General Securities Representative (Series 7) Practice Exam

What act governs the registration of UITs and ETFs?

1. 1934 Securities Exchange Act

2. 1935 Investment Company Act

3. 1940 Investment Company Act

4. 1970 Securities Act

The correct answer is: 1940 Investment Company Act

The registration of Unit Investment Trusts (UITs) and Exchange-Traded Funds (ETFs) is governed by the 1940 Investment Company Act. This Act was established to regulate companies that are engaged primarily in the business of investing, reinvesting, and trading in securities. It provides a framework for the registration and regulation of investment companies, including mutual funds, UITs, and ETFs. Under the 1940 Investment Company Act, UITs and ETFs must register with the Securities and Exchange Commission (SEC) and adhere to specific requirements related to disclosure, governance, and the types of investments they can make. This legislation aims to protect investors by requiring transparency regarding the investment strategies, risks, and fees associated with these investment products. The other acts listed do not specifically address the registration of UITs and ETFs. For instance, the 1934 Securities Exchange Act primarily deals with the regulation of trading securities and the responsibilities of market participants, while the 1935 Investment Company Act is not a recognized piece of legislation relating to investment companies. The 1970 Securities Act also does not apply to this context as it primarily focuses on the registration of securities offerings. Thus, the 1940 Investment Company Act is the correct legislative framework governing the registration of