DEFINITION of SEC Form 485A24E
SEC Form 485A24E is a registration statement required for separate accounts (with reference to management investment companies), which contains post-effective amendments filed pursuant to Rule 485(a) with additional shares under Rule 24e-2. The SEC Form 485A24E filing cannot be submitted as an Investment Company Act of 1940-only filing. The purpose of the form is to set out complete details of securities offerings and investment strategy by an investment company.
A separate account is a privately managed investment account owned by an investor seeking to manage a pool of individual assets. Separate accounts are typically opened through a brokerage firm, financial advisor, or other financial institution. For instance, they may also be held at a bank or opened with an insurance company. A separate account is commonly utilized by high net worth (HNW) investors seeking to partner with a professional money manager, and is often focused on a single targeted strategy. The SEC Form 485A24E is required to establish such a seperate account for a customer of a financial institution,.
BREAKING DOWN SEC Form 485A24E
SEC Form 485A24E is required to establish a seperate account for a customer of a financial institution. Seperate accounts, or segregated accounts or SMAs, are popular investment products offered to high net worth individuals, usually requiring a minimum balance of $100,000 or more to open and maintain. In these accounts, a financial advisor often has discretion over what to trade and how often. These accounts are often billed under a wrap fee type of arrangement.
Beause these types of accounts can involve particularly risky investment strategies and require discretion to be handed over to a financial advisor or portfolio manager, the SEC requires that these types of accounts be registered and regulated with the proper oversight.
Rule 485(a) of the Securities Act of 1933 says that a post-effective amendment filed by a registered open-end management investment company or unit investment trust shall become effective on the 60th day after the filing. Rule 24e of the Investment Company Act of 1940 regards a revised prospectus for investment company securities issued under the 1933 act. The revised prospectus must be filed as an amendment to the registration statement under the 1933 act.
If the investment plan or list of securities in the separate account changes, for instance if the prospectus for the investment strategy changes in a material way, it must be amended using an SEC Form 485A24F.