Mutual Fund Law
Mutual funds are not just a type of investment, but are actually legal entities, often formed as a business trust or corporation. Although organized under a number of different state laws, many registered funds organize under the corporate laws of the state of Maryland or the business trust laws of the state of Massachusetts or Delaware.
Primarily because of the Investment Company Act, each mutual fund is usually structured like a corporation in that it has a separate legal existence, a board of directors, officers and shareholders, etc. The Board is primarily responsible for preventing financial adviser abuse and, just as with a standard corporation, a mutual fund's investors are generally limited in liability to the extent of their investments.
Mutual funds do not generally have investment advisers on their payrolls, but rather, enter into contracts with these individuals. The advisers must be registered under the Investment Adviser Act, while the mutual funds are usually regulated under the Investment Company Act.
Many mutual funds have a multi-class structure, meaning a registered investment company issues different classes of shares. These are usually defined as “Class A” shares, which normally have a front-end sales load, “Class B” shares which have a contingent/deferred sales load, and “Class C” shares that have a level-load structure.
For more information about the different types of mutual funds and the laws pertaining to them, please refer to the materials below. Additionally, should you require the assistance of a legal professional experienced with this form of investment, please turn to the “Law Firms” page here at HG.org.
Mutual Funds Law - US
- Investment Company Act of 1940
The act divides the types of investment company to be regulated into three classifications: Face-amount certificate company: an investment company in the business of issuing face-amount certificates of the installment type. Unit Investment Trust: an investment company which is organized under a trust indenture, contract of custodianship or agency, or similar instrument, does not have a board of directors, and issues only redeemable securities, each of which represents an undivided interest in a unit of specified securities; but does not include a voting trust. Management Company: any investment company other than a face-amount certificate company or a unit investment trust. The most well-known type of management company is the mutual fund.
- Mutual Fund Transparency Act of 2009
A bill to require disclosure of financial relationships between brokers and dealers and mutual fund companies, and of certain commissions paid by mutual fund companies.
- Mutual Funds - Definition
Mutual Funds refers to a fund, managed by an investment company with the financial objective of generating high Rate of Returns. These asset management or investment management companies collects money from the investors and invests those money in different Stocks, Bonds and other financial securities in a diversified manner. Before investing they carry out thorough research and detailed analysis on the market conditions and market trends of stock and bond prices. These things help the fund mangers to speculate properly in the right direction.
- US Securities and Exchange Commission (SEC)
The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever. As our nation's securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation.
Organizations Related to Mutual Funds Law
- Financial Industry Regulatory Authority (FINRA)
The Financial Industry Regulatory Authority (FINRA), is the largest independent regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 4,750 brokerage firms, about 167,000 branch offices and approximately 633,000 registered securities representatives. Created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.
- Investment Company Institute (ICI)
ICI engages in three core missions: encouraging adherence to high ethical standards by all industry participants; advancing the interests of funds, their shareholders, directors, and investment advisers; and promoting public understanding of mutual funds and other investment companies.
- US Global Investors
U.S Global Investors, Inc. is an investment management firm specializing in gold, natural resources, emerging markets and global infrastructure opportunities around the world. The company, headquartered in San Antonio, Texas, manages a family of no-load mutual funds across a range of asset classes. In addition, the company manages funds for international clients.
Publications Related to Mutual Funds Law
- Mutual Fund Investing - Investor Tips
You can't open a newspaper or read a magazine without seeing ads promoting the stellar performance of "hot" mutual funds. But past performance is not as important as you may think, especially the short-term performance of relatively new or small funds. As with any investment, a fund's past performance is no guarantee of its future success.
- SEC - Invest Wisely: An Introduction to Mutual Funds
Over the past decade, American investors increasingly have turned to mutual funds to save for retirement and other financial goals. Mutual funds can offer the advantages of diversification and professional management. But, as with other investment choices, investing in mutual funds involves risk. And fees and taxes will diminish a fund's returns. It pays to understand both the upsides and the downsides of mutual fund investing and how to choose products that match your goals and tolerance for risk.
- SecLaw - Mutual Funds
SecLaw presents news, publications, articles, policy updates and complicance issues regarding mutual funds as well as information on other types of investments.
Articles on HG.org Related to Mutual Funds Law
- Foreign Inheritance Blocked by U.S. Tax LawsWhen inheriting a foreign estate, the individual needs to understand what laws pertain to the process so his or her inheritance does not face complications with the United States Internal Revenue Service agencies. It is recommended to contact a lawyer before attempting to import the foreign estate funds, assets or property.
- What Is Repatriation Tax for Multi-Nationals?Taxation for multinationals may come through a foreign income tax of United States based corporations for these persons and companies with increases and an entire reform of the tax system. There is over $2 trillion in earnings by these business entities that has not been taxed previously, and these new laws may increase revenue to the entire country.
- Voluntary Disclosure of Foreign Bank AccountsThere are certain procedures necessary through the Internal Revenue Service when the owner of an estate has a foreign bank account called the Reports of Foreign Bank and Financial Accounts or FBAR. If the person with these accounts has not disclosed revenue, interest and income that has been placed in these accounts, he or she could face criminal charges.
- Foreign Investors Face Tax Consequences in the U.S.When an investor from another country is working with the United States, he or she may face consequences with taxation based on what process he or she has followed. There are several ways that lead to negative impact, and this could include a failure to report income for investments outside the country when the foreign citizen resides in the United States.
- False Claims Act Issues Involving Avoiding Customs ChargesThe False Claims Act is involved in several deals that involve the avoidance of Customs charges and attempting to bypass monetary payments and fees when filling in entry forms with the United States Customs and Border Protection agencies. When this occurs, severe penalties and fees may be issued against the company or organization involved.
- Applying Chinese Law in American CourtsAccounting for foreign laws is important for diplomats and citizens from other countries. Their actions may be subject to certain stipulations that are not considered in the United States even when they are prosecuted or remanded to the American court system.
- Information for International Investors Doing Business in the United States: Consumer ProtectionInvestments, business and foreign involvement has been cooperative in the past so that every party included is able to maximize profits. The absence of most restrictions that may be placed by other countries shows this to be the case, and any needed information is usually provided for these investment matters.
- Amendments to the Foreign Investment Regulations in ChinaAmendments to regulations are constantly occurring, but in China this affects the foreign investments for the country and those associated with investors. The amendment changed each investment from a case-by-case basis to a more open policy where only certain issues are placed on a list for refusal.
- Expatriation Tax when Returning to Your Home CountryWhen returning home from living or residing in another country, there are additional taxes that may apply to the person called the expatriation tax. This means that someone moving back to a country he or she lived in before moving away could be taxed for capital gains earned while not within the nation and then becomes a taxed resident once again.
- What You Need to Know about Tax Savings in the British Virgin IslandsThe tax savings in the British Virgin Islands has been reported as a promotion for the financial sector and with this location as a tax haven. This means it is important to know what this means, how these stipulations apply and who is affected so that citizens and others are aware of what is necessary in the British Virgin Islands for tax savings.
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