company Act of 1940, sometimes called the “names rule.”

In general, Rule 35d-1 prohibits registered investment company names suggesting investment in particular investments or industries, suggesting investment in particular countries or geographic regions, or suggesting that the fund’s distributions are tax-exempt unless the fund has adopted a policy to invest at least 80% of its assets as suggested by the name.

The new rule has a compliance date of July 31, 2002.

The SEC guidance addresses a number of issues under the rule, including whether particular names come within the rule. According to the guidance, the following terms in fund names normally would not invoke the rule:

On the other hand, the following terms normally would invoke the rule:

The SEC guidance is available online at http://www.sec.gov/divisions/investment/guidance/rule35d-1faq.htm


Copyright 2001, John M. Baker, Esq., Stradley, Ronon, Stevens & Young, LLP, 1220 19th Street, N.W., Suite 700, Washington, DC 20036 – (202) 822-9611- Fax (202) 822-0140 This article was originally posted to the FundLaw List, http://www.egroups.com/group/fundlaw. To subscribe to FundLaw, send a blank e-mail to fundlaw-subscribe@egroups.com


Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.

Categories: Brokers