kaal:claim:2811729-014

The SEC's interpretation of Section 18 leaves a mutual fund subject to no statutory limitation or cap on its ability to borrow through the use of derivative instruments, provided the fund adheres to its asset segregation obligations.

In sum, the SEC's position has meant that a mutual fund is not subject to a statutory limitation or cap on its ability to borrow through the use of derivative instruments, if the fund adheres to its asset segregation obligations.

Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016), III.A. Mutual Fund Regulation, p. 24
https://ssrn.com/abstract=2811729 · source PDF

Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729

• mutual funds using derivatives under SEC Section 18 guidance as of 2016

failuresupport: arguedfailure: Uncapped synthetic leveragefamily: enforcement-gapinstitutional-design

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