SEC lifts ceiling for PowerShares ETFs

Investment companies will now be able to invest in the company’s ETFs beyond the limits of Section 12(d)-1.
AUG 30, 2007
By  Bloomberg
PowerShares Capital Management LLC, a provider of exchange traded funds, today said that it has received regulatory relief from the Securities and Exchange Commission. Now other investment companies will be able to invest in the company’s ETFs beyond the limits of Section 12(d)-1 of the Investment Company Act of 1940. Ordinarily, the regulation prevents investment firms from acquiring more than 3% of another investment company’s total outstanding voting stock and also bars them from investing more than 5% of their assets into a single investment company, or from investing more than 10% of their assets into at least two investment companies. The regulatory pass, which also applies to future ETF products launched by Chicago-based PowerShares, will require investment companies to agree to certain conditions before investing. The requirements include entering a participation agreement, not exercising influence over the ETFs, and complying with the investment company’s own restrictions and policies.

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