An investment company that does not sell securities to the public, but specializes in internal investing, is exempt from the Investment Company Act.

Question

Quizplus · Accepted Answer

According to the Investment Company Act, an investment company is required to register with the SEC and abide by several rules and regulations if it sells securities to the public. However, if an investment company has less than 100 investors and does not sell securities to the public, it is exempt from the registration requirements of the act. This type of investment company is known as a private investment company and is allowed to specialize in internal investing without being subject to the Investment Company Act.

An Investment Company That Does Not Sell Securities to the Public