SEC Proposed Changes to Form 13F for Institutional Investment Managers

August 03, 2020

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On July 10, 2020, the United States Securities and Exchange Commission (“SEC”) announced proposed amendments to the Form 13F reporting threshold for institutional investment managers. Currently, Section 13F requires institutional investment managers, which includes registered investment advisers, to file a report with the SEC if the institutional investment manager exercises investment discretion over accounts holding certain types of equity securities that have an aggregate fair market value of at least $100 million on the last trading day of any month of any calendar year. The threshold has not been updated since the mid-1970s when the Form 13F was first adopted by the SEC.

Form ADV Part 3 Drafting Tips

Washington DC, USA – US United States Securities and Exchange Commission

As proposed, the reporting threshold would be raised to $3.5 billion, substantially reducing the reporting burden for an estimated 90% of smaller investment managers while retaining oversight over over 90% of the dollar value of the holdings data currently reported. Proportionally, the new limit is intended to reflect a comparable market value of U.S. equities today that $100 million represented when the rule was first enacted in 1975. By reducing the number of smaller investment managers that are required to file, the proposal estimates an annual compliance cost savings for smaller investment advisers and managers ranging from $68.1 million to $136 million, but without a significant reduction in market oversight by the SEC.

In conjunction with the increased reporting threshold, the proposed changes would direct SEC staff to review the reporting threshold every five years and suggest changes, when deemed appropriate. The proposed amendment would also eliminate the ability of institutional investment managers to omit certain positions from their reports and would require managers to incorporate additional data for use by the SEC staff.Finally, the proposal would amend the instructions relating to requests for confidential treatment of Form 13F information. As proposed, institutional investment managers seeking confidential treatment for certain information contained in Form 13F would now be required to demonstrate that the information is “both customarily and actually kept private by the manager, and to show how the release of this information could cause harm to the manager.”

The SEC is requesting comments on the proposed amendments to Form 13F. Comments must be submitted within 60 days after the proposed rule is published in the Federal Register. Click here to read the SEC’s Press Release and Fact Sheet on Form 13F, or click here to read the Proposed Rule for Form 13F.

For more information on the current requirements of Form 13F, click here to view RIA Compliance Consultants’ “Frequently Asked Questions” for Form 13F.

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