SEC To Probe Funds' Use Of Derivatives

Law360, New York (March 26, 2010, 2:08 PM EDT) -- The U.S. Securities and Exchange Commission is launching a review of the use of derivatives by mutual funds, exchange-traded funds and other investment companies to consider what additional protections are necessary for those funds.

Pending the review's completion, the agency will defer consideration of exemptive requests under the Investment Company Act of 1940 to permit ETFs to make significant investments in derivatives, the SEC said Thursday.

The decision will affect new and pending exemptive requests from certain actively managed and leveraged ETFs that rely particularly heavily...
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