SEC Proposes to Increase Form 13F Reporting Thresholds
On Friday, the SEC proposed amendments to Form 13F for institutional investment managers. If adopted, the primary proposed change would raise the Form 13F reporting threshold for investment managers — from the current $100 million to $3.5 billion — and as stated in the SEC’s press release, would thereby provide relief for smaller managers who are currently subject to Form 13F reporting. Other proposed changes include:
The proposed changes also would direct the staff to review the Form 13F reporting threshold every five years and recommend an appropriate adjustment, if any, to the Commission. Additionally, the proposal would eliminate the ability of managers to omit certain small positions, thereby increasing the overall holdings information required from larger managers. The proposal also would require managers to report additional numerical identifiers to enhance the usability of the information provided on the form, and amend the instructions relating to requests for confidential treatment of Form 13F information.
The proposed reporting threshold change from $100 million to $3.5 billion is a big increase but as the announcement points out, the threshold hasn’t been updated since the Commission adopted the form over 40 years ago! In the time since the form was adopted, the announcement says the overall value of U.S. public corporate equities has grown over 30 times (from $1.1 trillion to $35.6 trillion).
Even though the press release notes that the Commission has received recommendations to revisit the Form 13F reporting thresholds over the years, not all are in agreement with the proposed changes. Commissioner Allison Lee issued a dissenting statement, which says the proposal decreases transparency and lacks sufficient analysis. The National Investor Relations Institute (NIRI) tweeted its disagreement and said it “shared Commissioner’s Lee’s concerns about the ill-advised proposal.” NIRI also referenced its position paper on 13F reforms, which is dated just last fall and, among other things, advocates for shortening the 13F reporting deadline.
-Lynn Jokela, TheCorporateCounsel.net July 13, 2020
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