Vol. 5 No. 2
Developments of Note
SEC Denies the Investment Company Institute’s Petition Seeking SEC Regulation of Web-based Stock Baskets as Mutual Funds
The SEC denied the Investment Company Institute’s (the "ICI") petition to have certain web-based stock basket products, such as the prepackaged "folio" product offered by FOLIOfn, regulated by the SEC as mutual funds under the Investment Company Act of 1940 (the "1940 Act"). The ICI had petitioned the SEC in a March 2001 letter to issue a definitional interpretation of the term "investment company" to include "any group of persons who purchase a pre-selected portfolio of securities with characteristics demonstrating investment management by others." If adopted, the rule would have required that these companies be registered and regulated under the 1940 Act and that the offering and sale of their shares be subject to registration under the Securities Act of 1933.
