Legislative Proposals in Response to Archegos Capital Meltdown – Changes to 13(f) Filings, Limit Family Office Exemption and Prohibit Order Flow Payments

May 05, 2021

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There are several legislative proposals currently under consideration by the U.S. House of Representative’s Committee on Financial Services in response to the Archegos Capital meltdown which may be of interest to many investment advisers:

  • Capital Markets Engagement and Transparency Act of 2021 – Amends the reporting requirements under Section 13(f) of the Securities Exchange Act of 1934 to include direct and indirect short interests and derivatives of an equity security as a covered security, changes the frequency of filings under Section 13(f) from quarterly to monthly, and requires the SEC to conduct a study to evaluate the criteria of whether confidential treatment should be applied to institutional investment manager for filing a report under Section 13(f);
  • Amendment to the Investment Advisers Act of 1940 – Limits the registration exemption provided for family offices from the definition of an investment adviser to those family offices with less than $750,000,000 in assets under management; and
  • Amendment to the Securities Exchange Act of 1934 – Prohibits the payment to a broker-dealer for order flow.

See https://democrats-financialservices.house.gov/UploadedFiles/HHRG-117-BA00-20210506-SD002.pdf .

For additional details, the House Committee on Financial Services is holding a hearing, “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, Part III,” on Thursday, May 6, 2021, which can be viewed online at https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=407748#LiveStream .

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Posted by Bryan Hill
Labels: Form 13F