§ 80a-1. — Findings and declaration of policy.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC80a-1]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I--INVESTMENT COMPANIES
Sec. 80a-1. Findings and declaration of policy
(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 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 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.
(Aug. 22, 1940, ch. 686, title I, Sec. 1, 54 Stat. 789.)
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.
Section Referred to in Other Sections
This section is referred to in sections 80a-6, 80a-35, 80a-58 of
this title.
