CITE

    15 USC Sec. 80a-1                                           01/05/2009

EXPCITE

    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2D - INVESTMENT COMPANIES AND ADVISERS
    SUBCHAPTER I - INVESTMENT COMPANIES

HEAD

    Sec. 80a-1. Findings and declaration of policy

STATUTE

    (a) Findings
      Upon the basis of facts disclosed by the record and reports of
    the Securities and Exchange Commission made pursuant to section 79z-
    4 (!1) of this title, and facts otherwise disclosed and
    ascertained, it is found that investment companies are affected
    with a national public interest in that, among other things -
        (1) the securities issued by such companies, which constitute a
      substantial part of all securities publicly offered, are
      distributed, purchased, paid for, exchanged, transferred,
      redeemed, and repurchased by use of the mails and means and
      instrumentalities of interstate commerce, and in the case of the
      numerous companies which issue redeemable securities this process
      of distribution and redemption is continuous;
        (2) the principal activities of such companies - investing,
      reinvesting, and trading in securities - are conducted by use of
      the mails and means and instrumentalities of interstate commerce,
      including the facilities of national securities exchanges, and
      constitute a substantial part of all transactions effected in the
      securities markets of the Nation;
        (3) such companies customarily invest and trade in securities
      issued by, and may dominate and control or otherwise affect the
      policies and management of, companies engaged in business in
      interstate commerce;
        (4) such companies are media for the investment in the national
      economy of a substantial part of the national savings and may
      have a vital effect upon the flow of such savings into the
      capital markets; and
        (5) the activities of such companies, extending over many
      States, their use of the instrumentalities of interstate commerce
      and the wide geographic distribution of their security holders,
      make difficult, if not impossible, effective State regulation of
      such companies in the interest of investors.
    (b) Policy
      Upon the basis of facts disclosed by the record and reports of
    the Securities and Exchange Commission made pursuant to section 79z-
    4 (!1) of this title, and facts otherwise disclosed and
    ascertained, it is declared that the national public interest and
    the interest of investors are adversely affected -
        (1) when investors purchase, pay for, exchange, receive
      dividends upon, vote, refrain from voting, sell, or surrender
      securities issued by investment companies without adequate,
      accurate, and explicit information, fairly presented, concerning
      the character of such securities and the circumstances, policies,
      and financial responsibility of such companies and their
      management;
        (2) when investment companies are organized, operated, managed,
      or their portfolio securities are selected, in the interest of
      directors, officers, investment advisers, depositors, or other
      affiliated persons thereof, in the interest of underwriters,
      brokers, or dealers, in the interest of special classes of their
      security holders, or in the interest of other investment
      companies or persons engaged in other lines of business, rather
      than in the interest of all classes of such companies' security
      holders;
        (3) when investment companies issue securities containing
      inequitable or discriminatory provisions, or fail to protect the
      preferences and privileges of the holders of their outstanding
      securities;
        (4) when the control of investment companies is unduly
      concentrated through pyramiding or inequitable methods of
      control, or is inequitably distributed, or when investment
      companies are managed by irresponsible persons;
        (5) when investment companies, in keeping their accounts, in
      maintaining reserves, and in computing their earnings and the
      asset value of their outstanding securities, employ unsound or
      misleading methods, or are not subjected to adequate independent
      scrutiny;
        (6) when investment companies are reorganized, become inactive,
      or change the character of their business, or when the control or
      management thereof is transferred, without the consent of their
      security holders;
        (7) when investment companies by excessive borrowing and the
      issuance of excessive amounts of senior securities increase
      unduly the speculative character of their junior securities; or
        (8) when investment companies operate without adequate assets
      or reserves.
    It is declared that the policy and purposes of this subchapter, in
    accordance with which the provisions of this subchapter shall be
    interpreted, are to mitigate and, so far as is feasible, to
    eliminate the conditions enumerated in this section which adversely
    affect the national public interest and the interest of investors.

SOURCE

    (Aug. 22, 1940, ch. 686, title I, Sec. 1, 54 Stat. 789.)

REFERENCES IN TEXT

      Section 79z-4 of this title, referred to in text, was repealed by
    Pub. L. 109-58, title XII, Sec. 1263, Aug. 8, 2005, 119 Stat. 974.

TRANSFER OF FUNCTIONS

      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

FOOTNOTE

    (!1) See References in Text note below.