Requires registration of persons who charge fees for providing investment advice
Investment Advisors Act of 1940
Defines and regulates investment companies, including mutual funds
Investment Company Act of 1940
Three types of Investment Companies defined by the Investment Company Act of 1940
Face Amount Certificate, Unit Investment Trust, Management Company
Management company shares that may trade at a price more or less than their net asset value
Closed-ended Investment companies
Three types of securities that closed-end companies can issue
Common shares, preferred shares and bonds
Type of management company that can issue shares continuously
Open-end
Type of management company that issues a fixed number of shares in a single offering
Closed-end
Type of management company that can issue only equity shares
Open-end
Type of management company that can issue both equity and debt
Closed-end
Type of management company shares that are redeemed by the issuer
Open-end
Type of management company shares that trade in the secondary market
Closed-end
The difference between the Public Offering Price and Net Asset Value
Sales load
Type of management company shares that are priced by formula
Open-end
Type of management company shares that are priced by supply and demand
Closed-end
An investment company which issues redeemable securities and is not actively managed
Unit investment trust
The price at which an investor purchases closed-end company shares
Ask price
Type of management company that offers shares through a continuous primary offering
Open-end
Number of days mutual fund shares must be held before they can be used as collateral in a margin account
30 days
The only type of securities that mutual funds can issue
Common shares
Securities legislation that defines and regulates investment companies
Investment Company Act of 1940
Maximum sales charge for mutual funds permitted by FINRA rules
8.5% of POP
Quantity purchase discounts that apply to individuals who purchase funds within the same fund family
Breakpoints
Document that allows an investor to receive a discounted sales charge on current and future funds invested within the same fund family
Letter of Intent
Maximum duration of a Letter of Intent
13 months
The maximum time allowed to backdate a Letter of Intent
90 days
Allows for reduction of sales charges on subsequent purchases based on combining additional purchases with prior share appreciation
Rights of accumulation
Maximum time limit for Rights of Accumulation
There are no time limits imposed on Rights of Accumulation
FINRA violation which involves encouraging a customer to purchase shares at a point below an available sales charge reduction
Breakpoint sale
Mutual fund share class with a front end sales load
Class A shares
Mutual fund share class with a back-end load and 12b-1 fees
Class B shares
