Rule 12d3-1, Exemption of acquisitions of securities issued by persons engaged in securities related businesses

Rule 12d3-1 (17 CFR 270.12d3-1) under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) creates exemptions that allow registered investment companies ("funds") to acquire securities issued by persons engaged in securities-related businesses, which would otherwise be prohibited under Section 12(d)(3) of the Act. The rule permits funds to invest in companies that derive 15 percent or less of their gross revenues from securities activities without ownership limits, and allows investments in companies deriving more than 15 percent from securities activities subject to specific ownership caps (no more than 5 percent of any equity class, 10 percent of debt securities, and 5 percent of the fund's total assets in any single issuer), while prohibiting investments in securities issued by the fund's promoters, underwriters, investment advisers, or their affiliates, except for subadviser securities under strict conditions requiring advisory contract provisions that prevent consultation between subadvisers and limit their advisory responsibilities to discrete portfolio portions. The SEC needs this information to monitor compliance with these investment restrictions and ensure proper fund governance, using the collected data for regulatory oversight, examination, and enforcement purposes. This regulation primarily imposes recordkeeping requirements and internal governance obligations on investment companies, with information maintained for internal compliance purposes and made available to the SEC during examinations, while fund shareholders and the public benefit from the enhanced investor protections these restrictions provide.

The latest form for Rule 12d3-1, Exemption of acquisitions of securities issued by persons engaged in securities related businesses expires 2028-08-31 and can be found here.