The SEC held an open meeting on August 31, 2011 to announce the publication of a concept release (the “Concept Release”) on the use of derivatives by investment companies under the 1940 Act. The Concept Release requests data and comments regarding the types of derivatives used by mutual funds and other investment companies, the purposes for which funds use derivatives, and whether funds’ use of derivatives has undergone or may be undergoing changes. The Concept Release represents the latest step in the SEC’s ongoing review of the use of derivatives by funds. More information and certain preliminary observations regarding the Concept Release are available in Ropes & Gray’s alert here.
At the August 31, 2011 open meeting, the SEC also voted to request public comment on the treatment of asset-backed issuers as well as real estate investment trusts and other mortgage-related pools under the 1940 Act. The SEC is seeking public comment regarding possible amendments to Rule 3a-7 under the 1940 Act, which excludes certain issuers of asset-backed securities from having to comply with the requirements of the 1940 Act. In a separate concept release, the SEC is seeking public comment on interpretive issues relating to some REITs and other mortgage-related pools that rely on Section 3(c)(5)(C) of the 1940 Act. More information regarding the SEC’s proposals is available here.