The regulation of wrap fee programs – Part I

Terrance J. O’Malley (Investment Management Group at LeBoeuf, Lamb, Greene & MacRae, LLP)
Kenneth E. Neikirk (Investment Management Group at LeBoeuf, Lamb, Greene & MacRae, LLP)

Journal of Investment Compliance

ISSN: 1528-5812

Publication date: 1 January 2002

Abstract

Wrap fee programs are an increasingly popular product offered by broker‐dealers and investment managers to their clients. Wrap fee programs present unique issues under both the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Advisers Act”), the two primary bodies of law that govern the product and those who offer and manage it. The regulations and rules under those Acts applicable to wrap fee programs and related interpretive statements made by the SEC staff, however, are wide ranging and have not been provided in a single format. This article attempts to present a comprehensive discussion on the regulation of wrap fee programs, as well as the many compliance issues associated with these programs. The article is delivered in two parts. Part I, presented in this issue, addresses the regulation of wrap fee programs under the Investment Company Act. Part I also begins a review of unique issues arising under the Advisers Act, including registration requirements for wrap fee sponsors and other persons who manage or offer the product to their clients, as well as required contents for wrap fee brochures and related disclosure issues. Part II, which will be presented in the next issue, will discuss additional Advisers Act issues such as suitability, fees and advertising. It also will briefly review issues arising under the Securities Exchange Act of 1934 (“Exchange Act”) and the Employee Retirement Income Security Act of 1974 (“ERISA”).

Keywords

Citation

O’Malley, T.J. and Neikirk, K.E. (2002), "The regulation of wrap fee programs – Part I", Journal of Investment Compliance, Vol. 3 No. 1, pp. 59-69. https://doi.org/10.1108/joic.2002.3.1.59

Publisher

:

MCB UP Ltd

Copyright © 2002, MCB UP Limited

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