The Investment Company Act

The Investment Company Act of 1940 is a U.S. law that regulates investment companies, which are firms that pool money from investors to purchase securities like stocks and bonds. The act aims to protect investors by ensuring transparency, requiring these companies to disclose their financial health, investment practices, and risks. It also imposes regulations on fees, governance, and fiduciary responsibilities of fund managers. Overall, the act helps maintain fair practices in the investment industry and seeks to prevent fraud, ensuring that investors make informed decisions about their investments.