Under Section 13(h) of the Securities Exchange Act, Form 13H must be filed by any organization that is considered a large trader. An investment adviser firm qualifies as a “large trader” when the firm has discretionary authority over one or more accounts that purchase or sell any exchange-listed security in an aggregate amount equal to or greater than 2 million shares or $20 million in a calendar day, or 20 million shares or $200 million in a calendar month.
If an investment adviser firm places trades that meet the amounts listed above, it must file Form 13H within 10 days of qualifying as a large trader. A firm may receive a notice from the qualified custodian that the requirement to file the Form 13H has been triggered (assuming all the trades are made through a single qualified custodian).
Upon the initial filing of the Form 13H, the SEC will assign a large trader identification number (“LTID”), which the investment adviser must disclose to all broker-dealers effecting transactions on its behalf, along with a list of all accounts at that broker-dealer to which the LTID applies. SEC-registered investment advisers who have been advised by a broker-dealer that they meet the definition of a large trader, but were unaware of such status, should immediately review their trading activity and compliance policies and procedures to ensure compliance with Rule 13h-1.
After the initial filing, the Form 13H is filed annually by every large trader within 45 days after the end of each full calendar year. Additionally, amendments to the Form must be filed promptly following the end of a calendar quarter in the event that any of the information contained in a Form 13H filing becomes inaccurate for any reason.
In December 2020, the SEC released a Risk Alert about its assessment of the compliance practices of SEC-registered investment advisers and broker dealers with regard to Rule 13h-1 and Form 13H. RIA Compliance Consultants encourages all SEC-registered investment advisers to review and update their compliance policies and procedures to ensure compliance with Rule 13h-1. Click here to read the SEC’s Risk Alert for Large Trader Obligations.
The information contained in this calendar event is general in nature intended for educational purposes only and is not intended to be a comprehensive analysis of this topic. It is not intended to constitute compliance consulting advice or apply to any particular investment adviser firm’s specific situation. Please consult the applicable securities regulator’s rules and published guidance for more details about the topics referenced above.