SEC Extends Decades-Old Investment Fund Record Rules
Published Date: 6/3/2026
Notice
Summary
The SEC is asking for comments to keep Rule 31a-1, which requires investment companies and business development companies to keep detailed financial records. This rule helps the SEC check that these companies follow the law without extra paperwork. About 14,300 companies spend a lot of time—over 25 million hours yearly—on this, but the rule helps avoid even bigger hassles.
Analyzed Economic Effects
4 provisions identified: 1 benefits, 3 costs, 0 mixed.
Funds Must Keep Detailed Records
If you operate a registered investment company, a business development company (BDC), or a majority-owned subsidiary, Rule 31a-1 requires you to maintain and keep current the accounts, books, auditors' certificates, and other documents that underlie the financial statements filed under section 30 of the Investment Company Act of 1940. Compliance with this recordkeeping requirement is mandatory under section 31(a) of the Act.
Large Time and Labor Costs Quantified
The SEC estimates about 14,301 entities (14,125 investment company series and 176 BDCs) must comply, with each entity spending about 1,750 hours per year on these records for a total estimated annual burden of 25,026,750 hours. The SEC estimates an attributable annual burden of 2,502,675 hours and an estimated annual cost per entity of $613,200, leading to a total industry cost attributable to the rule of approximately $877 million.
Recordkeeping Avoids More Burdensome Filings
The SEC states that requiring these records under Rule 31a-1 helps the Commission conduct inspections and examinations and avoids the need for potentially more burdensome requirements such as mandatory filings of similar information with the Commission. Maintaining records under the rule is presented as an alternative to imposing additional mandatory filings.
Records Subject to Retention Rules
The records required by Rule 31a-1 must be preserved pursuant to Rule 31a-2 under the Investment Company Act (17 CFR 270.31a-2), which specifies retention periods for various categories of records. The SEC notes this is a recordkeeping requirement only and does not involve filing these records with the Commission.
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