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Understanding the Impact of the Investment Company Act of 1940

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Exploring the implications and updates of the Investment Company Act.

description: an anonymous individual analyzing financial reports and regulatory documents in a modern office setting.

NEW YORK , July 10, 2024 /PRNewswire/ -- Cantor Fitzgerald Infrastructure Fund (the 'Fund') today announced a second-quarter distribution of dividends to its investors. This distribution comes amidst a changing regulatory landscape for investment companies, particularly in light of recent developments surrounding the Investment Company Act of 1940.

On September 20, 2023, the U.S. Securities and Exchange Commission (SEC) adopted amendments to Rule 35d‑1 (the “Names Rule”) under the Investment Company Act of 1940. These amendments aim to enhance transparency for investors by requiring funds to disclose key information about their investments and strategies.

Sound Point Meridian Capital, Inc. (NYSE: SPMC), a closed-end management investment company that has registered as an investment company under the Investment Company Act of 1940, has been closely monitoring these regulatory changes. The company recognizes the importance of compliance with these rules to maintain transparency and trust with investors.

This action highlights the need for investment advisers to exercise caution when contemplating any situation in which legal fees will be paid by a fund. The SEC has been cracking down on potential conflicts of interest and ensuring that investors are protected from any misconduct or misuse of funds.

On June 5, 2024, a three-judge panel of the Fifth Circuit Court of Appeals unanimously vacated the rule adopted by the SEC in August 2023. This decision has sent shockwaves through the investment management industry, prompting firms to reassess their compliance strategies and regulatory practices.

The New Orleans-based U.S. Court of Appeals for the Fifth Circuit vacated the new private fund rules adopted by the SEC in August 2023, further adding to the uncertainty surrounding regulatory changes impacting investment companies. Firms are now left navigating a complex legal landscape with shifting rules and guidelines.

Our November issue of the Investment Management Update covers regulatory developments from the third quarter of 2023 impacting the investment management industry. It delves into the latest updates surrounding the Investment Company Act of 1940 and how firms can adapt to ensure compliance with these regulations.

Last week, the Securities and Exchange Commission (SEC) finalized new rules relating to special purpose acquisition companies (SPACs). These rules have significant implications for investment companies looking to engage in SPAC transactions, highlighting the broader impact of regulatory changes on the industry.

The Securities and Exchange Commission (the “SEC”) has adopted important changes to Rule 35d-1 under the Investment Company Act of 1940, signaling a shift towards greater transparency and disclosure requirements for investment companies. Firms must stay vigilant in their compliance efforts to navigate these evolving regulatory landscapes effectively.

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