Researching A Registered Investment Company & Its Legitimacy

A legitimate registered investment company must be registered under the investment company act of 1940. This is the general assumed laws and regulations that are upheld by the SEC for all investment companies. The SEC is the Securities and Exchange Commission which keeps all the regulations for investment companies. If people are managing other portfolios that they will usually need to be registered with the investment company act. This will insure to the SEC and to the public that they are a legitimate organization.

Looking for Legitimate Companies

A true investment company is a company that is dealing with securities. There are also many other investment opportunities such as stocks and bonds that a company might be involved with. Many true investment companies are involved with unit investment trusts. Unit investment trusts also known as UTI’s are an investment company managing a portfolio of securities that have a definitive life cycle. These might be found being bought and sold with exchange traded funds on the open market.

SEC Backing

Legitimate companies usually follow the specified rules and regulations of the investment company act and are accredited by the SEC. When researching an investment company you should enter with the expectations that you have for the company. You should decide if you are looking for a local mom and pop type of company or a larger most assuredly accredited company. It is important to understand the types of services and management structures that your company employs. Obviously the larger and more nationally recognized a company is, the more legitimate its practices and regulations might be. Unfortunately true legitimacy does not in any way translate into profit margins. The only way to be truly successful in the investment would is to do your homework.

Understand Your Investments

You need to have your own understanding of the types of investments you want to make and the various places you might want to spend your money. This will ultimately help you decide if the company you are researching is legitimate. If you do not have enough time to completely learn about the industry on your own then it might be best to stick with a company that is widely known to be proficient and legitimate. One final piece of advice for finding legitimate companies is to understand that investment pools and private investment clubs are not usually considered legitimate companies. These generally act under their own set of rules and are not closely regulated by the same rules and regulations.


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