SEC Proposes Amendments to Update Form 13F for Institutional Investment Managers

 

The Securities and Exchange Commission (SEC) announced in July 2020 a proposal to amend Form 13F to update the reporting threshold to $3.5 billion from $100 million for institutional investment managers. 

Section 13(f) of the Securities and Exchange Act requires any manager to file a report with the SEC if the manager exercises investment discretion with respect to accounts holding U.S. equity securities having a market value on the last trading day of any month of at least $100 million.

The reports, which show a fund’s holdings in stocks, as well as options and warrants, which trade on U.S. exchanges, must be filed within 45 days of each quarter end. Form 13F was adopted pursuant to a 1975 directive designed to provide the SEC with data from larger managers about their investment activities and holdings, so that their influence and impact could be considered in maintaining fair and orderly securities markets.

The proposed increase in the threshold to $3.5 billion would be the first change to the threshold since the form was adopted in 1978. The proposed adjusted threshold is based on the growth of the U.S. equities market that occurred since the adoption of section 13(f), and is intended to reflect proportionally the same market value of U.S. equities that $100 million represented in 1975. The adjusted threshold is designed to achieve the goals of Form 13F, including the submission of filings by larger managers that cover a large proportion of managed assets, while limiting the burdens of reporting and minimizing the number of filers, as applied to today’s market size.

The proposal requests comment on the direct compliance costs associated with Form 13F, including such as developing and maintaining internal hardware and software systems, analysis of whether holdings qualify for confidential treatment and preparing the information for submission.

SEC Chairman, Jay Clayton, said in relation to the proposed change: “Today’s proposal will update, for the first time in over 40 years, the 13F reporting threshold to a level that furthers the statutory goal of enabling the SEC to monitor holdings of larger investment managers while reducing unnecessary burdens on smaller managers.” The SEC is seeking public comment on the proposal for 60 days from its publication in the Federal Register.

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