Learn More About Exemptive Relief

Registered investment companies, such as mutual funds, are regulated by the Securities and Exchange Commission (“SEC” or “Commission”) under several laws, including the Investment Company Act of 1940 (“Act”). To protect fund investors, the Act is highly restrictive; however, Congress also recognized the need for flexibility and empowered the SEC to grant exemptions from provisions of the Act. Thus, if a fund has an idea for a novel practice or structure that would be prohibited by the Act, it can apply for exemptive relief from the Act to the SEC. Applications for exemptive relief orders have historically played an important role in helping the fund industry to grow, innovate, and adapt in ways that benefit investors. Because certain provisions in the Act would prevent an open-end mutual fund from offering an exchange-traded share class, operating this type of structure, commonly referred to as a share class ETF, requires exemptive relief from the SEC.