The Investment Company Act of 1940 is a U.S. federal law that regulates investment companies, which pool money from investors to purchase securities. The Act aims to protect investors by requiring these companies to disclose their financial condition, investment policies, and risks associated with their investments. It also establishes standards for the governance and operations of investment companies. Under the Act, investment companies are classified into three main types: open-end funds, closed-end funds, and unit investment trusts. Each type has different structures and regulations. The Act is enforced by the Securities and Exchange Commission (SEC), which oversees compliance and ensures that investors receive accurate information.