Mutual funds, investment advisers, and the National Securities Markets Improvement Act

The Article presents an overview of the recently enacted National Securities Markets Improvement Act (NSMIA), as it affects investment companies and investment advisers. The NSMIA amended the Investment Company Act of 1940 and the Investment Advisers Act of 1940 in several important respects and, more significantly, reallocated and rationalized the regulatory responsibilities of federal and state regulators with respect to investment companies and investment advisers. The Article discusses factors that led to the enactment of the legislation, explains its various provisions, and notes interpretive questions that have arisen or are likely to arise under the NSMIA.