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SEC Rule 38a-1

Mandates that registered investment companies and business development companies (collectively referred to as “funds”) establish robust compliance frameworks to prevent violations of federal securities laws. The rule formalizes the creation, implementation, oversight, and documentation of internal compliance policies, with particular emphasis on board oversight and the role of a designated Chief Compliance Officer (CCO).

Rule Overview

Jurisdiction: United States

Regulator: SEC

Topic: Compliance Personnel, Controls and Procedures, Supervision

Overview
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Each fund must adopt and implement written policies and procedures designed to prevent violations of federal securities laws.

These policies must include oversight mechanisms for the fund’s key service providers: investment adviser, principal underwriter, administrator, and transfer agent.

The fund’s board of directors, including a majority of independent directors (not “interested persons”), must approve the fund’s compliance policies and the policies of the fund’s service providers.

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