§80a–20 Proxies; Voting Trusts; Circular Ownership

Summary

Makes it illegal to use the mail, the internet, phones, or any interstate means to ask for or use someone’s proxy or consent about a security issued by a registered investment company unless the Securities and Exchange Commission’s rules allow it. It also bans a registered investment company, its close associates, an issuer of a voting-trust certificate for its securities, or an underwriter from offering or selling those voting-trust certificates in a public sale by mail or other interstate means. Stops a registered investment company from buying voting stock if doing so creates or would create certain ownership loops. Cross-ownership: two companies each own more than 3% of the other’s voting stock. Circular ownership: three or more companies form a loop where each owns over 3% of another and has more than 3% of its voting stock owned by others in the group. If such cross or circular ownership starts when a fund buys stock, the fund must fix the problem within one year of learning about it.