No-Action Relief Allows Business Development Companies to Hold Shares of Investment Advisers

In two separate no-action letters, the SEC staff quietly expanded the ability of business development companies (BDCs) to invest in registered investment advisers.

Section 12(d)(3) of the Investment Company Act of 1940 generally prohibits registered investment companies from acquiring securities of issuers that are in the securities business. This prohibition extends to issuers that are broker-dealers and registered investment advisers and applies to closed end funds that elect to be treated as BDCs.

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Topics:  Business Development Companies, Investment Company Act of 1940, No-Action Letters, No-Action Relief, SEC

Published In: General Business Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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