---
kind: "section"
citation: "15 U.S.C. § 80a–1"
title: "15"
title_heading: "Commerce and Trade"
number: "80a–1"
heading: "Findings and declaration of policy"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/80a-1"
units:
  - "Chapter 2D — Investment Companies and Advisers"
  - "Subchapter I — Investment Companies"
---

# §80a–1. Findings and declaration of policy

- (a) **Findings—** Upon the basis of facts disclosed by the record and reports of the [Securities](/usc/15/80a–2.md?p=a-36) and [Exchange](/usc/15/80a–2.md?p=a-14) [Commission](/usc/15/80a–2.md?p=a-7) made pursuant to section 79z–4[^1] of this title, and facts otherwise disclosed and ascertained, it is found that investment [companies](/usc/15/80a–2.md?p=a-8) are affected with a national public interest in that, among other things—
  - (1) the [securities](/usc/15/80a–2.md?p=a-36) issued by such [companies](/usc/15/80a–2.md?p=a-8), which constitute a substantial part of all [securities](/usc/15/80a–2.md?p=a-36) publicly offered, are distributed, purchased, paid for, exchanged, transferred, redeemed, and repurchased by use of the mails and means and instrumentalities of [interstate commerce](/usc/15/80a–2.md?p=a-18), and in the case of the numerous [companies](/usc/15/80a–2.md?p=a-8) which issue [redeemable securities](/usc/15/80a–2.md?p=a-32) this process of distribution and redemption is continuous;
  - (2) the principal activities of such [companies](/usc/15/80a–2.md?p=a-8)—investing, reinvesting, and trading in [securities](/usc/15/80a–2.md?p=a-36)—are conducted by use of the mails and means and instrumentalities of [interstate commerce](/usc/15/80a–2.md?p=a-18), including the facilities of [national securities exchanges](/usc/15/80a–2.md?p=a-26), and constitute a substantial part of all transactions effected in the [securities](/usc/15/80a–2.md?p=a-36) markets of the Nation;
  - (3) such [companies](/usc/15/80a–2.md?p=a-8) customarily invest and trade in [securities](/usc/15/80a–2.md?p=a-36) issued by, and may dominate and [control](/usc/15/80a–2.md?p=a-9) or otherwise affect the policies and management of, [companies](/usc/15/80a–2.md?p=a-8) engaged in business in [interstate commerce](/usc/15/80a–2.md?p=a-18);
  - (4) such [companies](/usc/15/80a–2.md?p=a-8) are media for the investment in the national economy of a substantial part of the national savings and may have a vital effect upon the flow of such savings into the capital markets; and
  - (5) the activities of such [companies](/usc/15/80a–2.md?p=a-8), extending over many [States](/usc/15/80a–2.md?p=a-39), their use of the instrumentalities of [interstate commerce](/usc/15/80a–2.md?p=a-18) and the wide geographic distribution of their [security](/usc/15/80a–2.md?p=a-36) holders, make difficult, if not impossible, effective [State](/usc/15/80a–2.md?p=a-39) regulation of such [companies](/usc/15/80a–2.md?p=a-8) in the interest of investors.
- (b) **Policy—** Upon the basis of facts disclosed by the record and reports of the [Securities](/usc/15/80a–2.md?p=a-36) and [Exchange](/usc/15/80a–2.md?p=a-14) [Commission](/usc/15/80a–2.md?p=a-7) made pursuant to section 79z–4[^1] of this title, and facts otherwise disclosed and ascertained, it is declared that the national public interest and the interest of investors are adversely affected—
  - (1) when investors purchase, pay for, [exchange](/usc/15/80a–2.md?p=a-14), receive dividends upon, vote, refrain from voting, sell, or surrender [securities](/usc/15/80a–2.md?p=a-36) issued by investment [companies](/usc/15/80a–2.md?p=a-8) without adequate, accurate, and explicit information, fairly presented, concerning the character of such [securities](/usc/15/80a–2.md?p=a-36) and the circumstances, policies, and financial responsibility of such [companies](/usc/15/80a–2.md?p=a-8) and their management;
  - (2) when investment [companies](/usc/15/80a–2.md?p=a-8) are organized, operated, managed, or their portfolio [securities](/usc/15/80a–2.md?p=a-36) are selected, in the interest of [directors](/usc/15/80a–2.md?p=a-12), officers, [investment advisers](/usc/15/80b–2.md?p=a-11), depositors, or other affiliated [persons](/usc/15/80a–2.md?p=a-28) thereof, in the interest of underwriters, [brokers](/usc/15/80a–2.md?p=a-6), or [dealers](/usc/15/80a–2.md?p=a-11), in the interest of special classes of their [security](/usc/15/80a–2.md?p=a-36) holders, or in the interest of other investment [companies](/usc/15/80a–2.md?p=a-8) or [persons](/usc/15/80a–2.md?p=a-28) engaged in other lines of business, rather than in the interest of all classes of such [companies](/usc/15/80a–2.md?p=a-8)’ [security](/usc/15/80a–2.md?p=a-36) holders;
  - (3) when investment [companies](/usc/15/80a–2.md?p=a-8) issue [securities](/usc/15/80a–2.md?p=a-36) containing inequitable or discriminatory provisions, or fail to protect the preferences and privileges of the holders of their outstanding [securities](/usc/15/80a–2.md?p=a-36);
  - (4) when the [control](/usc/15/80a–2.md?p=a-9) of investment [companies](/usc/15/80a–2.md?p=a-8) is unduly concentrated through pyramiding or inequitable methods of [control](/usc/15/80a–2.md?p=a-9), or is inequitably distributed, or when investment [companies](/usc/15/80a–2.md?p=a-8) are managed by irresponsible [persons](/usc/15/80a–2.md?p=a-28);
  - (5) when investment [companies](/usc/15/80a–2.md?p=a-8), in keeping their accounts, in maintaining reserves, and in computing their earnings and the asset value of their outstanding [securities](/usc/15/80a–2.md?p=a-36), employ unsound or misleading methods, or are not subjected to adequate independent scrutiny;
  - (6) when investment [companies](/usc/15/80a–2.md?p=a-8) are reorganized, become inactive, or change the character of their business, or when the [control](/usc/15/80a–2.md?p=a-9) or management thereof is transferred, without the consent of their [security](/usc/15/80a–2.md?p=a-36) holders;
  - (7) when investment [companies](/usc/15/80a–2.md?p=a-8) by excessive borrowing and the issuance of excessive amounts of senior [securities](/usc/15/80a–2.md?p=a-36) increase unduly the speculative character of their junior [securities](/usc/15/80a–2.md?p=a-36); or
  - (8) when investment [companies](/usc/15/80a–2.md?p=a-8) operate without adequate assets or reserves.

  It is declared that the policy and purposes of this subchapter, in accordance with which the provisions of this subchapter shall be interpreted, are to mitigate and, so far as is feasible, to eliminate the conditions enumerated in this section which adversely affect the national public interest and the interest of investors.


## Footnotes

[^1]: See References in Text note below.

## Source credit

(Aug. 22, 1940, ch. 686, title I, § 1, 54 Stat. 789.)

## Notes

### Editorial Notes

### References in Text

Section 79z–4 of this title, referred to in text, was repealed by Pub. L. 109–58, title XII, § 1263, Aug. 8, 2005, 119 Stat. 974.

### Executive Documents

### Transfer of Functions

For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.