SEC Adopts ‘Names Rule' Changes

On Sept. 20, the Securities and Exchange Commission (SEC) adopted amendments to Rule 35d-1, more commonly known as the "Names Rule," under the Investment Company Act of 1940 (Investment Company Act). These amendments are designed to broaden the scope of the Names Rule's applicability and include updated disclosure and record-keeping requirements.

Currently, the Names Rule requires that a registered investment company whose name suggests a focus in a particular type of investment adopt a policy to invest at least 80% of the value of its assets in those investments. The amendments expand the Names Rule to require a broader scope of funds to adopt an 80% investment policy, including funds with names suggesting a focus in investments with "particular characteristics" — for example, terms such as "growth" or "value" or certain terms that reference a thematic investment focus, such as the incorporation of one or more environmental, social or governance factors. These