Which act requires insurer separate accounts to be registered as investment companies with the securities industry?

Which act requires insurer separate accounts to be registered as investment companies with the securities industry?

• A. Investment Company Act of 1940
• B. Securities Act of 1933
• C. Investment Advisers Act
• D. Securities Exchange Act

Answer: (A)

The main idea here is regulatory oversight of pooled investment vehicles. Insurer separate accounts that fund variable annuities are considered investment companies because they pool policyowners’ money and invest in securities. The Investment Company Act of 1940 is the law that requires these investment companies to register with the SEC and follow rules intended to protect investors, such as disclosures and governance standards. The other acts cover different parts of the securities world: the Securities Act of 1933 governs the initial issuance of securities, the Securities Exchange Act of 1934 covers trading and ongoing reporting, and the Investment Advisers Act regulates who can provide investment advice. Therefore, the act that requires insurer separate accounts to be registered as investment companies is the Investment Company Act of 1940.

The main idea here is regulatory oversight of pooled investment vehicles. Insurer separate accounts that fund variable annuities are considered investment companies because they pool policyowners’ money and invest in securities. The Investment Company Act of 1940 is the law that requires these investment companies to register with the SEC and follow rules intended to protect investors, such as disclosures and governance standards. The other acts cover different parts of the securities world: the Securities Act of 1933 governs the initial issuance of securities, the Securities Exchange Act of 1934 covers trading and ongoing reporting, and the Investment Advisers Act regulates who can provide investment advice. Therefore, the act that requires insurer separate accounts to be registered as investment companies is the Investment Company Act of 1940.