SEC Issues Concept Release On Funds’ Use Of Derivatives

The Securities and Exchange Commission 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 Investment Company Act of 1940, as amended (the "1940 Act"). The Concept Release requests data and comments regarding the types of derivatives used by mutual funds and other investment companies, such as business development companies and exchange-traded funds, the purposes for which funds use derivatives, and whether funds' use of derivatives has undergone or may be undergoing changes. The Commission requests comments to the Concept Release to help it determine whether "the regulatory framework, as it applies to funds' use of derivatives, continues to fulfill the purposes and policies underlying the [1940 Act] and is consistent with investor protection."