What Is SEC Form 24F-2NT?

SEC Form 24F-2NT is a filing used to inform the Securities and Exchange Commission (SEC) of the sale of additional securities. Investment management companies, such as mutual funds, must file SEC Form 24F-2NT when they sell more shares than initially stated in their registration filings.

Key Takeaways

  • SEC Form 24F-2NT is a filing used to inform the Securities and Exchange Commission (SEC) of the sale of additional securities.
  • The form serves as a way for an investment management company to adjust and update its original shares-related sales prediction.
  • SEC Form 24F-2NT gives investment companies a way to sell additional securities while remaining in compliance with SEC rules and regulations.

Understanding SEC Form 24F-2NT

SEC Form 24F-2NT serves as a way for an investment management company to adjust and update its original shares-related sales prediction. The company provides this prediction in its initial registration filing with the SEC.

SEC Form 24F-2NT is related to SEC Form 24F-2. Form 24F-2 is a required form that must be submitted every year by open-end management investment companies. Unit investment trusts and face-amount certificate companies must also file SEC Form 24F-2.

The information listed on SEC Form 24F-2NT includes the amount of additional shares to be registered and the retroactive registration date for the additional shares. Like other types of SEC filings, the completed SEC Form 24F-2NT must be submitted in an electronic format. The system for this electronic filing is the SEC's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Anyone, either an individual or an organization, can access this system online and download required forms and materials via the website for free.

Benefits of SEC Form 24F-2NT

SEC Form 24F-2NT gives investment companies a way to sell additional securities while remaining in compliance with SEC rules and regulations. It provides a single place to record all of these sales and send them to the SEC. The ability to file online also helps the forms to be processed and published more quickly.

Criticism of SEC Form 24F-2NT

SEC Form 24F-2NT also has some drawbacks. It might be easier for some companies to file this information along with Form 24F-2 instead of as a separate form. Although companies file SEC Form 24F-2NT electronically, the form itself is derived from old paper forms based on requirements dating back to 1940. Finally, there is a more general argument that SEC requirements like Form 24F-2NT impose excessive costs on businesses.

Requirements of SEC Form 24F-2NT

SEC Form 24F-2NT allows a company to remain compliant by notifying the SEC of the sale of additional shares. It is needed if a closed-end mutual fund or unit investment sells more shares than originally stated.

SEC Form 24F-2NT, like the related SEC Form 24F-2, is one of the numerous filings required under the Investment Company Act of 1940. A filing is an official, formal document or financial statement submitted to the SEC. It must contain accurate, truthful, and complete disclosures and information that fulfill SEC requirements.

Many of the forms required by the SEC are direct results of the Investment Company Act of 1940.

Congress passed the Investment Company Act of 1940 to ensure proper monitoring and oversight of investment companies operating in the public market. The SEC is the government entity charged with enforcing that legislation and ensuring that investment companies adhere to all applicable federal regulations.

The Investment Company Act of 1940 also spells out a range of other mandates dictating how an investment company must operate and conduct business. That includes the requirement that a board of directors must be established and maintained, with the majority of those board members considered independent. The act also places limitations and restrictions on investment strategies, such as the use of leverage. The Investment Company Act of 1940 also specifically addresses the disclosures the investment company is required to provide.

Real-World Example of SEC Form 24F-2NT

On December 3, 2020, Legg Mason Partners Equity Trust filed an SEC Form 24F-2NT covering the period ending September 30, 2020. The securities for which the form was filed included the QS S&P 500 Index Fund and the ClearBridge All Cap Value Fund. The other funds on the form were the QS Global Dividend Fund, the ClearBridge International Small Cap Fund, and the ClearBridge Small Cap Value Fund. Legg Mason reported selling securities worth $222,855,675 during the fiscal year under section 24(f). At the same time, the company redeemed or repurchased securities valued at $398,519,949.