Reporting Threshold for Institutional Investment Managers, 46016-46032 [2020-15322]
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Federal Register / Vol. 85, No. 148 / Friday, July 31, 2020 / Proposed Rules
You may review the public docket
containing the proposal, any comments
received and any final disposition in
person in the Dockets Office (see the
ADDRESSES section for address and
phone number) between 9:00 a.m. and
5:00 p.m., Monday through Friday,
except federal holidays. An informal
docket may also be examined between
8:00 a.m. and 4:30 p.m., Monday
through Friday, except federal holidays
at the office of the Eastern Service
Center, Federal Aviation
Administration, Room 350, 1701
Columbia Avenue, College Park, GA
30337.
Availability and Summary of
Documents for Incorporation by
Reference
This document proposes to amend
FAA Order 7400.11D, Airspace
Designations and Reporting Points,
dated August 8, 2019, and effective
September 15, 2019. FAA Order
7400.11D is publicly available as listed
in the ADDRESSES section of this
document. FAA Order 7400.11D lists
Class A, B, C, D, and E airspace areas,
air traffic service routes, and reporting
points.
The Proposal
The FAA proposes an amendment to
Title 14 Code of Federal Regulations (14
CFR) part 71 to amend Class E airspace
extending upward from 700 feet above
the surface at Toccoa RG Letourneau
Field Airport, Toccoa, GA, by
eliminating the Foothills VOR/DME and
the associated extension. In addition,
the FAA proposes to update the
geographic coordinates of the airport
and Habersham County Airport, to
coincide with the FAA’s aeronautical
database.
Class E airspace designations are
published in Paragraph 6005, of FAA
Order 7400.11D, dated August 8, 2019,
and effective September 15, 2019, which
is incorporated by reference in 14 CFR
71.1. The Class E airspace designations
listed in this document will be
published subsequently in the Order.
FAA Order 7400.11, Airspace
Designations and Reporting Points, is
published yearly and effective on
September 15.
Regulatory Notices and Analyses
The FAA has determined that this
proposed regulation only involves an
established body of technical
regulations for which frequent and
routine amendments are necessary to
keep them operationally current. It,
therefore: (1) Is not a ‘‘significant
regulatory action’’ under Executive
Order 12866; (2) is not a ‘‘significant
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rule’’ under DOT Regulatory Policies
and Procedures (44 FR 11034; February
26, 1979); and (3) does not warrant
preparation of a Regulatory Evaluation
as the anticipated impact is so minimal.
Since this is a routine matter that will
only affect air traffic procedures and air
navigation, it is certified that this
proposed rule, when promulgated, will
not have a significant economic impact
on a substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
Environmental Review
Lists of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
The Proposed Amendment
In consideration of the foregoing, the
Federal Aviation Administration
proposes to amend 14 CFR part 71 as
follows:
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for part 71
continues to read as follows:
■
Authority: 49 U.S.C. 106(f), 106(g); 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
1959–1963 Comp., p. 389.
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of Federal Aviation
Administration Order 7400.11D,
Airspace Designations and Reporting
Points, dated August 8, 2019, and
effective September 15, 2019, is
amended as follows:
■
Paragraph 6005 Class E Airspace Areas
Extending Upward from 700 feet or More
Above the Surface of the Earth.
*
*
ASO GA E5
*
*
*
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BILLING CODE 4910–13–P
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Parts 240 and 249
RIN 3235–AM65
Reporting Threshold for Institutional
Investment Managers
Securities and Exchange
Commission.
ACTION: Proposed rule.
AGENCY:
The Securities and Exchange
Commission (the ‘‘Commission’’) is
proposing to update the reporting
threshold for Form 13F reports by
institutional investment managers for
the first time in 45 years, raising the
reporting threshold from $100 million to
$3.5 billion to reflect the change in size
and structure of the U.S. equities market
since 1975, when Congress adopted the
requirement for these managers to file
holdings reports with the Commission.
The proposal also would amend Form
13F to increase the information
provided by institutional investment
managers by eliminating the omission
threshold for individual securities, and
requiring managers to provide
additional identifying information. The
Commission is also proposing to make
certain technical amendments,
including to modernize the structure of
data reporting and amend the
instructions on Form 13F for
confidential treatment requests in light
of a recent decision of the U.S. Supreme
Court.
DATES: Comments should be received on
or before September 29, 2020.
ADDRESSES: Comments may be
submitted by any of the following
methods:
SUMMARY:
Electronic Comments
Toccoa, GA [Amended]
Toccoa RG Letourneau Field Airport, GA
(Lat. 34°35′34″ N, long. 83°17′47″ W)
Habersham County Airport
(Lat. 34°29′59″ N, long. 83°33′24″ W)
That airspace extending upward from 700
feet or more above the surface of the earth
within a 10-mile radius of Toccoa RG
Letourneau Field, and an 8.2-mile radius of
Habersham County Airport.
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[FR Doc. 2020–16296 Filed 7–30–20; 8:45 am]
[Release No. 34–89290; File No. S7–08–20]
This proposal will be subject to an
environmental analysis in accordance
with FAA Order 1050.1F,
‘‘Environmental Impacts: Policies and
Procedures’’ prior to any FAA final
regulatory action.
§ 71.1
Issued in College Park, Georgia, on July 22,
2020.
Andreese C. Davis,
Manager, Airspace & Procedures Team South,
Eastern Service Center, Air Traffic
Organization.
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/submitcomments.htm); or
• Send an email to rule-comments@
sec.gov. Please include File Number S7–
08–20 on the subject line;
Paper Comments
• Send paper comments to Vanessa
A. Countryman, Secretary, Securities
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Federal Register / Vol. 85, No. 148 / Friday, July 31, 2020 / Proposed Rules
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number S7–08–20. This file number
should be included on the subject line
if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/proposed.shtml). Comments are
also available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly.
Studies, memoranda, or other
substantive items may be added by the
Commission or staff to the comment file
during this rulemaking. A notification of
the inclusion in the comment file of any
such materials will be made available
on the Commission’s website. To ensure
direct electronic receipt of such
notifications, sign up through the ‘‘Stay
Connected’’ option at www.sec.gov to
receive notifications by email.
FOR FURTHER INFORMATION CONTACT:
Zeena Abdul-Rahman, Senior Counsel,
Mark T. Uyeda, Senior Special Counsel,
at (202) 551–6792, or Brian McLaughlin
Johnson, Assistant Director, at (202)
551–6792, Investment Company
Regulation Office, Division of
Investment Management, Securities and
Exchange Commission, 100 F Street NE,
Washington, DC 20549–8549.
SUPPLEMENTARY INFORMATION: The
Commission is proposing for public
comment amendments to 17 CFR
240.13f–1 (‘‘rule 13f–1’’) and Form 13F
(referenced in 17 CFR 249.325) under
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) (‘‘Exchange Act’’).
Table of Contents
I. Background
A. Overview of Section 13(f) and Rule 13f–
1
B. Legislative History and Subsequent
Developments
II. Discussion and Economic Analysis
A. Increase of Form 13F Reporting
Threshold
B. Future Analysis
C. Omission Threshold for Form 13F
D. Additional Identifying Information
E. Technical Amendments
F. Efficiency, Competition, and Capital
Formation
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III. Paperwork Reduction Act Analysis
A. Form 13F
B. Request for Comments
IV. Initial Regulatory Flexibility Analysis
V. Consideration of the Impact on the
Economy
VI. Statutory Authority
Text of Proposed Rule and Form
Amendments
I. Background
The Commission is proposing to:
• Amend rule 13f–1 and Form 13F to
raise the reporting threshold from $100
million to $3.5 billion to account for the
changes in the size and structure of the
U.S. equities market since 1975; and
• Eliminate the omission threshold
for individual securities on Form 13F.
The Commission further proposes to
amend Form 13F to require an
institutional investment manager
(‘‘manager’’) that files Form 13F to
provide certain identifying information:
• If the manager has a number
assigned to the manager by the Central
Registration Depository (‘‘CRD’’) system
of the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) or by the
Investment Adviser Registration
Depository (‘‘IARD’’) system (‘‘CRD
number’’), the manager would be
required to provide the CRD number;
and
• If a manager has a filing number
assigned to the manager by the
Commission (‘‘SEC filing number’’), the
manager would be required to provide
the SEC filing number.1
Finally, the Commission proposes to
make certain technical amendments to
modernize the information reported on
Form 13F, consistent with its existing
structured eXtensible Markup Language
(‘‘XML’’) format, and to modify the
standard applied to certain types of
requests to the Commission for
confidential treatment of Form 13F
information (‘‘Form 13F CTRs’’) to make
such standard consistent with a recent
U.S. Supreme Court decision.2
A. Overview of Section 13(f) and Rule
13f–1
Adopted in 1975 as part of the
Securities Acts Amendments of 1975
(‘‘1975 Amendments’’),3 section 13(f) of
1 The term ‘‘institutional investment manager’’
includes any person, other than a natural person,
investing in or buying and selling securities for its
own account, and any person exercising investment
discretion with respect to the account of any other
person. See section 13(f)(6)(A) of the Exchange Act
[15 U.S.C. 78m(f)(6)]. The term ‘‘person’’ includes
any natural person, company, government, or
political subdivision, agency, or instrumentality of
a government. See section 3(a)(9) of the Exchange
Act [15 U.S.C. 78c(a)(9)].
2 Food Marketing Institute v. Argus Leader Media,
139 S. Ct. 2356 (2019).
3 Public Law 94–29, 89 Stat. 97 (1975).
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the Exchange Act 4 requires a manager
to file a report with the Commission if
the manager exercises investment
discretion with respect to accounts
holding certain equity securities (‘‘13(f)
securities’’) 5 having an aggregate fair
market value on the last trading day of
any month of any calendar year of at
least $100 million.6 Rule 13f–1 requires
that managers file quarterly reports on
Form 13F if the accounts over which
they exercise investment discretion hold
an aggregate of more than $100 million
in 13(f) securities.7 The information
reported on Form 13F becomes publicly
available upon filing, unless the
manager has filed a Form 13F CTR.8 A
Form 13F CTR is confidential pending
review pursuant to 17 CFR 240.24b–2(c)
(‘‘rule 24b–2(c)’’). The staff of the
Division of Investment Management has
delegated authority from the
Commission to grant and deny Form
13F CTRs, and to revoke a grant of
confidential treatment for any Form 13F
CTR.9
Section 13(f) of the Exchange Act
gives the Commission broad rulemaking
authority to determine the size of the
institutions required to file reports, the
format and frequency of the reporting
requirements, and the information to be
4 15
U.S.C. 78m(f).
13f–1(c) under the Exchange Act defines
‘‘section 13(f) securities’’ to mean equity securities
of a class described in section 13(d)(1) of the
Exchange Act that are admitted to trading on a
national securities exchange or quoted on the
automated quotation system of a registered
securities association. The Commission is required
under section 13(f)(4) to publish a list of section
13(f) securities, which can be found at
www.sec.gov/divisions/investment/13flists.htm.
6 Section 13(f)(1) of the Exchange Act [15 U.S.C.
78m(f)(1)].
7 See General Instruction 3 of Form 13F. Form
13F requires managers to disclose, for example, the
name, Form 13F file number, and address of the
manager, and, for each security being reported, the
name of the issuer, title of class, CUSIP, market
value, amount and type of security, and whether the
manager has investment discretion and voting
authority for that security.
8 See Sections 13(f)(4) and (5) of the Exchange Act
and 17 CFR 240.24b–2 (‘‘rule 24b–2’’) under the
Exchange Act. A Form 13F CTR consists of two
parts: A written request letter (the ‘‘application,’’
per 17 CFR 240.24b–2(b)(2)) and a paper,
confidential Form 13F for the same calendar
quarter as the public Form 13F that includes only
the equity holding(s) for which confidential
treatment is being requested (the ‘‘confidential
portion,’’ per 17 CFR 240.24b–2(b)(1)). A Form 13F
CTR must be filed in paper with the Secretary of
the Commission. See 17 CFR 240.24b–2(b)(3). While
section 13(f)(4) of the Exchange Act gives the
Commission discretion to determine whether to
grant Form13F CTRs, section 13(f)(4) also prohibits
the Commission from publicly disclosing
information that identifies the securities held by the
account of a natural person, estate, or trust (other
than a business trust or investment company).
9 17 CFR 200.30–5(c–1) and (c–2).
5 Rule
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Federal Register / Vol. 85, No. 148 / Friday, July 31, 2020 / Proposed Rules
disclosed in each report.10 Section
13(f)(1) authorizes the Commission to
set the reporting threshold in an amount
‘‘of at least $100,000,000 or such lesser
amount’’ by rule.11 In addition, section
13(f)(3) authorizes the Commission to
exempt any manager or class of
managers from the reporting
requirements of section 13(f).12 The
1975 Amendments Senate Report stated
that the Commission would ‘‘have
authority to raise or lower’’ the
threshold.13 The 1975 Amendments
Senate Report also indicated that, in
setting the reporting threshold for Form
13F, the Commission should consider,
among other factors, the compliance
burdens of reporting and the marginal
informational value provided by the
disclosure.14 Additionally, in exercising
its authority under section 13(f), the
Commission is required to consult with
other agencies, including federal, state,
and self-regulatory organizations.15
In 1978, the Commission
implemented the reporting requirement
of section 13(f) by adopting rule 13f–1
10 15 U.S.C. 78m(f)(1); see also Filing and
Reporting Requirements Relating to Institutional
Investment Managers, Exchange Act Release No.
14852 (June 15, 1978) [43 FR 26700, 26701 (June
22, 1978)] (‘‘13F Adopting Release’’) at text
accompanying n.5.
11 However, the Commission does not have the
authority to lower the reporting threshold under
section 13(f)(1) to less than $10 million. See 15
U.S.C. 78m(f)(1).
12 15 U.S.C. 78m(f)(3).
13 See Securities Acts Amendments of 1975:
Hearings on S. 249 before a Subcomm. of the Senate
Comm. on Banking, Housing and Urban Affairs,
94th Cong., 1st Sess. (S. Report No. 94–75) (1975),
at 107 (‘‘1975 Amendments Senate Report’’).
14 Id. at 86 (stating that, in establishing a reporting
threshold, the Commission should ‘‘balance such
costs and burdens to the public interest that would
be served by the expected informational value of
the marginal equity securities holdings which
would then be subject to the reporting provisions’’).
15 15 U.S.C. 78m(f)(5). Specifically, the statute
requires the Commission to consult with the
Comptroller General of the United States, the
Director of the Office of Management and Budget,
national securities exchanges, registered securities
associations, and the appropriate regulatory
agencies, federal and state authorities which,
directly or indirectly, require reports from managers
of information substantially similar to that called
for by section 13(f). Section 3(a)(34)(F) defines
‘‘appropriate regulatory agency’’ for these purposes
as the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System, and the
Federal Deposit Insurance Corporation. 15 U.S.C.
78c(a)(34)(F) (defining ‘‘appropriate regulatory
agency’’ when used with respect to a person
exercising investment discretion over an account).
We will complete our consultation with these
agencies during the comment period of this
proposal in accordance with section 13(f)(5).
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and Form 13F.16 In designing Form 13F,
the Commission stated that it attempted
to structure the form in a manner that
would provide useful data regarding
holdings that would impact the markets,
while minimizing the form’s reporting
burdens.17 In 1999, the Commission
required electronic filing of public Form
13F reports through the Commission’s
Electronic Data Gathering, Analysis, and
Retrieval (‘‘EDGAR’’) system.18
B. Legislative History and Subsequent
Developments
Section 13(f) was added to the
Exchange Act following a study the
Commission conducted at Congress’s
direction, which concluded that there
were certain ‘‘gaps in information about
the purchase, sale and holdings of
securities by major classes of
institutional investors.’’ 19
The section 13(f) disclosure program
had three primary goals. First, to create
a central repository of historical and
current data about the investment
activities of institutional investment
managers. Second, to improve the body
of factual data available regarding the
holdings of institutional investment
managers and thus facilitate
consideration of the influence and
impact of institutional investment
managers on the securities markets and
the public policy implications of that
influence. Third, to increase investor
confidence in the integrity of the U.S.
securities markets.20
13F Adopting Release, supra footnote 10.
Reporting by Institutional Investment
Managers of Information with Respect to Accounts
over which Investment Discretion is Exercised,
Exchange Act Release No. 13396 (Mar. 22, 1977) [42
FR 16831, 16832 at n.7 (Mar. 30, 1977)]. See also
13F Adopting Release, supra footnote 10.
18 See Rulemaking for EDGAR System,
Investment Company Act Release No. 23640 (Jan.
12, 1999) [64 FR 2843 (Jan. 19, 1999)]. In 2013, the
Commission modernized the filing format of Form
13F by replacing the plain-text ASCII format with
a structured XML format and accompanying online
form, but did not make any substantive changes to
the Form. See Adoption of Updated EDGAR Filer
Manual, Investment Company Act Release No.
30515 (May 14, 2013) [78 FR 29616 (May 21, 2013)].
19 See 13F Adopting Release, supra footnote 10 at
n.3 and accompanying text.
20 See 13F Adopting Release, supra footnote 10 at
n.4 and accompanying text; see also Thomas P.
Lemke and Gerald T. Lins, Equity Holdings by
Institutional Investment Manager: An Analysis of
Section 13(f) of the Securities Exchange Act of 1934,
43 Bus. Law 93, 94 n.7 (Nov. 1987); Office of the
Inspector General, Review of the SEC’s 13(f)
Reporting Requirements (Sept. 27, 2010), available
at https://www.sec.gov/about/offices/oig/reports/
audits/2010/480.pdf (‘‘OIG Report’’).
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16 See
17 See
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Legislative history indicates that the
reporting threshold of section 13(f) was
designed so that reporting would cover
a large proportion of managed assets,
while minimizing the number of
reporting persons. The $100 million
threshold that was adopted thereby
limited the burdens of reporting,
particularly on smaller managers. The
1975 Amendments Senate Report noted
that, at the time of the section’s
adoption, approximately 300 persons—
holding about 75 percent of the dollar
value of all institutional equity security
holdings—would be subject to the
reporting requirements.21 The 1975
Amendments Senate Report reasoned
that, by setting the threshold at $100
million, the burdens associated with
filing Form 13F would be limited to
‘‘the largest institutional investment
managers’’ and, therefore, the new filing
requirements could be ‘‘implemented
rapidly with the least amount of
unnecessary costs and burdens on the
potential respondents.’’ 22
Since 1975, the relative significance
of managing $100 million in securities
as compared with the overall size of the
U.S. equities market has declined
considerably. More managers have
become subject to the Form 13F
reporting obligation, even though $100
million represents a much smaller
fraction of the U.S. equities market,
which has grown substantially in
aggregate size. Figure 1 shows the rise
in the number of managers that file
Form 13F over time.23
21 The 1975 Amendments Senate Report
indicated that section 13(f) would increase public
availability of information regarding the securities
holdings of institutional investment managers. See
supra footnote 13, at 85.
22 1975 Amendments Senate Report, supra
footnote 13, at 87.
23 Data presented after 1999 only includes
managers that file Form 13F holdings and
combination reports (together, ‘‘Form 13F–HR’’)
under rule 13f–1. In some instances, two or more
managers may exercise investment discretion with
respect to the same securities. In these cases,
subject to certain conditions, Form 13F permits one
such institutional manager to report those securities
on behalf of the other(s). A manager on whose
behalf securities are reported, generally, must file
an abbreviated ‘‘notice’’ report on Form 13F to
identify the manager(s) reporting on its behalf
(‘‘Form 13F–NT’’). See General Instruction 2 to
Form 13F (requiring that, where two managers
exercise investment discretion with respect to the
same securities, only one such manager include
information regarding those securities in its Form
13F report).
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resulting decrease in the market
significance of managing $100 million
in securities as compared with the
overall size of the market.
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EP31JY20.026</GPH>
Figure 2 shows the significant
increase in the overall size of the U.S.
equities market over time and the
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Today, 5,089 managers that exceed
the $100 million threshold file Form
13F holding reports.24 This is
approximately 17 times the number of
filers that the threshold covered in 1975.
The 1975 Amendments Senate Report
anticipated that the Commission would
consider the costs and burdens on
smaller institutional investment
managers in preparing Form 13F
reports.25 Given the significant increase
in the number of managers required to
file 13F reports over the last two
decades, and the substantial reduction
in the significance of holdings of $100
million, we believe it is an appropriate
time to adjust the reporting threshold.
II. Discussion and Economic Analysis
A. Increase of Form 13F Reporting
Threshold
We are proposing to amend rule 13f–
1 and Form 13F to raise the reporting
threshold for Form 13F to $3.5 billion.26
This adjustment is based on the growth
of the U.S. equities market that occurred
between the adoption of section 13(f) in
1975 and December 2018, and it is
designed to reflect proportionally the
same market value of U.S. equities that
$100 million represented in 1975.27
We have received recommendations
from persons representing a variety of
different perspectives to increase the
reporting threshold for Form 13F.28 For
24 See
infra footnote 40 (noting that an additional
1,570 managers filed a notice report on Form 13F–
NT for December 31, 2018).
25 See 1975 Amendments Senate Report, supra
footnote 13 (noting that the Commission
represented to the Senate that, before it reduced the
13(f) reporting threshold, it would consider the cost
and burden to such smaller managers of preparing
such reports).
26 For purposes of determining whether a
manager is required to file Form 13F, the new
reporting threshold would be evaluated for all
months of the calendar year in which the adoption
of the new reporting threshold occurs. Thus, if the
Commission were to adopt an increased reporting
threshold in 2020, the increased threshold would be
used to determine Form 13F filing obligations for
the cycle starting with the year ending December
31, 2020. The first Form 13F report that would
apply the new reporting threshold would be due
within 45 days after the end of such calendar year.
27 Proposed rule 13f–1(a)(1); see also proposed
General Instruction 1 of Form 13F. We calculated
the growth of the U.S. equities market from 1975
until 2018 using statistical data provided by the
Federal Reserve System. See Federal Reserve Board,
Flow of Funds Chart L.223 for domestic corporate
equities, available at https://
www.federalreserve.gov/releases/z1/current/
default.htm (‘‘Federal Reserve Data’’). The ratio of
U.S. equities market value in 2018 to U.S. equities
market value in 1975 is 3,571.41 percent. We
multiplied that ratio by $100 million and rounded
to the nearest $500 million, which resulted in a
dollar value of $3.5 billion. Because the proposed
reporting threshold is a figure in the billions, we
believe that rounding to the nearest $500 million is
appropriate.
28 The Commission has also received petitions for
rulemakings regarding other aspects of Form 13F.
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example, in response to our rulemaking
on shareholder reports and quarterly
portfolio disclosure of mutual funds,
two commenters in a joint letter
suggested that the 13(f) reporting
threshold should be raised to reflect the
‘‘effects of market inflation.’’ 29 The
Commission’s Office of Inspector
General recommended that the staff
update its analysis of the impact of
increasing the reporting threshold of
$100 million for section 13(f) in order to
determine whether an increase in the
threshold amount should be pursued.30
Another commenter called for
legislation that would increase the
reporting threshold to $450 million to
reflect a consumer price index (‘‘CPI’’)
adjustment from 1976 to 2019, with an
adjustment every five years thereafter to
reflect changes in the CPI, to ease the
reporting burden on smaller investors.31
We believe that increasing the
reporting threshold would provide
meaningful regulatory relief for smaller
managers that manage less than $3.5
billion in 13(f) assets and would no
longer have to file the form in terms of
a reduction in direct compliance costs
and indirect costs. We believe that some
of the direct compliance costs
associated with preparing filings on
Form 13F have decreased since 1975,
principally due to lower-cost
We believe that it is appropriate to propose changes
to the scope of managers required to file reports on
Form 13F before considering other potential
amendments to the Form. See Petition for
Rulemaking Under Section 13(f) of the Securities
Exchange Act of 1934 (Feb. 1, 2013), available at
https://www.sec.gov/rules/petitions/2013/petn4659.pdf (requesting that the Commission amend
rule 13f–1(a)(1) to shorten the 45-day delay in Form
13F’s reporting deadline); see also Petition for
Rulemaking Pursuant to Sections 10 and 13(f) of the
Securities Exchange Act of 1934 (October 7, 2015),
available at https://www.sec.gov/rules/petitions/
2015/petn4-689.pdf (requesting that the
Commission consider requiring periodic public
disclosure of short-sale activities of managers on
Form 13F).
29 See letter from Fund Democracy and Consumer
Federation of America, File No. S7–51–02 (Feb. 14,
2003). The commenters noted that ‘‘[t]he $100
million threshold was based on the impact that
such a portfolio could have on the market at the
time that Section 13(f) was adopted. If the same
standard were applied today, the threshold would
exceed $1 billion dollars. The $100 million
threshold no longer accomplishes the stated
purpose of Form 13F disclosure.’’
30 See OIG Report, supra footnote 20, at 27. The
OIG Report noted that, in 2006, the staff performed
an analysis of increasing the Form 13F reporting
threshold to $300 million, which reflected inflation
using the consumer price index, and staff
concluded that such an adjustment to the threshold
would result in a significant decrease in the number
of institutional investment managers that would be
required to file Form 13F, with only a relatively
modest decrease in the total dollar amount of assets
covered.
31 See National Investor Relations Institute, The
Case for 13F Reform (Sept. 25, 2019), available at
https://www.niri.org/NIRI/media/NIRI/Advocacy/
NIRI-Case-for-13F-Reform-2019-final.pdf.
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information processing systems.
However, we believe that direct
compliance costs are likely to be
proportionately higher for smaller
managers than they are for larger
managers.32 For example, in connection
with staff outreach to advisers to smaller
fund complexes, these advisers stated
that reporting on Form 13F involves
significant compliance burdens. Other
indirect costs also may have increased
since 1975, especially for smaller
managers. For example, public reports
of smaller managers, as compared with
larger managers, may be more likely to
reflect a limited number of separately
managed portfolios that follow the same
style or reflect the investment behavior
of a single portfolio manager.33
Consequently, Form 13F data of smaller
managers may be more likely to be used
by other market participants to engage
in behavior that is damaging to the
manager and the beneficial owners of
the managed portfolio, such as front
running (which primarily harms the
beneficial owners) or copycatting
(which potentially harms the portfolio
manager), which may increase the costs
of investing for smaller managers and
hinder their investment performance.34
Smaller managers also account for a
significant proportion of the Form 13F
CTRs filed with the Commission.
Managers with less than $3.5 billion of
13(f) securities manage 9.2 percent of
the dollar value of all reported
securities, yet our staff estimates that
those smaller managers submit
approximately three-fourths of all the
Form 13F CTRs filed (see Table 1).
Additionally, smaller managers may
have limited resources, which might
32 See infra discussion accompanying and
following footnote 43 (discussing the direct
compliance costs and indirect costs associated with
Form 13F); see also Section III below for a
discussion of estimated information collection
burdens associated with Form 13F under the
Paperwork Reduction Act.
33 See Marshall E. Blume and Donald B. Keim,
The Changing Nature of Institutional Stock
Investing, 6 Critical Fin. Rev. 1 (2017) (‘‘Blume and
Keim’’) at 3–4.
34 See e.g., Susan E.K. Christoffersen, Erfan
Danesh, and David Musto, Why Do Institutions
Delay Their Shareholdings? Evidence from Form
13F, (Working Paper, June 11, 2018)
(‘‘Chistoffersen, Danesh and Musto’’), available at
https://www.bwl.uni-mannheim.de/media/
Lehrstuehle/bwl/Area_Finance/Finance_Area_
Seminar/HWS2018/Christoffersen_Paper.pdf
(explaining that a frontrunner is one who trades ‘‘in
front of an expected trade by another investor,
thereby making the same trade on the terms the
other investor would otherwise have got.’’); see also
Mary Margaret Frank, et al., Copycat Funds:
Information Disclosure Regulation and the Returns
to Active Management in the Mutual Fund Industry,
47 J.L. & Econ. 515 (2004) (‘‘Frank et al. 2004’’)
(explaining that copycat funds ‘‘purchase the same
assets as actively-managed funds as soon as those
asset holdings are disclosed.’’).
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make it difficult for them to file Form
13F CTRs in order to protect their
holdings information from harmful
behaviors and the costs of those
behaviors.
Our staff regularly receives inquiries
and requests for assistance from
managers regarding compliance with the
Form 13F reporting obligations. Smaller
managers make many of the requests. In
addition to relieving smaller managers
from the compliance burdens associated
with filing Form 13F (and Form 13F
CTRs), our proposal would also reduce
the costs to the Commission associated
with administering the regulatory
program for Form 13F by reducing the
number of inquiries and requests for
assistance the staff receives and the
associated time needed for staff review.
We considered various approaches to
adjusting the reporting threshold,
including the use of:
• Stock Market Growth: Using the
growth in value of U.S. public corporate
equities from 1975 until 2018 as the
basis for calculating the threshold
increase, the threshold would be $3.57
billion.35
• Consumer Price Inflation: We
evaluated two potential consumer price
inflation calculations:
Æ Using the Personal Consumption
Expenditures Price Index (‘‘PCE’’)
46021
inflation standard through 2018, the
threshold would be $358 million.36
Æ Using the CPI inflation standard
through 2018, the threshold would be
$453 million.37
• Stock Market Returns: Using the
total return of the stock market from the
end of December 1975 to the end of
December 2018 as the basis for
calculating the threshold increase, the
threshold would be $9.33 billion.38
Table 1 demonstrates how changing
the reporting threshold for section 13(f)
would affect the number of filers at
different threshold amounts and the
aggregate holdings reported by such
filers.39
TABLE 1—FORM 13F REPORTING THRESHOLD CHANGES
[13F Holdings Filings as of December 31, 2018 40]
Total Number of Holdings Filers: 5,089
Total Reported Assets (billions): $25,198
Number of
filers above
threshold
Threshold
≥$100 billion .........................................................................
≥$30 billion ...........................................................................
≥$25 billion ...........................................................................
≥$10 billion ...........................................................................
≥$5 billion .............................................................................
≥$4.5 billion ..........................................................................
≥$4 billion .............................................................................
≥$3.5 billion ..........................................................................
≥$3 billion .............................................................................
≥$2.5 billion ..........................................................................
≥$2 billion .............................................................................
≥$1.5 billion ..........................................................................
≥$1 billion .............................................................................
≥$900 million ........................................................................
≥$800 million ........................................................................
≥$700 million ........................................................................
≥$600 million ........................................................................
≥$500 million ........................................................................
≥$400 million ........................................................................
≥$300 million ........................................................................
≥$200 million ........................................................................
≥$100 million ........................................................................
Number of
filers below
threshold
37
114
122
278
441
467
500
550
597
672
790
955
1,227
1,301
1,407
1,532
1,710
1,904
2,188
2,543
3,148
5,089
Percent of
filers below
threshold
5,052
4,975
4,967
4,811
4,648
4,622
4,589
4,539
4,492
4,417
4,299
4,134
3,862
3,788
3,682
3,557
3,379
3,185
2,901
2,546
1,941
0
99.3
97.8
97.6
94.5
91.3
90.8
90.2
89.2
88.3
86.8
84.5
81.2
75.9
74.4
72.4
69.9
66.4
62.6
57.0
50.0
38.1
0.0
Aggregate
assets of
filers above
threshold
(billions)
14,286
18,605
18,824
21,261
22,427
22,550
22,688
22,876
23,027
23,233
23,494
23,780
24,113
24,183
24,273
24,366
24,481
24,588
24,716
24,838
24,985
25,198
Percent of
the dollar
value of all
reported
assets
56.7
73.8
74.7
84.4
89.0
89.5
90.0
90.8
91.4
92.2
93.2
94.4
95.7
96.0
96.3
96.7
97.2
97.6
98.1
98.6
99.2
100.0
We considered raising the threshold
to account for consumer price inflation,
rather than market growth. However, we
preliminarily determined that the group
of managers covered by using a market
growth standard better reflects the group
of managers intended to be subject to
reporting under section 13(f) because
this approach focuses on managers
whose holdings of section 13(f)
securities are large relative to the overall
35 Based on the Federal Reserve Data, supra
footnote 27.
36 Based on the Personal Consumption
Expenditures Chain-Type Price Index, published by
the U.S. Department of Commerce.
37 Based on the Consumer Price Index for All
Urban Consumers, published by the Bureau of
Labor Statistics of the U.S. Department of Labor.
38 We assembled monthly value-weighted market
returns with dividends reinvested from the Center
for Research in Security Prices. We compounded
these returns from January 1976 to December 2018,
and we multiplied that product by $0.100 billion,
which resulted in $9.33 billion.
39 The staff compiled this data by reviewing
filings made on Form 13F during the relevant
period. The data excludes securities reported as
options on Form 13F. The staff has adjusted the
reported data to account for what appeared to be
erroneously reported information, such as data that
is reported in the wrong units.
40 This data covers Form 13F–HR, but excludes
Form 13F–NT. An additional 1,570 managers filed
a Form 13F–NT for December 31, 2018. Using this
data, we cannot determine precisely how many of
these additional 1,570 managers would no longer
need to file Form 13F–NT if the reporting threshold
is increased. Therefore, if a Form 13F–NT filer is
linked to a Form 13–HR filing of a manager that
exceeds the 3.5 billion threshold, we assumed that
such a manager would be required to file Form
13F–NT if the reporting threshold is increased as
proposed. Therefore, we estimate that 738 notice
reports would be filed on Form 13F–NT if the
proposed threshold increase is adopted.
Certain aspects of the Form 13F reporting
structure make it difficult to pinpoint the exact
value of reported holdings for an individual
manager. The staff analysis excludes holdings
reported as options. In addition, not all holdings
may be reported due to Form 13F CTRs and
managers may omit a holding if they hold fewer
than 10,000 shares and less than $200,000 in
aggregate fair market value. Therefore, the actual
number of Form 13F filers above the threshold, the
aggregate assets of filers above the threshold, and
the percentage of all assets may be higher.
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size of the U.S. equities market.41
Raising the reporting threshold for rule
13f–1 to $3.5 billion, which would
account for the growth in the U.S.
equities market since 1975, would retain
disclosure of 90.8 percent of the dollar
value of the Form 13F holdings data
currently reported while relieving the
reporting burdens from approximately
4,500 Form 13F filers, or approximately
89.2 percent of all current filers.42
Managers incur direct compliance
costs, including information collection
costs,43 associated with Form 13F.
These costs include the following: (1)
Developing and maintaining internal
hardware and software systems to
collect and analyze the information for
submission; 44 (2) utilizing internal and
external legal and compliance resources
for advice and review in connection
with Form 13F filings and to analyze
whether any holdings qualify for
confidential treatment and, if so, to
prepare and submit a request for
confidential treatment; (3) preparing the
information for submission to the
EDGAR system; and (4) undertaking
other reviews or compliance activities
as part of the manager’s overall
compliance program, such as
comparisons of the data reported on
Form 13F against other regulatory
filings that may have similar data
reporting obligations to confirm that
information is reported consistently
across multiple regulatory filings, as
applicable.
Based on staff analysis and outreach
to managers, we estimate that, for the
smaller managers that would no longer
file reports on Form 13F under the
proposal, these direct compliance costs
could range from $15,000 to $30,000
annually per manager, depending on the
complexity and volume of holdings, the
type of third-party legal and compliance
review undertaken prior to the filing,
and a filer’s experience with filing Form
13F, among other factors. Therefore, we
estimate that the direct compliance cost
savings for these managers per year
would range from $68.1 million to $136
41 See supra footnote 22 and accompanying text
(noting that the 1975 Amendments Senate Report
stated that the Form 13F reporting threshold was
designed to limit the form’s filing obligations to
‘‘the largest institutional investment managers’’).
42 Since December 31, 2018, there have been
significant fluctuations in the market that may
impact our analysis.
43 See Section III below for a discussion of
estimated information collection costs associated
with Form 13F under the Paperwork Reduction Act.
44 We believe that funds generally do not
maintain dedicated hardware systems for the sole
purpose of filing Form 13F. Our cost estimates
therefore are intended to take into account only the
partial cost of those systems attributable to filing
Form 13F.
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million.45 We believe that larger
managers that would continue to be
required to file reports on Form 13F
under the proposal incur higher direct
compliance costs, on a per manager
basis, than the smaller managers.
In addition to these direct compliance
costs, managers face indirect costs such
as the potential for front-running and
copycatting. The key determinant of
these indirect costs is whether the
disclosure of holdings information
enables other market participants to take
actions that harm either the beneficial
owners of the fund or its manager.
The academic literature provides
partial evidence about the harm caused
by the actions of third parties that is
applicable in the context of the
proposed amendments. For example,
several studies show that managers use
confidential treatment requests to delay
reporting stocks on Form 13F that have
higher future returns than their other
stocks, but these studies do not directly
verify that the delayed stocks do not
continue to have high future returns
after the end of the confidential
treatment period.46 Other researchers
show that managers who are more likely
to face front-running costs choose to file
at the end of the 45-day filing window,
but they do not show whether or to
what extent the delay to the end of the
filing window eliminates the potential
front-running costs.47 Many studies test
for copycatting profits by simulating
funds that copy reported 13F portfolios,
and the studies generally find that some
copycat funds can match the
performance of the copied funds,
although they do not directly test
whether this behavior harms managers
or beneficial owners of the copied
funds.48 In addition, one study
examines hedge funds around the time
45 These estimates are based on the following
calculations: 4,539 filers × $15,000 = $68,085,000;
4,539 filers × $30,000 = $136,170,000. This is based
on our estimate that 4,539 managers would no
longer be required to file reports on Form 13F–HR
under the proposal. These estimates do not include
direct compliance costs for managers filing notice
reports on Form 13F–NT. The information
collection burdens associated with these filings are
included in the estimates discussed below in
Section III.
46 See George O. Aragon, Michael Herzel, and
Zhen Shi, Why Do Hedge Funds Avoid Disclosure?
Evidence from Confidential 13F Filings, 48 J. Fin.
& Quantitative Analysis, 1499 (Oct. 2013); see also
Agarwal Vikas, Wei Jiang, Yuehua Tang, and
Baozhong Yang, Uncovering Hedge Fund Skill from
the Portfolio Holdings They Hide, 68 J. Fin. 739
(2013).
47 See Chistoffersen, Danesh and Musto, supra
footnote 34 at 23.
48 See Frank et al. 2004, supra note 34; see also
Marno Verbeek and Yu Wangb, Better than the
Original? The Relative Success of Copycat Funds,
37 J. Banking & Fin. 3454 (2013); see also
Chistoffersen, Danesh and Musto, supra footnote
34.
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they begin filing Form 13F. The study
suggests that hedge funds experience
decreased performance after Form 13F
disclosure, and it reports that this drop
in performance may be ‘‘due to the
revelation of trade secrets and freeriding activities.’’ 49
Under the proposed amendments, the
aggregate value of section 13(f)
securities reported by managers would
represent approximately 75 percent of
the U.S. equities market as a whole, as
compared with 83 percent without the
proposed amendments and 40 percent
in 1981, the earliest year for which
Form 13F data is available.50 The
proposed amendments to the Form 13F
reporting threshold thus also reflect the
changes in the structure of the market
that have occurred over time.
Using CPI or PCE would result in a
reporting threshold of $500 million and
$400 million, respectively (applying a
rounding convention to the nearest $100
million). The decrease in the dollar
value of the reported holdings would be
either about 2.4 percent or 1.9 percent,
and the decrease in the number of
current filers would be about 3,200 or
2,900, respectively. In the years since
1975, the overall size of the U.S.
equities market has grown at a rate
significantly higher than the CPI or PCE.
The legislative history indicates that the
reporting threshold of section 13(f) was
designed to focus on larger managers.
We therefore believe that relying on a
consumer price inflation measure such
as CPI or PCE to account for 45 years of
market growth would not adequately or
appropriately capture the holdings and
universe of managers contemplated by
section 13(f).
Using stock market returns from
December 1975 to December 2018,
rather than market growth, would result
in a reporting threshold of $9.5 billion,
rounded to the nearest $500 million.
The decrease in the dollar value of the
reported holdings would be about 15.2
percent and the decrease in the number
of current filers would be about 4,800.
We believe that section 13(f) was
49 See Shi, Zhen, The Impact of Portfolio
Disclosure on Hedge Fund Performance (2017) the
Journal of Financial Economics, Vol. 126, at 38
(‘‘Shi (2017)’’) (finding (a) an annual reduction of
certain hedge funds’ performance after they begin
filing Form 13F, (b) that ‘‘the return correlations
between disclosing funds and other hedge funds
that are in the same investment style increase after
the disclosure,’’ and (c) that ‘‘the negative effect of
disclosure is concentrated among funds that hold
more illiquid stocks, have lower turnover rates,
have greater portfolio concentration, are in more
competitive investment styles, have performed well
in the past, employ less conventional trading
strategies, or belong to an asset management
company with a smaller number of funds’’).
50 This data is based on the staff’s review of data
reporting on Form 13F and Federal Reserve Data.
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intended to provide transparency into a
certain segment of the securities
markets—the equity holdings by larger
institutional investment managers.
Therefore, we believe that it is more
appropriate to increase the reporting
threshold based on the growth of the
U.S. equities market rather than the
returns generated by the stock market.
Our preliminary decision to use market
growth to adjust the reporting threshold
is designed to require managers to file
on Form 13F when their holdings of
section 13(f) securities approximate the
same percentage of the U.S. equities
market that was represented by the $100
million threshold in 1975. If we were to
use stock market returns instead,
however, the holdings of individual
managers required to report under this
threshold would not approximate the
same percentage of the U.S. equities
market that was represented by the $100
million threshold in 1975.
We have considered the potential
effects of the reduction in Form 13F
data received from smaller managers,
and we understand that the information
reported on Form 13F currently is used
for a wide variety of purposes. Since
Form 13F data became publicly
available, different uses for the data
have developed. These uses developed,
in part, due to the increased volume of
Form 13F data as more and more
managers became subject to the filing
requirement. While Form 13F was
originally designed to assist regulators
and the public in understanding the
effects of institutional equity ownership
on the markets, the pool of users of the
data has expanded to include
academics, market researchers, the
media, attorneys pursuing private
securities class-action matters, and
market participants (including
institutional investors themselves) who
use the data to enhance their ability to
compete.51 The data can also assist
individuals in making investment
decisions, investment managers in
51 Commission staff has noted that ‘‘meritorious
private actions have long been recognized as an
important supplement to civil and criminal lawenforcement actions.’’ See Study on the CrossBorder Scope of the Private Right of Action under
Section 10(b) of the Securities Exchange Act of
1934, available at https://www.sec.gov/news/
studies/2012/929y-study-cross-border-privaterights.pdf. Some of those private actions use Form
13F data in their calculations to produce a more
reliable, ‘lower bound’ estimate of damages. See
Marcia Mayer, Best-Fit Estimation Of Damaged
Volume in Shareholder Class Actions: The MultiSector, Multi-Trader Model of Investor Behavior,
Nat’l Economic Research Assoc. (Oct. 2006); Daniel
Fishel et al., The Use of Trading Models to Estimate
Aggregate Damages in Securities Fraud Litigation:
An Update, 10(3) Briefly (Washington, D.C.) 1
(2006). As a result, a reduction in publicly available
Form 13F data may result in increased use of other
methods to estimate shareholder harm.
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managing assets, and corporate issuers
of 13(f) securities interested in
determining the beneficial holders of
their publicly traded stock.52
Commission staff also uses Form 13F
information for a variety of purposes,
some of which were specifically
identified in the legislative history of
section 13(f), while others were not.
Since section 13(f) was adopted in 1975,
data available to the Commission about
the investment activities of institutional
investment managers has been greatly
expanded and includes data from
sources other than Form 13F, such as
Form N–PORT. Commission staff
currently uses Form 13F and other data
regarding the investment activities of
institutional investment managers in
rulemakings, to support the
Commission’s examination and
enforcement programs, and to conduct
research. For example, Commission staff
may use investor information from Form
13F on a relatively infrequent basis in
estimating shareholder harm as well as
shareholder turnover, which may be
considered in the context of potential
corporate penalties, including in
determining whether proposed penalties
would cause further harm to
shareholders who suffered losses as a
result of the violation. Commission staff
typically will have access to additional
data sources for these estimates,
including Form N–PORT, and the
Commission generally does not expect
the proposed amendments to the Form
13F reporting thresholds to impact the
staff’s recommendations regarding the
imposition or amounts of corporate
penalties.
We recognize that raising the Form
13F reporting threshold would decrease
holdings data available to the
Commission and other regulators as
well as corporate issuers, market
participants, and other analysts and
researchers pursuant to section 13(f).53
Although we believe the proposal
would retain disclosure of 90.8 percent
of the dollar value of the Form 13F
holdings data, some of the holdings data
that would no longer be reported by
managers with less than $3.5 billion in
section 13(f) securities relates to smaller
portfolio companies in which some
commenters assert larger managers may
be less likely to invest.54 We estimate
52 See generally Edward Pekarek, Hogging the
Hedge? ‘‘Bulldog’s’’ 13F Theory May Not be So
Lucky, 12 Fordham J. Corp. & Fin. Law 1079 (2007)
(‘‘Pekarek’’).
53 See infra footnote 58 and accompanying text.
54 See e.g., Blume and Keim supra footnote 33 at
16 (providing evidence that portfolios of smaller
institutional investors are weighted more heavily
towards smaller stocks compared to portfolios of
larger institutional investors, but noting that both
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46023
that, under the proposal, holdings data
for approximately 95.7 percent of
portfolio companies that are currently
reported by more than one manager on
Form 13F would continue to be reported
on the form.55 Whether any of these
Form 13F data users find the data from
smaller managers to be valuable would
depend on their particular use of this
data.56 We believe that the investing
public specifically would be less
concerned about the availability of
portfolio holdings of these smaller
managers because the activities of these
smaller managers are not likely to cause
market effects of the type contemplated
by section 13(f).57
When examining the effects on data
availability of the proposed amounts,
we are mindful of alternative sources of
holdings data that either exist or are
being developed and may provide
overlapping or similar data to that
included on Form 13F. For example,
since the adoption of section 13(f), the
Commission has adopted additional
rules and forms that require investment
companies to provide additional
holdings data to the Commission, which
would provide the Commission and the
public with certain information about
these funds’ holdings of section 13(f)
securities and other investments.58 As
large and small institutional investors overweight
investments in smaller stocks relative to market
weights).
55 We believe that data regarding portfolio
companies held by just a single manager would
generally be of limited value to many users of Form
13F data. This is because a smaller sample size
provides less information about the population and,
in particular, a sample size of one provides no basis
for an estimate of variance. However, if we also
counted portfolio companies that are currently held
by just a single manager on Form 13F, together with
portfolio companies that are currently held by more
than one manager, we estimate that, under the
proposal, holdings data for approximately 87.2
percent of portfolio companies would continue to
be reported.
56 See e.g., Blume and Keim, supra footnote 33
(observing that, because the $100 million reporting
threshold has not changed over several decades,
whereas stock market capitalization has increased
significantly, the holdings of smaller managers
make up only 6.1 percent of the aggregate
institutional portfolio in 2010 and do not affect the
main results of their analysis about the trends of
institutional ownership).
57 In addition, to the extent that a manager
(individually or collectively with other members of
a group) acquires more than 5 percent of any voting
class of a company’s equity securities registered
under section 12 of the Exchange Act, the manager
would be required to report such an acquisition,
along with other information, on Schedule 13D
within 10 days of the purchase. Depending on the
circumstances, the manager may be eligible to file
the more abbreviated Schedule 13G in lieu of filing
Schedule 13D.
58 See e.g., Form N–PORT [referenced in 17 CFR
274.150] (This form requires each registered
management investment company to report on a
quarterly basis its monthly holdings information to
the Commission. On a quarterly basis, and with a
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another example, the Commission
adopted a rule to require the selfregulatory organizations to submit to the
Commission a national market system
plan to create, implement and maintain
a comprehensive consolidated audit
trail that would allow regulators to track
all activity throughout the U.S. markets
in National Market System securities
efficiently and accurately.59
The 1975 Amendments Senate Report
noted that Congress was concerned with
the material increase in the
concentration of institutional ownership
of securities with managers and the
effect of such an increase on the trade
prices of those securities, the issuers of
the securities, as well as on the interests
of individual investors.60 Congress
adopted section 13(f), in part, because it
was concerned that this increase in
concentration, coupled with the lack of
trading data of larger managers available
to regulators and the market, hampered
the Commission’s ability to maintain
fair and orderly securities markets and
impaired the stability of stock prices.61
We believe that it is necessary to
continue to provide regulators and the
public information regarding the
equities holdings of larger managers that
have the potential to significantly affect
the securities markets. The need for
public disclosure of holdings of smaller
managers is less compelling. Raising the
reporting threshold to $3.5 billion is
designed to recalibrate the reporting
threshold to reflect the multiple
objectives of section 13(f). These
include providing the Commission,
other regulators and the public with
holdings information of larger managers
that may impact the markets without
requiring smaller managers to incur the
costs associated with filing reports on
Form 13F and subjecting them to the
risks of potentially harmful investment
behaviors resulting from those filing
obligations. We believe that the
proposed $3.5 billion reporting
threshold recalibrates the reporting
threshold appropriately so that it does
not impose undue burdens, including
because the dollar value of the aggregate
holdings of the smaller managers that
would no longer be required to file
60-day delay, holdings information for the last
month of the quarter is made publicly available).
Additionally, developments in the market such as
the increased use of technology to capture current
data with respect to market activity, including more
sophisticated systems for following daily
transactions, have reduced the need for the
Commission to rely on Form 13F for purposes of
market analysis or surveillance.
59 See Securities Exchange Act Release No. 67457
(July 18, 2012), [77 FR 45722 (August 1, 2012)].
60 See 1975 Amendments Senate Report, supra
footnote 13 at 82.
61 Id.
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reports on Form 13F under the proposal
represent a small percentage of 13(f)
securities overall.
We request comment on the proposed
amendments to rule 13f–1 and Form
13F to adjust the reporting threshold.
1. Should we, as proposed, adopt an
amendment to rule 13f–1 that would
initially adjust the reporting threshold
under rule 13f–1? Is the proposed
threshold of $3.5 billion appropriate? If
another threshold would be more
appropriate, what should the threshold
be and why?
2. Would raising the reporting
threshold for Form 13F to $3.5 billion
negatively affect the utility of Form 13(f)
data or investor confidence in the
integrity of the U.S. markets? If so, how?
And if so, is there a different threshold
that would be more appropriate? Are
there any additional effects of raising
the Form 13F reporting threshold that
we have not considered?
3. Should we, as proposed, adopt an
amendment to rule 13f–1 that would
initially adjust the Form 13F reporting
threshold based on the growth in the
U.S. equities market? Should we, as
described above, use the Federal
Reserve Board’s flow of funds data on
corporate equities as a basis for this
calculation?
4. Rather than adjusting the Form 13F
reporting threshold based on the growth
in the U.S. equities market that occurred
between 1975 and December 2018 (a
date certain), should we instead use an
average rate of growth, which might
effectively reflect market growth while
minimizing the effects of market
fluctuations around the time the
Commission is adjusting the threshold?
For example, under this approach, we
could take the market size as of the end
of 2015, 2016, 2017, 2018, and 2019,
average those values, and compare that
average to the size of the U.S. equities
market in 1975. If so, why? Is such a
five-year period (or other period) more
appropriate for calculating an average
growth rate to apply over the 45 years
since the threshold was initially set?
5. Should we instead adjust the
reporting threshold for Form 13F using
stock market returns as a basis for this
calculation? If so, how should we
measure stock market returns? For
example, would dividends be included
or excluded? Is there another measure
that we should use as a basis for
initially adjusting the reporting
threshold?
6. Should we instead adjust the
reporting threshold for Form 13F to
account for consumer price inflation? If
so, what measure of consumer price
inflation—PCE or CPI—should we use?
Is there another measure of consumer
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price inflation (or other inflation
measure) that we should use? If so,
what?
7. Should we adopt a different
rounding convention, rather than the
nearest $500 million, such as the nearest
$1 billion, $250 million, or $100
million? For example, if we rounded to
the nearest $100 million, the reporting
threshold would be $3.6 billion based
on stock market growth. If we should
use a different rounding convention,
why?
8. Are the Form 13F filing obligations
burdensome to smaller managers? If so,
how? Are they burdensome in absolute
terms, relative terms, or both? Are the
burdens on smaller managers different
in character from the burdens on larger
managers?
9. What, if any, are the benefits to
investors and markets for the markets to
have access to Form 13F data from
smaller managers? Do these benefits
justify the filing burdens? If so, why?
10. Are the Form 13F filing
obligations burdensome to larger
managers? If so, how? Is it beneficial to
the markets to continue to have access
to Form 13F data from larger managers?
If so, why? Do these benefits justify the
filing burdens? If so, why?
11. Who uses Form 13F data? Are
these uses beneficial to investors,
market integrity, or capital formation?
Why or why not? How will these users
of the data be affected if the reporting
threshold is increased and fewer filers
report? Do those users prefer a different
threshold? Why or why not? Can those
users reasonably find alternative sources
of data that meet their needs? Why or
why not?
12. We estimate above direct
compliance costs that smaller managers
incur in connection with Form 13F. Are
these estimates accurate? What kinds of
costs, and in what amounts, do smaller
managers incur in connection with
Form 13F? How do the costs differ for
larger and smaller managers? How much
internal time do managers devote to
compliance with Form 13F? What are
the external costs, such as the cost of a
third-party vendor or external legal
counsel, associated with complying
with Form 13F? We request comment on
the direct compliance costs managers
experience in connection with Form
13F, including the estimates in Section
III below, and how these costs vary
among managers.
13. We also request comment on
indirect costs that may be incurred in
connection with Form 13F. We discuss
above some of these indirect costs, such
as the potential for front-running and
copycatting. Do commenters agree that
these indirect costs are incurred? How
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do these indirect costs differ for larger
and smaller managers? Are there other
or different indirect costs that are
incurred in connection with Form 13F?
What are those and how would they be
affected by the proposed amendments?
B. Future Analysis
We are proposing an increase in the
reporting threshold of Form 13F to
account for the change in size and
structure of the U.S. equities market
since 1975. However, we recognize that,
as the U.S. equities market continues to
change in the future, Form 13F’s
reporting threshold, once again, may
become significantly misaligned with
the size and structure of the market and,
as a result, place unnecessary reporting
burdens on certain managers. Therefore,
the staff will conduct reviews of the
Form 13F reporting threshold every five
years to determine whether the
reporting threshold continues to be
appropriate. If, as a result of such a
review, the staff believes that additional
adjustments should be made to the
Form 13F reporting threshold, the staff
will recommend an appropriate
adjustment to the Commission.
As an alternative, we considered
proposing to amend rule 13f–1 to
provide that the Commission would
make automatic future adjustments to
the Form 13F reporting threshold on an
ongoing basis every five years to keep
the reporting threshold aligned with the
size and structure of the market.62 For
example, we considered proposing that
these automatic adjustments take into
account the growth in the U.S. equities
market. However, we are concerned that
adjusting the Form 13F reporting
threshold to account for the growth in
U.S. equities market for regularly
recurring, automatic, and ongoing
adjustments could cause volatile
changes in the reporting threshold.
Alternatively, we considered using
inflation indexes, such as the PCE or
CPI, to make automatic adjustments to
the Form 13F reporting threshold. While
these measures would result in less
volatile changes to the 13F reporting
threshold, we are concerned that the
growth in the size of the market may
outpace inflation over time. This would
cause the 13F reporting threshold to
burden smaller managers unnecessarily.
Based on these considerations, we
determined not to propose automatic
62 Such a requirement would be similar to other
automatic periodic adjustments that the
Commission makes. For example, 17 CFR 275.205–
3 [rule 205–3 under the Investment Advisers Act of
1940 (‘‘Advisers Act’’)] provides that the
Commission will issue an order every five years to
adjust the dollar amounts in that rule for the effects
of inflation.
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future adjustments to the reporting
threshold. The staff’s periodic review of
the Form 13F reporting threshold and
any resulting staff recommendation
would inform the Commission’s
consideration of whether to propose
additional changes to the threshold in
the future. Addressing any future
change to the reporting threshold in
notice and comment rulemaking, as
opposed to an automatic adjustment
required by an order, would allow the
Commission to actively consider and
receive public comment on the effects of
any future adjustments to the reporting
threshold, including the effects on the
mix of information available to the
market and the reporting burdens
associated with filing Form 13F reports.
We request comment on the following:
14. Rather than the staff conducting
periodic reviews of the Form 13F
reporting threshold, should we instead
adopt a periodic automatic adjustment
to the Form 13F reporting threshold? If
so, how often should the reporting
threshold be automatically adjusted? If
we adopt an automatic adjustment, what
measure should we use to make the
adjustment? Should we use consumer
price inflation measures such as the CPI
or PCE? Should we use stock market
growth or stock market returns instead?
Is there a different measure that would
be more appropriate? If so, please
explain why. If we use any of these
measures, how should they be measured
and as of what date? If we use an
adjustment based on stock market
growth or returns, the adjustment could
be positive or negative compared with
the present level. Would such an
automatic adjustment raise any
additional issues that the Commission
should take into account in considering
such an automatic adjustment?
C. Omission Threshold for Form 13F
Form 13F allows, but does not
require, a manager to omit holdings of
fewer than 10,000 shares (or less than
$200,000 principal amount of
convertible debt securities) (‘‘share
limit’’) and less than $200,000 aggregate
fair market value (‘‘value limit’’)
(together, with the share limit,
‘‘omission threshold’’).63 The omission
threshold was intended to further the
Commission’s goals of structuring Form
13F in a manner that would provide
meaningful holdings data while
minimizing the form’s reporting
burdens.64 The Commission included
the omission threshold when it first
adopted Form 13F because it viewed
aggregate holdings in these amounts as
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63 See
64 See
Special Instruction 10 of Form 13F.
supra footnote 17 and accompanying text.
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46025
de minimis and, therefore, unlikely to
have the potential to materially impact
the market.65
In conjunction with the proposal to
increase the reporting threshold, we are
proposing to eliminate the omission
threshold for Form 13F. We believe that,
if the reporting threshold is
substantially increased, the omission
threshold would no longer be necessary
or appropriate. We have proposed a
significant increase in the reporting
threshold for Form 13F to $3.5 billion
and, as a result, reporting all of a
manager’s holdings would be less
burdensome to managers of that size.
For these larger managers, we believe
that the incremental increase in cost, if
any, of including securities holdings
information below the omission
threshold on Form 13F would be
immaterial, including because larger
managers are more likely to have trading
and other systems that can export all of
the manager’s positions (regardless of
size) for purposes of reporting on Form
13F. Eliminating the omission threshold
therefore may not materially increase
burdens for these filers. Although we do
not have data on the extent to which
managers currently utilize the omission
threshold, our staff has examined
current filings on Form 13F by managers
reporting more than $3.5 billion in
holdings and found that a number of
these managers currently report
holdings that fall below the omission
threshold.66 These managers choose not
to omit certain holdings even where
Form 13F would permit them to do so.
Should a manager determine that
disclosure of a smaller holding may
cause harm and qualify for confidential
treatment, we believe that managers
with at least $3.5 billion under
management would be able to seek
appropriate protection by filing Form
13F CTR.
Rather than eliminate the omission
threshold entirely, as proposed, we
considered adjusting it, including
adjusting it upwards to account for
market growth, akin to the adjustment
we are proposing to the reporting
threshold (e.g., increasing the share
limit to 50,000 and the value limit to
$1,000,000 67). We are not taking this or
65 See 13F Adopting Release, supra footnote 10 at
n.12 and accompanying text.
66 In December 2018, we estimate that 1,162
managers, or 23.1 percent, voluntarily reported at
least some positions that fell within the omission
threshold. Additionally, approximately 212
managers (or 38.27 percent) who had at least $3.5
billion in assets under management voluntarily
reported positions that fell below the omission
threshold.
67 Based on the staff’s review of data reported on
Form 13F, increasing the share and value limits in
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a similar approach because, as
discussed, we believe that the
incremental increase in cost, if any, of
including securities holdings
information below the current omission
threshold—or any revised threshold—is
likely immaterial.
We seek comment on our proposal to
eliminate the omission threshold,
including the following issues:
15. Should we, as proposed, eliminate
the omission threshold? Why or why
not?
16. If the Form 13F reporting
threshold is raised to $3.5 billion as
proposed, to the extent it is not already
reported on a voluntary basis, would
investors and the markets find the
disclosure of smaller holdings
information for larger managers
valuable? Why or why not?
17. Among Form 13F filers with at
least $3.5 billion of 13(f) securities
under management, is it costly to report
small positions? Why or why not? How
many of these filers’ positions have
fewer than 10,000 shares? How many of
their positions are valued under
$200,000? What is the incremental cost
of reporting these small positions on
Form 13F? Is the incremental cost
significant? Are there other costs
associated with identifying these
specific positions for purposes of
excluding them? Are there other reasons
that it would be beneficial to keep the
omission threshold?
18. Rather than eliminating the
omission threshold, should we increase
it? If so, what part should we increase?
Should we adjust only the share limit of
the omission threshold? If so, to what?
Should we adjust only the value limit of
the omission threshold? If so, to what?
Should we adjust both components of
the omission threshold? If so, to what?
Should we, for example, increase the
share limit to 50,000 and the value limit
to $1,000,000?
19. Should we mirror the adjustment
to the omission threshold
proportionately to the adjustment we
are proposing for the Form 13F
reporting threshold using stock market
growth? Would such an adjustment
result in a significant decrease in
securities reported on Form 13F? Would
such an adjustment impede the ability
of the public to observe the impact
managers have on the markets?
20. If we maintain an omission
threshold, should we adopt a
mechanism for automatic future
adjustments of the omission threshold?
this way would result in 25.83 percent of the
number of holdings qualifying for omission on
Form 13F and a decrease in the value of the
reported securities of 0.22 percent.
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Should future adjustments be for the
share limit, for the value limit, or for
both? What is an appropriate
mechanism for adjusting the share
limit?
D. Additional Identifying Information
We are proposing to amend Form 13F
to require filers to provide additional
identifying information. The proposed
amendments would require each Form
13F filer to provide its CRD number and
SEC filing number, if any.68 If a manager
is making a Form 13F–NT filing, the
manager must include the CRD number
and SEC filing number, if any, of any
other manager included in the ‘‘List of
Other Managers Reporting for this
Manager’’ table on the cover page.69
We believe that this information
would allow the Commission and other
consumers of Form 13F data to identify
a Form 13F filer’s other regulatory
filings and the interrelationships
between managers who share
investment discretion over 13(f)
securities more easily. This could
identify for the public additional
sources of market information.70 We
estimate that each manager will initially
spend six hours per year implementing
these changes.71 Therefore, we estimate
that these amendments will initially
impose $1,164,798 of costs on all
managers who would be required to file
Form 13F under the proposed reporting
threshold.72 We believe that the
estimated additional costs of requiring
this disclosure would be justified by
informational efficiencies and
benefits.73
68 See proposed amendments to Special
Instruction 5 of Form 13F.
69 A manager can make a Form 13F–NT filing if
all the securities for which the manager has
investment discretion are reported by another
manager. See Special Instruction 6 of Form 13F.
Similarly, if a manager’s Form 13F–HR reports the
holdings of managers other than the reporting
manager, the reporting manager would be required
to include the CRD number and SEC filing number
of those other managers in the ‘‘List of Other
Included Managers’’ on the cover page. See Special
Instruction 8 of Form 13F.
70 See section 13(f)(4) of the Exchange Act [15
U.S.C. 78m(f)(4)] (requiring the Commission to
tabulate information contained in Form 13F reports
in a manner that would ‘‘maximize the usefulness
of the information to other Federal and State
authorities and the public’’). The ability to identify
interrelationships between managers easily could
also allow third party vendors that compile Form
13F data to provide more complete trading
information. See Pekarek, supra footnote 52, at n.91
(noting that most academic studies rely on 13F
filings compiled quarterly by third party vendors).
71 See Section III below for a discussion of
estimated burdens associated with Form 13F under
the Paperwork Reduction Act.
72 Id.
73 Other regulatory filings also require similar
identifying information. See e.g., Form N–CEN
[referenced in 17 CFR 274.101]; Form ADV
[referenced in 17 CFR 279.1].
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We seek comment on the following
issues:
21. Should we require managers to
provide their CRD number and SEC
filing number, if any, on Form 13F?
22. Should we require managers to
provide the CRD number and SEC filing
number, if any, of other managers
identified in their 13F report?
23. Would this additional identifying
on Form 13F be useful information? If
so, how?
24. Would disclosing this information
be unduly burdensome for 13F filers?
25. Are there any other amendments
we should make to the information
provided on Form 13F? For example, is
there any information currently required
that is not useful or does not have a
beneficial effect for investors, reporting
managers, or users of the data? Should
we consider omitting Form 13F’s
requirement to provide a CUSIP number
for each security? Why or why not?
Should we permit managers to provide,
in lieu of a CUSIP number, other
identifiers such as a Financial
Instrument Global Identifier (FIGI) for
each security? Why or why not? Would
permitting voluntary use of an alternate
identifier have a beneficial effect for
investors, reporting managers, or users
of the data?
E. Technical Amendments
We are proposing to make certain
nonsubstantive technical amendments
to Form 13F designed to account for the
previous change in the format of Form
13F from the plain-text ASCII format to
the structured XML data format. For
example, we are proposing to simplify
the rounding conventions of Form 13F
by requiring all dollar values listed on
Form 13F to be rounded to the nearest
dollar, rather than to the nearest one
thousand dollars as is currently
required.74 We are also proposing to
remove the requirement that filers,
when reporting dollar values on Form
13F, omit the ‘‘000’’.75 As a space saving
measure, current Form 13F instructs
filers to omit the ‘‘000’’ and thus, for
example, report a security with a value
of $5 million as $5,000. As proposed,
such a filer would report the security’s
value as $5,000,000. Since column
width is no longer an issue with the
structured XML data format, we believe
that this change will reduce filer
mistakes and data inaccuracies.76 For
74 See proposed amendments to Special
Instruction 9 of Form 13F.
75 Id.
76 See Anne Anderson & Paul Brockman, An
Examination of 13F Filings, 41 J. Fin. Res. 295, 312–
314 (2018) (the authors analyzed the accuracy of
Form 13F data and concluded that mistakes in
applying Form 13F’s rounding guidelines leads to
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similar reasons, we also are proposing to
remove the 80 character limit imposed
on the information filers can include on
the cover page and the summary page
and the 132 character limit on the
information table.77 We believe that
these amendments would enhance the
accuracy of the data provided on Form
13F and make it easier to understand
and use. Additionally we are proposing
to remove duplicative definitions and
streamline certain sections to simplify
Form 13F’s instructions.78 We estimate
that each manager will initially spend
10 hours per year implementing these
changes.79 Therefore, these amendments
would impose $1,417,350 of costs on all
managers who would be required to file
Form 13F under the proposed reporting
threshold.80
We request comment on our proposed
technical amendments, and the
following issues:
26. Should we require filers to round
all dollar values listed on Form 13F to
the nearest dollar and remove the
requirement to omit ‘‘000’’? Should we,
alternatively, maintain the current
rounding conventions? Should we adopt
some other rounding conventions?
Should we no longer permit rounding?
27. Are there any other amendments
we should make to streamline Form 13F
or simplify its instructions? If so, what
are they?
28. Will our proposed technical
amendments increase the accuracy of
Form 13F data?
29. Will our proposed technical
amendments make Form 13F data easier
to understand and more accessible to
the public?
30. Would these proposed technical
amendments impose costs or burdens
on filers?
We are also proposing to amend the
instructions on the Form 13F for
confidential treatment requests to
require managers seeking confidential
treatment for information contained in
Form 13F 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
many discrepancies in the reported values on Form
13F).
77 These character limits are imposed by 17 CFR
232.305 [rule 305 of Regulation S–T].
78 See proposed amendments to General
Instructions 1 and 3 well as Special Instructions 3,
7, 8, and 13 of Form 13F. We are also proposing
to streamline the discussion in the Paperwork
Reduction Act Section of Form 13F.
79 See Section III below for a discussion of
estimated burdens associated with Form 13F under
the Paperwork Reduction Act.
80 Id.
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manager.81 We believe the proposed
amendment is necessary in light of a
U.S. Supreme Court decision in June
2019 that changed the standard for
determining whether information is
‘‘confidential’’ under exemption 4 of the
Freedom of Information Act (‘‘FOIA’’).82
Our proposed amendment is necessary
because a FOIA analysis is part of a
Form 13F CTR determination. Section
13(f)(4) of the Exchange Act authorizes
the Commission, as it determines to be
necessary or appropriate in the public
interest or for the protection of
investors, to delay or prevent public
disclosure of certain Form 13F
information in accordance with the
FOIA. Additionally, Section 13(f)(5) of
the Exchange Act requires that the
Commission, in exercising its authority
under section 13(f), ‘‘determine (and so
state) that its action is necessary or
appropriate in the public interest and
for the protection of investors or to
maintain fair and orderly markets.’’ We
seek comment on our proposed
modified standard for Form 13F CTRs,
and the following issue:
31. Does the amendment
appropriately reflect the effect of the
U.S. Supreme Court’s June 24, 2019,
decision in Food Marketing Institute v.
Argus Leader Media on the type of
information that is required to
substantiate confidential treatment in
accordance with Exchange Act sections
13(f)(4) and (5) and rule 24b–2
thereunder?
Finally, we are proposing technical
amendments to Form 13F’s instructions
for confidential treatment requests to
reflect amendments to the Commission’s
FOIA regulations that were amended in
2018.83
F. Efficiency, Competition, and Capital
Formation
We are sensitive to the costs and
benefits of the rules we are proposing,
and section 23(a)(2) of the Exchange Act
requires us to consider, among other
matters, the impact that any new rule
would have on competition and states
that the Commission shall not adopt any
rule that would impose a burden on
81 See proposed amendments to Instruction 2.d
for Confidential Treatment Requests of Form 13F.
82 5 U.S.C. 552(b)(4). See Food Marketing Institute
v. Argus Leader Media, 139 S. Ct. 2356 (2019)
(stating that ‘‘[a]t least where commercial or
financial information is both customarily and
actually treated as private by its owner and
provided to the government under an assurance of
privacy, the information is ‘confidential’ within the
meaning of Exemption 4’’).
83 Proposed amendments to Instructions for
Confidential Treatment Requests of Form 13F. See
Amendments to the Commission’s Freedom of
Information Act Regulations, Exchange Act Release
No. 83506 (June 25, 2018) [83 FR 30322] (June 28,
2018).
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46027
competition not necessary or
appropriate in furtherance of the
purposes of the Exchange Act. In
addition, section 3(f) of the Exchange
Act directs us, when engaging in
rulemaking that requires us to consider
or determine whether an action is
necessary or appropriate in the public
interest, to consider, in addition to the
protection of investors, whether the
action will promote efficiency,
competition, and capital formation. The
impacts of the proposed amendments on
efficiency, competition, and capital
formation are discussed throughout this
section and elsewhere in this release.
The following discussion highlights
several such impacts.
The Commission believes that, for
smaller managers, the proposed Form
13F reporting threshold increase is
likely not only to enhance competition
by lowering the cost to participate in the
market but also to promote efficiency,
which can benefit investors in the form
of lower management fees and/or
enhanced services. Furthermore,
because the proposed Form 13F
reporting threshold increase would
potentially reduce the exposure of
smaller managers to harmful, and in
many cases inappropriate, actions by
other market participants, such as front
running, smaller managers would likely
be encouraged to invest in small and
mid-size portfolio companies that are
more susceptible to the harmful effects
of these behaviors.84 This increased
investment would facilitate capital
formation in smaller and medium sized
companies. Similarly, protecting smaller
managers from these harmful behaviors
would likely promote competition
between smaller and larger managers by
helping to level the playing field for
smaller managers. Investors would
similarly benefit from the price impacts
of this competition as well as any
reduction in harmful trading behaviors.
The Commission also believes that the
proposed increase in the Form 13F
reporting threshold would enhance
efficiency by reducing the reporting
burden of Form 13F which would
enable smaller managers to devote more
resources to, for example, market
research that might promote price
discovery. Similarly, the Commission
believes that the proposed technical
amendments would increase efficiency
by enhancing the accuracy of the data
provided on Form 13F and thus
improving the data’s usefulness.
Furthermore, by requiring managers to
provide additional identifying
information, and identifying
information of other managers covered
84 See
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by the report, these proposed
amendments would enhance efficiency
by making it easier for regulators and
the public to identify a Form 13F filer’s
other regulatory filings and the
interrelationships between managers
who share investment discretion over
13(f) securities.
This rulemaking also would remove
the omission threshold for Form 13F
filers. The Commission believes that
this will have only negligible effects on
efficiency, competition, and capital
formations because, on the one hand,
the additional immaterial information is
not likely to be of significant value, and
on the other hand, the costs of reporting
these small positions is de minimis for
filers with at least $3.5 billion of 13(f)
securities. Further, to the extent an
asymmetry in reporting could occur
between larger and smaller managers
with respect to holdings in small and
medium sized companies, if a larger
manager were to determine that
disclosure of a small holding may
negatively affect its competitive
position, we believe that a larger
manager would be able to seek
appropriate protection without undue
burden by filing a Form 13F CTR.
We request comment on all aspects of
our analysis, including the potential
benefits and costs of the proposed
amendments, and whether the proposed
amendments, if adopted, would
promote efficiency, competition, and
capital formation or have an impact on
investor protection. Commenters are
requested to provide empirical data,
estimation methodologies, and other
factual support for their views, in
particular, on the estimates of costs and
benefits for the affected parties.
32. Would relieving smaller managers
from the compliance burdens of Form
13F reduce costs and enhance
competition and add efficiency,
including enhancing the ability of
smaller managers to compete in the
market? To what extent, if any, would
the benefits be passed on to investors in
the form of lower management fees and/
or enhanced services? Would the
proposed increase in the Form 13F
threshold protect smaller managers from
harmful behaviors such as frontrunning? Would reducing this risk for
smaller managers promote capital
formation by encouraging these
managers to invest more in small and
mid-size portfolio companies? Would
reducing this risk for smaller managers
benefit investors?
33. Would the proposed technical
amendments increase efficiency by
enhancing the accuracy of Form 13F
data? Are the cost estimates
appropriate?
34. Would the proposed additional
identifying information increase
efficiency by making it easier to identify
a Form 13F filer’s other regulatory
filings and the interrelationships
between managers who share
investment discretion over 13(f)
securities?
III. Paperwork Reduction Act Analysis
Certain provisions of the proposed
amendments to Form 13F would affect
the ‘‘collection of information’’ burden
under Form 13F within the meaning of
the Paperwork Reduction Act of 1995
(‘‘PRA’’).85 We are submitting the
proposed collection of information to
the Office of Management and Budget
(‘‘OMB’’) for review in accordance with
the PRA.86 The title for the existing
collection of information is: ‘‘Form 13F,
Report of Institutional Investment
Managers (Pursuant to Section 13(f) of
the Securities Exchange of 1934)’’ (OMB
Control No. 3235–0006). An agency may
not conduct or sponsor, and a person is
not required to respond to, a collection
of information unless it displays a
currently valid OMB control number.
The requirements of this collection of
information are mandatory. Responses
are not kept confidential, unless they
are confidential pending review
pursuant to rule 24b–2(c) under the
Exchange Act or the Commission grants
an application for confidential treatment
pursuant to section 13(f)(4) of the
Exchange Act.
A. Form 13F
In our most recent PRA submission
for Form 13F, we estimated a total hour
burden of 472,521.6 hours, with an
internal cost burden of $31,186,425.60,
and with no annual external cost
burden.87 Based on staff analysis and
outreach to managers, however, we
believe that these estimates do not
reflect all of the information collection
costs associated with Form 13F. The
current burden estimates for Form 13F
assume that all of the functions are
carried out by a compliance clerk,
whereas we understand that additional
professionals are typically involved.
The current burden estimates also do
not include external costs for third-party
vendors, which we understand many
managers use in connection with their
filings on Form 13F, or external legal
counsel, who may provide advice in
connection with the form’s reporting
requirements or actual or potential
requests for confidential treatment.
Furthermore, the current burden
estimates assume that the same number
of hours and costs are necessary to
prepare and file Form 13F–HR and 13F–
NT filings, even though reports on Form
13F–HR would involve greater burdens.
This results in a current overestimation
of the costs associated with filing Form
13F–NT. Therefore, we are revising the
current PRA burdens associated with
filing Form 13F.
The table below summarizes our
adjustments to the current PRA
estimates and the initial and ongoing
annual burden estimates associated with
the proposed amendments to Form 13F.
Staff estimates that the proposed
amendments will not change the PRA
hour burdens associated with making
amended filings on Form 13F.
TABLE 2—FORM 13F PRA ESTIMATES
Initial hours
Annual hours
Wage rate
Internal time cost
REVISIONS TO CURRENT PRA BURDEN ESTIMATES
Revised Burdens for 13F–HR Filings
Current estimated annual burden of Form
13F–HR per filer.
85 44
86 44
80.8 hours ..................
U.S.C. 3501 through 3520.
U.S.C. 3507(d); 5 CFR 1320.11.
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×
$66 2 .........................................
$5,332.80.
87 This estimate is based on the last time the
rule’s information collection was submitted for PRA
renewal in 2018.
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External costs 1
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TABLE 2—FORM 13F PRA ESTIMATES—Continued
Initial hours
Annual hours
×
80.8 hours × 5,089 filers 3.
Revised current annual estimated burden per filer.
Revised current annual burden of Form
13F–HR filings.
411,191.2 hours .........
External costs 1
Wage rate
Internal time cost
$257.70 (blended rate for compliance attorney, senior programmer, and compliance
clerk) 4.
$20,822.16 × 5,089 filers .........
$789 5 × 5,089 filers.
$105,963,972 ............................
$4,015,221.6
$71 (wage rate for compliance
clerk).
$1,136 × 1,570 filers ................
$300 × 1,570 filers.
...................................................
$1,783,520 ................................
$471,000.
Revised Burdens for 13F–NT Filings
Current estimated annual burden of Form
13F–NT.
Revised current estimated Form 13F–
NT burden per filing.
Revised current annual burden of Form
13F–NT per filer.
........................
80.8 hours.
........................
4 hours × 4 filings.
........................
16 hours × 1,570 filers 7.
×
25,120 hours ..............
Revised Burdens for Form 13F Amendment Filings
Current estimated burden per amendment
filing.
Revised current estimated burden per
amendment.
Revised current annual estimated burden of all amendments.
........................
4 hours .......................
.
4 hours × 1,066
amendments.
........................
4,264 hours ................
×
$66.00 .......................................
$264.
$257.70 (blended rate for compliance attorney, senior programmer, and compliance
clerk).
$1,030.80 × 1,066 amendments
$300 × 1,066 amendments.
$1,098,832.80 ...........................
$319,800.
$1,494.66 ..................................
$0.
PROPOSED AMENDMENTS TO FORM 13F
Estimated Form 13F–HR Burdens
Proposed Amendments to Form 13F–
HR (additional identifying information,
technical amendments, change in
omission threshold)
per filer.
New annual estimated
Form 13F–HR burden per filer.
Number of annual filers.
Total new annual
burden.
×
16
5.8 hours 8 ..................
........................
86.6 hours ..................
$22,316.82 ................................
$789.
........................
× 550 filers 10 .............
× 550 filers ................................
× 550 filers.
........................
47,630 hours ..............
$12,274,251 ..............................
$433,950.
$177.50 .....................................
$0.
$257.70 (blended rate for compliance attorney, senior programmer, and compliance
clerk) 9.
Estimated Form 13F–NT Burdens
Proposed Amendments to Form 13F–
NT (additional identifying information).
New annual estimated
Form 13F–NT burden per filer.
Number of annual filers.
Total new annual
burden.
6
2.5
hours 8
..................
×
71.00 (wage rate for compliance clerk) 11.
........................
18.5 hours × 738 filers 12.
$1,313.50 × 738 filers ..............
$300 × 738 filers.
........................
13,653 hours ..............
$969,363 ...................................
$221,400.
...................................................
...................................................
$300 × 344 amendments.
$257.70 (blended rate for compliance attorney, senior programmer, and compliance
clerk).
$354,595.2 ................................
$103,200.
Estimated Amendment Filings Burdens
Revised estimated
number of Amendments.
Estimated total burden
of amendments.
........................
344 amendments 13 ×
4 hours.
........................
1,376 hours ................
×
TOTAL ESTIMATED FORM 13F BURDEN
Currently approved
burden estimates.
Revised current burden estimates.
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472,521.6 hours
...................................................
$31,186,425.60 .........................
$0.
440,575.2 hours
...................................................
$108,846,325 ............................
$4,806,021.
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TABLE 2—FORM 13F PRA ESTIMATES—Continued
Initial hours
Burden estimates
under the proposal.
Annual hours
62,659 hours
Wage rate
Internal time cost
...................................................
$13,598,209.2 ...........................
External costs 1
$758,550.
Notes:
1 The external costs of complying with Form 13F can vary among filers. Some filers use third-party vendors for a range of services in connection with filing reports
on Form 13F, while other filers use vendors for more limited purposes such as providing more user-friendly versions of the list of section 13(f) securities. For purposes of the PRA, we estimate that each filer will spend an average of $300 on vendor services each year in connection with the filer’s four quarterly reports on Form
13F–HR or Form 13F–NT, as applicable, in addition to the estimated vendor costs associated with any amendments. In addition, some filers engage outside legal
services in connection with the preparation of requests for confidential treatment or analyses regarding possible requests, or in connection with the form’s disclosure
requirements. For purposes of the PRA, we estimate that each manager filing reports on Form 13F–HR will incur $489 for one hour of outside legal services each
year.
2 $66 was the estimated wage rate for a compliance clerk in 2018.
3 This estimate is based on the number of 13F–HR filers as of December 2018.
4 The $257.7 wage rate reflects current estimates of the blended hourly rate for an in-house compliance attorney ($368), a senior programmer ($334) and in-house
compliance clerk ($71). $257.7 is based on the following calculation: ($368 + $334 + $71)/3 = $257.7. The $368 per hour and $334 per hour figures for a compliance
attorney and a senior programmer, respectively, are based on salary information for the securities industry compiled by the Securities Industry and Financial Markets
Association’s Office Salaries in the Securities Industry 2013 (‘‘SIFMA Report’’), modified by Commission staff to account for an 1800-hour work-year and inflation, and
multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. The $71 per hour figure for a compliance clerk is based on salary information
from the SIFMA Report, modified by Commission staff to account for an 1800-hour work-year and inflation, and multiplied by 2.93 to account for bonuses, firm size,
employee benefits and overhead.
5 $789 includes an estimated $300 paid to a third-party vendor in connection with the Form 13F–HR filing as well as an estimated $489 for one hour of outside
legal services.
6 We estimate that Form 13F–HR filers will require some level of external legal counsel in connection with these filings.
7 This estimate is based on the number of Form 13F–NT filers as of December 2018.
8 Includes initial burden estimates annualized over a three-year period, plus 0.5 hours of ongoing annual burden hours.
9 These PRA estimates assume that the same types of professionals would be involved in satisfying the proposed amendments that we believe otherwise would be
involved in preparing and filing reports on Form 13F–HR.
10 This estimate is based on the Form 13F–HR filers as of December 2018 that would continue to be required to file Form 13F under the proposed $3.5 billion reporting threshold.
11 These PRA estimates assume that the same types of professionals would be involved in satisfying the proposed amendments that we believe otherwise would
be involved in preparing and filing reports on Form 13F–NT.
12 This estimate is based on the number of Form 13F–NT filers as of December 2018, and assumes that a Form 13F–NT filing linked to a Form 13F–HR filing of a
manager that exceeds the $3.5 billion threshold would continue to be filed.
13 We estimate that 86 filers would file amendments to Form 13F if the $3.5 billion reporting threshold is adopted. 86 amendments × 4 annual filings = 344
amendments.
B. Request for Comments
We request comment on whether
these estimates are reasonable.
Specifically, we request comment on
whether our estimated average costs are
reasonable in light of the proposed
increase in the Form 13F reporting
threshold. The proposal would limit the
form’s reporting obligations to larger
managers, while the average burden
estimate of 86.6 hours represents the
average burden of complying with Form
13F across all current filers.
Furthermore, the proposal assumes that
a compliance attorney, a senior
programmer, and a compliance clerk
would be equally involved in fulfilling
a manager’s compliance burdens
associated with Form 13F. We request
comment on these assumptions,
recognizing that there will be some
variation among different managers.
Additionally, we seek comment on our
estimated external costs of complying
with Form 13F–HR and any
amendments and Form 13F–NT.
Pursuant to 44 U.S.C. 3506(c)(2)(B),
the Commission solicits comments in
order to: (1) Evaluate whether the
proposed collection of information is
necessary for the proper performance of
the functions of the Commission,
including whether the information will
have practical utility; (2) evaluate the
accuracy of the Commission’s estimate
of the burden of the proposed collection
of information; (3) determine whether
there are ways to enhance the quality,
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utility, and clarity of the information to
be collected; and (4) determine whether
there are ways to minimize the burden
of the collection of information on those
who are to respond, including through
the use of automated collection
techniques or other forms of information
technology.
Persons wishing to submit comments
on the collection of information
requirements of the proposed
amendments should direct them to the
OMB Desk Officer for the Securities and
Exchange Commission,
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov, and should send a copy to,
Vanessa A. Countryman, Secretary,
Securities and Exchange Commission,
100 F Street NE, Washington, DC
20549–1090, with reference to File No.
S7–08–20. OMB is required to make a
decision concerning the collections of
information between 30 and 60 days
after publication of this release;
therefore a comment to OMB is best
assured of having its full effect if OMB
receives it within 30 days after
publication of this release. Requests for
materials submitted to OMB by the
Commission with regard to these
collections of information should be in
writing, refer to File No. S7–08–20, and
be submitted to the Securities and
Exchange Commission, Office of FOIA
Services, 100 F Street NE, Washington,
DC 20549–2736.
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IV. Initial Regulatory Flexibility
Analysis
Pursuant to Section 605(b) of the
Regulatory Flexibility Act (‘‘RFA’’),88
the Commission hereby certifies that the
proposed amendments to rule 13f–1 and
Form 13F under the Exchange Act,
relating to increasing the reporting
threshold for Form 13F from $100
million to $3.5 billion, along with
certain technical amendments, would
not, if adopted, have a significant
economic impact on a substantial
number of small entities. The definition
of the term ‘‘small entity’’ in the
Exchange Act does not explicitly
reference institutional investment
managers.89 However, rule 0–10
provides that the Commission may
‘‘otherwise define’’ small entities for
purposes of a particular rulemaking
proceeding. For purposes of the
proposed amendments relating to the
reporting threshold of Form 13F, the
Commission has determined to use the
definition of small entity under 17 CFR
275.0–7(a) as more appropriate to the
functions of managers. The Commission
believes that the proposed definition
would help ensure that all persons or
entities that might be institutional
investment managers under section 13(f)
of the Exchange Act will be included
within a category addressed by the
definition. Therefore, for purposes of
88 5
U.S.C. 605(b).
CFR 240.0–10 (‘‘rule 0–10’’).
89 17
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Federal Register / Vol. 85, No. 148 / Friday, July 31, 2020 / Proposed Rules
this rulemaking and the RFA, a manager
is a small entity if it: (i) Has assets under
management having a total value of less
than $25 million; (ii) did not have total
assets of $5 million or more on the last
day of its most recent fiscal year; and
(iii) does not control, is not controlled
by, and is not under common control
with another investment adviser that
has assets under management of $25
million or more, or any person (other
than a natural person) that had total
assets of $5 million or more on the last
day of its most recent fiscal year.90 The
Commission requests comments on the
use of this definition.
Managers are not required to submit
reports on Form 13F unless they
exercise investment discretion with
respect to accounts holding 13(f)
securities having an aggregate fair
market value on the last trading day of
any month of any calendar year of at
least $100 million. Therefore, no small
entities for purposes of rule 0–10 under
the Exchange Act are affected by the
form or by an increase to the reporting
threshold. The Commission requests
written comments regarding these
certifications. The Commission requests
that commenters describe the nature of
any impact on small businesses and
provide empirical data to support the
extent of the impact.
V. Consideration of the Impact on the
Economy
For purposes of the Small Business
Regulatory Enforcement Fairness Act of
1996 (‘‘SBREFA’’),91 we must advise
OMB whether a proposed regulation
constitutes a ‘‘major’’ rule. Under
SBREFA, a rule is considered ‘‘major’’
where, if adopted, it results in or is
likely to result in (1) an annual effect on
the economy of $100 million or more;
(2) a major increase in costs or prices for
consumers or individual industries; or
(3) significant adverse effects on
competition, investment or innovation.
The Commission requests comment
on the potential impact of the proposed
amendments on the economy on an
annual basis. The Commission requests
that commenters provide empirical data
and other factual support for their views
to the extent possible.
VI. Statutory Authority
The Commission is proposing
amendments to rule 13f–1 and Form
90 17 CFR 275.0–7(a) (‘‘rule 0–7(a)’’). Recognizing
the growth in assets under management at
investment advisers since rule 0–7(a) was adopted,
the Commission plans to revisit the definition of a
small entity in rule 0–7(a).
91 Public Law 104–121, Title II, 110 Stat. 857
(1996) (codified in various sections of 5 U.S.C., 15
U.S.C. and as a note to 5 U.S.C. 601).
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13F pursuant to the authority set forth
in sections 3(b), 13(f), 23, 24, and 36 of
the Exchange Act [15 U.S.C. 78c(b),
78m(f), 78w, 78x, and 78mm].
46031
a. In General Instruction 1, revising
‘‘$100,000,000’’ to read ‘‘$3.5 billion’’;
■ b. In General Instruction 3, revising
the first sentence to read ‘‘Rule 13f–
1(a)(1) provides that a Manager must file
List of Subjects
a Form 13F report with the Commission
within 45 days after the end of the
17 CFR Part 240
calendar year and each of the first three
Confidential business information,
calendar quarters of the subsequent
Reporting and recordkeeping
calendar year.’’;
requirements, Securities.
■ c. In General Instruction 3, replacing
‘‘the EDGAR Filing’’ with ‘‘the filing
17 CFR Part 249
made on the Commission’s Electronic
Reporting and recordkeeping
Data Gathering, Analysis, and Retrieval
requirements, Securities.
(‘‘EDGAR’’) system’’;
■ d. In the last sentence of the second
Text of Proposed Rule and Form
paragraph of the Instructions for
Amendments
Confidential Treatment Requests, delete
For the reasons set out in the
the phrase ‘‘the Commission’s rules and
preamble, the Commission proposes to
regulations adopted under’’;
amend title 17, chapter II of the Code of
■ e. In Instruction 2.d for Confidential
Federal Regulations as follows:
Treatment Requests, revising it to read
as follows: ‘‘Demonstrate that the
PART 240—GENERAL RULES AND
information is both customarily and
REGULATIONS, SECURITIES
actually kept private by the Manager,
EXCHANGE ACT OF 1934
and how release of this information
could cause harm to the Manager.’’
■ 1. The general authority citation for
■ f. In Special Instruction 3, deleting the
part 240 continues to read as follows:
phrase ‘‘(and in the EDGAR submission
Authority: 15 U.S.C. 77c, 77d, 77g, 77j,
header)’’;
77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn,
■ g. In Special Instruction 5, revising it
77sss, 77ttt, 78c, 78c–3, 78c–5, 78d, 78e, 78f,
to read as follows: ‘‘Present the Cover
78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m,
Page and the Summary Page information
78n, 78n–1, 78o, 78o–4, 78o–10, 78p, 78q,
in the format and order provided in the
78q–1, 78s, 78u–5, 78w, 78x, 78dd, 78ll,
78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b– form. If the Manager has a number
3, 80b–4, 80b–11, and 7201 et seq., and 8302; assigned by the Financial Industry
7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18
Regulatory Authority’s Central
U.S.C. 1350; Pub. L. 111–203, 939A, 124 Stat. Registration Depository system or by the
1376 (2010); and Pub. L. 112–106, sec. 503
Investment Adviser Registration
and 602, 126 Stat. 326 (2012), unless
Depository system (‘‘CRD number’’),
otherwise noted.
provide the Manager’s CRD number. If
*
*
*
*
*
the Manager has a filing number (e.g.,
801–, 8–, 866–, 802–) assigned by the
§ 240.13f–1 [Amended]
Commission (‘‘SEC filing number’’),
■ 2. Amend § 240.13f–1 by:
provide the Manager’s SEC filing
■ a. In paragraph (a)(1), removing
number. The Cover Page may include
‘‘$100,000,000’’ and adding in its place
information in addition to the required
‘‘$3.5 billion’’;
information, so long as the additional
■ b. In paragraph (c), removing
information does not, either by its
‘‘$100,000,000’’ and adding in its place
nature, quantity, or manner of
‘‘$3.5 billion’’; and
presentation, impede the understanding
■ c. Removing the authority citation at
or presentation of the required
the end of the section.
information. Place all additional
information after the signature of the
PART 249—FORMS, SECURITIES
person signing the report (immediately
EXCHANGE ACT OF 1934
preceding the Report Type section). Do
■ 3. The general authority citation for
not include any additional information
part 249 continues to read as follows:
on the Summary Page or in the
Information Table.’’;
Authority: 15 U.S.C. 78a et seq. and 7201
et seq.; 12 U.S.C. 5461 et seq.; 18 U.S.C. 1350; ■ h. In Special Instruction 7, deleting
the phrase ‘‘on the Summary Page’’;
Sec. 953(b), Pub. L. 111–203, 124 Stat. 1904;
Sec. 102(a)(3), Pub. L. 112–106, 126 Stat. 309 ■ i. In Special Instruction 7.a, deleting
(2012); Sec. 107, Pub. L. 112–106, 126 Stat.
the phrase ‘‘on the Summary Page’’;
313 (2012), and Sec. 72001, Pub. L. 114–94,
■ j. In Special Instruction 8, deleting the
129 Stat. 1312 (2015), unless otherwise
phrase ‘‘on the Summary Page’’;
noted.
■ k. Replacing the first sentence of
*
*
*
*
*
Special Instruction 8.b with the
following ‘‘If this Form 13F report
■ 4. Form 13F (referenced in § 249.325)
reports the holdings of one or more
is amended by:
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Federal Register / Vol. 85, No. 148 / Friday, July 31, 2020 / Proposed Rules
Managers other than the Manager filing
this report, enter in the List of Other
Included Managers all such Managers
together with any CRD Number or SEC
filing number assigned to each Manager
and, if known, the Managers’ respective
Form 13F file numbers (The Form 13F
file numbers are assigned to Managers
when they file their first Form 13F.).’’;
■ l. In Special Instruction 9, revising
‘‘rounded to the nearest one thousand
dollars (with ‘‘000’’ omitted)’’ to read
‘‘rounded to the nearest dollar’’;
■ m. Deleting Special Instruction 10 and
renumbering Special Instructions 11, 12,
and 13 to 10, 11, and 12, respectively;
■ n. In renumbered Special Instruction
10, revising ‘‘$100,000,000’’ to read
‘‘$3.5 billion’’;
■ o. In renumbered Special Instruction
11.b.i, revising the phrase ‘‘rule 13f–1(c)
(the ‘‘13F List’’)’’ to read ‘‘the 13F List’’;
and
■ p. Deleting renumbered Special
Instruction 12 in its entirety and
replacing it with the following:
nearest dollar)’’ in the Form 13F
Information Table Value Total row.
■ u. In the List of Other Included
Managers section of the Form 13F
Summary Page, adding ‘‘CRD Number
(if applicable)’’ and ‘‘SEC Filing Number
(if applicable)’’ columns; and
■ v. In the Form 13F Information Table,
replacing ‘‘(x$1000)’’ with ‘‘(to the
nearest dollar)’’ in the Value
subcolumn.
‘‘Filing of Reports
13. Reports must be filed
electronically using EDGAR in
accordance with Regulation S–T.
Consult the EDGAR Filer Manual and
Appendices for EDGAR filing
instructions.’’
■ q. Deleting the Paperwork Reduction
Act Information section in its entirety
and replacing it with the following:
RIN 1545–BP37
■
‘‘PAPERWORK REDUCTION ACT
INFORMATION
Persons who are to respond to the
collection of information contained in
this form are not required to respond to
the collection of information unless the
form displays a currently valid Office of
Management and Budget (‘‘OMB’’)
control number. Please direct comments
concerning the accuracy of the
information collection burden estimate
and any suggestions for reducing the
burden to the Secretary, Securities and
Exchange Commission, Washington, DC
20549. OMB has reviewed this
collection of information under the
clearance requirements of 44 U.S.C.
3507.’’;
■ r. In the Institutional Investment
Manager Filing this Report section on
the Cover Page, adding ‘‘CRD Number (if
applicable):ll’’ and ‘‘SEC Filing
Number (if applicable):ll ’’;
■ s. In the List of Other Managers
Reporting for this Manager section on
the Cover Page, adding ‘‘CRD Number (if
applicable)’’ and ‘‘SEC Filing Number (if
applicable)’’ columns;
■ t. In the Report Summary on the Form
13F Summary Page, replacing
‘‘(thousands)’’ with ‘‘(round to the
VerDate Sep<11>2014
16:47 Jul 30, 2020
Jkt 250001
By the Commission.
Dated: July 10, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020–15322 Filed 7–30–20; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 40 and 49
[REG–112042–19]
Excise Taxes; Transportation of
Persons by Air; Transportation of
Property by Air; Aircraft Management
Services
Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic
submissions via the Federal
eRulemaking Portal at
www.regulations.gov (indicate IRS and
REG–112042–19) by following the
online instructions for submitting
comments. Once submitted to the
Federal eRulemaking Portal, comments
cannot be edited or withdrawn. The IRS
expects to have limited personnel
available to process public comments
that are submitted on paper through
mail. Until further notice, any
comments submitted on paper will be
considered to the extent practicable.
The Department of the Treasury
(Treasury Department) and the IRS will
publish for public availability any
comment submitted electronically, and
to the extent practicable on paper, to its
public docket.
Send paper submissions to:
CC:PA:LPD:PR (REG–112042–19), Room
5203, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station,
Washington, DC 20044.
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Michael H. Beker or Rachel S. Smith at
(202) 317–6855; concerning submissions
of comments and/or requests for a
public hearing, Regina Johnson, (202)
317–5177 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
ADDRESSES:
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
and partial withdrawal of notice of
proposed rulemaking.
Background
This document contains
proposed regulations relating to the
excise taxes imposed on certain
amounts paid for transportation of
persons and property by air.
Specifically, the proposed regulations
relate to the exemption for amounts
paid for certain aircraft management
services. The proposed regulations also
amend, revise, redesignate, and remove
provisions of existing regulations that
are out-of-date or obsolete and generally
update the existing regulations to
incorporate statutory changes, case law,
and other published guidance. In
addition, the proposed regulations
withdraw a provision that was included
in a prior notice of proposed rulemaking
that was never finalized and re-propose
it. The proposed regulations affect
persons that provide air transportation
of persons and property, and persons
that pay for those services.
DATES: Written or electronic comments
and requests for a public hearing must
be received by September 29, 2020.
Requests for a public hearing must be
submitted as prescribed in the
‘‘Comments and Requests for a Public
Hearing’’ section.
This document contains proposed
amendments to the Facilities and
Services Excise Tax Regulations (26 CFR
part 49) under sections 4261, 4262,
4263, 4264, 4271, 4281, and 4282 of the
Internal Revenue Code (Code). This
document also contains proposed
amendments to the Excise Tax
Procedural Regulations (26 CFR part
40).
Section 4261 imposes an excise tax on
certain amounts paid for transportation
of persons by air. Section 4271 imposes
an excise tax on certain amounts paid
for transportation of property by air. The
excise taxes imposed by sections 4261
and 4271 (collectively, air
transportation excise tax), as well as
certain Federal fuel taxes, are deposited
into the Airport and Airway Trust Fund,
which funds the Federal Aviation
Administration’s (FAA) operations, air
transportation infrastructure, and other
aviation-related programs. See section
9502 of the Code.
Section 13822 of Public Law 115–97,
131 Stat. 2054, 2182 (2017), commonly
referred to as the Tax Cuts and Jobs Act
(TCJA), amended the Code by adding
paragraph (e)(5) to section 4261. The
AGENCY:
SUMMARY:
PO 00000
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]]>Agencies
[Federal Register Volume 85, Number 148 (Friday, July 31, 2020)]
[Proposed Rules]
[Pages 46016-46032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15322]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 240 and 249
[Release No. 34-89290; File No. S7-08-20]
RIN 3235-AM65
Reporting Threshold for Institutional Investment Managers
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Securities and Exchange Commission (the ``Commission'') is
proposing to update the reporting threshold for Form 13F reports by
institutional investment managers for the first time in 45 years,
raising the reporting threshold from $100 million to $3.5 billion to
reflect the change in size and structure of the U.S. equities market
since 1975, when Congress adopted the requirement for these managers to
file holdings reports with the Commission. The proposal also would
amend Form 13F to increase the information provided by institutional
investment managers by eliminating the omission threshold for
individual securities, and requiring managers to provide additional
identifying information. The Commission is also proposing to make
certain technical amendments, including to modernize the structure of
data reporting and amend the instructions on Form 13F for confidential
treatment requests in light of a recent decision of the U.S. Supreme
Court.
DATES: Comments should be received on or before September 29, 2020.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/submitcomments.htm); or
Send an email to [email protected]. Please include
File Number S7-08-20 on the subject line;
Paper Comments
Send paper comments to Vanessa A. Countryman, Secretary,
Securities
[[Page 46017]]
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number S7-08-20. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (https://www.sec.gov/rules/proposed.shtml). Comments are also available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. All comments received will be posted without change.
Persons submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly.
Studies, memoranda, or other substantive items may be added by the
Commission or staff to the comment file during this rulemaking. A
notification of the inclusion in the comment file of any such materials
will be made available on the Commission's website. To ensure direct
electronic receipt of such notifications, sign up through the ``Stay
Connected'' option at www.sec.gov to receive notifications by email.
FOR FURTHER INFORMATION CONTACT: Zeena Abdul-Rahman, Senior Counsel,
Mark T. Uyeda, Senior Special Counsel, at (202) 551-6792, or Brian
McLaughlin Johnson, Assistant Director, at (202) 551-6792, Investment
Company Regulation Office, Division of Investment Management,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-8549.
SUPPLEMENTARY INFORMATION: The Commission is proposing for public
comment amendments to 17 CFR 240.13f-1 (``rule 13f-1'') and Form 13F
(referenced in 17 CFR 249.325) under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.) (``Exchange Act'').
Table of Contents
I. Background
A. Overview of Section 13(f) and Rule 13f-1
B. Legislative History and Subsequent Developments
II. Discussion and Economic Analysis
A. Increase of Form 13F Reporting Threshold
B. Future Analysis
C. Omission Threshold for Form 13F
D. Additional Identifying Information
E. Technical Amendments
F. Efficiency, Competition, and Capital Formation
III. Paperwork Reduction Act Analysis
A. Form 13F
B. Request for Comments
IV. Initial Regulatory Flexibility Analysis
V. Consideration of the Impact on the Economy
VI. Statutory Authority
Text of Proposed Rule and Form Amendments
I. Background
The Commission is proposing to:
Amend rule 13f-1 and Form 13F to raise the reporting
threshold from $100 million to $3.5 billion to account for the changes
in the size and structure of the U.S. equities market since 1975; and
Eliminate the omission threshold for individual securities
on Form 13F.
The Commission further proposes to amend Form 13F to require an
institutional investment manager (``manager'') that files Form 13F to
provide certain identifying information:
If the manager has a number assigned to the manager by the
Central Registration Depository (``CRD'') system of the Financial
Industry Regulatory Authority, Inc. (``FINRA'') or by the Investment
Adviser Registration Depository (``IARD'') system (``CRD number''), the
manager would be required to provide the CRD number; and
If a manager has a filing number assigned to the manager
by the Commission (``SEC filing number''), the manager would be
required to provide the SEC filing number.\1\
---------------------------------------------------------------------------
\1\ The term ``institutional investment manager'' includes any
person, other than a natural person, investing in or buying and
selling securities for its own account, and any person exercising
investment discretion with respect to the account of any other
person. See section 13(f)(6)(A) of the Exchange Act [15 U.S.C.
78m(f)(6)]. The term ``person'' includes any natural person,
company, government, or political subdivision, agency, or
instrumentality of a government. See section 3(a)(9) of the Exchange
Act [15 U.S.C. 78c(a)(9)].
---------------------------------------------------------------------------
Finally, the Commission proposes to make certain technical
amendments to modernize the information reported on Form 13F,
consistent with its existing structured eXtensible Markup Language
(``XML'') format, and to modify the standard applied to certain types
of requests to the Commission for confidential treatment of Form 13F
information (``Form 13F CTRs'') to make such standard consistent with a
recent U.S. Supreme Court decision.\2\
---------------------------------------------------------------------------
\2\ Food Marketing Institute v. Argus Leader Media, 139 S. Ct.
2356 (2019).
---------------------------------------------------------------------------
A. Overview of Section 13(f) and Rule 13f-1
Adopted in 1975 as part of the Securities Acts Amendments of 1975
(``1975 Amendments''),\3\ section 13(f) of the Exchange Act \4\
requires a manager to file a report with the Commission if the manager
exercises investment discretion with respect to accounts holding
certain equity securities (``13(f) securities'') \5\ having an
aggregate fair market value on the last trading day of any month of any
calendar year of at least $100 million.\6\ Rule 13f-1 requires that
managers file quarterly reports on Form 13F if the accounts over which
they exercise investment discretion hold an aggregate of more than $100
million in 13(f) securities.\7\ The information reported on Form 13F
becomes publicly available upon filing, unless the manager has filed a
Form 13F CTR.\8\ A Form 13F CTR is confidential pending review pursuant
to 17 CFR 240.24b-2(c) (``rule 24b-2(c)''). The staff of the Division
of Investment Management has delegated authority from the Commission to
grant and deny Form 13F CTRs, and to revoke a grant of confidential
treatment for any Form 13F CTR.\9\
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\3\ Public Law 94-29, 89 Stat. 97 (1975).
\4\ 15 U.S.C. 78m(f).
\5\ Rule 13f-1(c) under the Exchange Act defines ``section 13(f)
securities'' to mean equity securities of a class described in
section 13(d)(1) of the Exchange Act that are admitted to trading on
a national securities exchange or quoted on the automated quotation
system of a registered securities association. The Commission is
required under section 13(f)(4) to publish a list of section 13(f)
securities, which can be found at www.sec.gov/divisions/investment/13flists.htm.
\6\ Section 13(f)(1) of the Exchange Act [15 U.S.C. 78m(f)(1)].
\7\ See General Instruction 3 of Form 13F. Form 13F requires
managers to disclose, for example, the name, Form 13F file number,
and address of the manager, and, for each security being reported,
the name of the issuer, title of class, CUSIP, market value, amount
and type of security, and whether the manager has investment
discretion and voting authority for that security.
\8\ See Sections 13(f)(4) and (5) of the Exchange Act and 17 CFR
240.24b-2 (``rule 24b-2'') under the Exchange Act. A Form 13F CTR
consists of two parts: A written request letter (the
``application,'' per 17 CFR 240.24b-2(b)(2)) and a paper,
confidential Form 13F for the same calendar quarter as the public
Form 13F that includes only the equity holding(s) for which
confidential treatment is being requested (the ``confidential
portion,'' per 17 CFR 240.24b-2(b)(1)). A Form 13F CTR must be filed
in paper with the Secretary of the Commission. See 17 CFR 240.24b-
2(b)(3). While section 13(f)(4) of the Exchange Act gives the
Commission discretion to determine whether to grant Form13F CTRs,
section 13(f)(4) also prohibits the Commission from publicly
disclosing information that identifies the securities held by the
account of a natural person, estate, or trust (other than a business
trust or investment company).
\9\ 17 CFR 200.30-5(c-1) and (c-2).
---------------------------------------------------------------------------
Section 13(f) of the Exchange Act gives the Commission broad
rulemaking authority to determine the size of the institutions required
to file reports, the format and frequency of the reporting
requirements, and the information to be
[[Page 46018]]
disclosed in each report.\10\ Section 13(f)(1) authorizes the
Commission to set the reporting threshold in an amount ``of at least
$100,000,000 or such lesser amount'' by rule.\11\ In addition, section
13(f)(3) authorizes the Commission to exempt any manager or class of
managers from the reporting requirements of section 13(f).\12\ The 1975
Amendments Senate Report stated that the Commission would ``have
authority to raise or lower'' the threshold.\13\ The 1975 Amendments
Senate Report also indicated that, in setting the reporting threshold
for Form 13F, the Commission should consider, among other factors, the
compliance burdens of reporting and the marginal informational value
provided by the disclosure.\14\ Additionally, in exercising its
authority under section 13(f), the Commission is required to consult
with other agencies, including federal, state, and self-regulatory
organizations.\15\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78m(f)(1); see also Filing and Reporting
Requirements Relating to Institutional Investment Managers, Exchange
Act Release No. 14852 (June 15, 1978) [43 FR 26700, 26701 (June 22,
1978)] (``13F Adopting Release'') at text accompanying n.5.
\11\ However, the Commission does not have the authority to
lower the reporting threshold under section 13(f)(1) to less than
$10 million. See 15 U.S.C. 78m(f)(1).
\12\ 15 U.S.C. 78m(f)(3).
\13\ See Securities Acts Amendments of 1975: Hearings on S. 249
before a Subcomm. of the Senate Comm. on Banking, Housing and Urban
Affairs, 94th Cong., 1st Sess. (S. Report No. 94-75) (1975), at 107
(``1975 Amendments Senate Report'').
\14\ Id. at 86 (stating that, in establishing a reporting
threshold, the Commission should ``balance such costs and burdens to
the public interest that would be served by the expected
informational value of the marginal equity securities holdings which
would then be subject to the reporting provisions'').
\15\ 15 U.S.C. 78m(f)(5). Specifically, the statute requires the
Commission to consult with the Comptroller General of the United
States, the Director of the Office of Management and Budget,
national securities exchanges, registered securities associations,
and the appropriate regulatory agencies, federal and state
authorities which, directly or indirectly, require reports from
managers of information substantially similar to that called for by
section 13(f). Section 3(a)(34)(F) defines ``appropriate regulatory
agency'' for these purposes as the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, and the Federal
Deposit Insurance Corporation. 15 U.S.C. 78c(a)(34)(F) (defining
``appropriate regulatory agency'' when used with respect to a person
exercising investment discretion over an account). We will complete
our consultation with these agencies during the comment period of
this proposal in accordance with section 13(f)(5).
---------------------------------------------------------------------------
In 1978, the Commission implemented the reporting requirement of
section 13(f) by adopting rule 13f-1 and Form 13F.\16\ In designing
Form 13F, the Commission stated that it attempted to structure the form
in a manner that would provide useful data regarding holdings that
would impact the markets, while minimizing the form's reporting
burdens.\17\ In 1999, the Commission required electronic filing of
public Form 13F reports through the Commission's Electronic Data
Gathering, Analysis, and Retrieval (``EDGAR'') system.\18\
---------------------------------------------------------------------------
\16\ See 13F Adopting Release, supra footnote 10.
\17\ See Reporting by Institutional Investment Managers of
Information with Respect to Accounts over which Investment
Discretion is Exercised, Exchange Act Release No. 13396 (Mar. 22,
1977) [42 FR 16831, 16832 at n.7 (Mar. 30, 1977)]. See also 13F
Adopting Release, supra footnote 10.
\18\ See Rulemaking for EDGAR System, Investment Company Act
Release No. 23640 (Jan. 12, 1999) [64 FR 2843 (Jan. 19, 1999)]. In
2013, the Commission modernized the filing format of Form 13F by
replacing the plain-text ASCII format with a structured XML format
and accompanying online form, but did not make any substantive
changes to the Form. See Adoption of Updated EDGAR Filer Manual,
Investment Company Act Release No. 30515 (May 14, 2013) [78 FR 29616
(May 21, 2013)].
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B. Legislative History and Subsequent Developments
Section 13(f) was added to the Exchange Act following a study the
Commission conducted at Congress's direction, which concluded that
there were certain ``gaps in information about the purchase, sale and
holdings of securities by major classes of institutional investors.''
\19\
---------------------------------------------------------------------------
\19\ See 13F Adopting Release, supra footnote 10 at n.3 and
accompanying text.
---------------------------------------------------------------------------
The section 13(f) disclosure program had three primary goals.
First, to create a central repository of historical and current data
about the investment activities of institutional investment managers.
Second, to improve the body of factual data available regarding the
holdings of institutional investment managers and thus facilitate
consideration of the influence and impact of institutional investment
managers on the securities markets and the public policy implications
of that influence. Third, to increase investor confidence in the
integrity of the U.S. securities markets.\20\
---------------------------------------------------------------------------
\20\ See 13F Adopting Release, supra footnote 10 at n.4 and
accompanying text; see also Thomas P. Lemke and Gerald T. Lins,
Equity Holdings by Institutional Investment Manager: An Analysis of
Section 13(f) of the Securities Exchange Act of 1934, 43 Bus. Law
93, 94 n.7 (Nov. 1987); Office of the Inspector General, Review of
the SEC's 13(f) Reporting Requirements (Sept. 27, 2010), available
at https://www.sec.gov/about/offices/oig/reports/audits/2010/480.pdf
(``OIG Report'').
---------------------------------------------------------------------------
Legislative history indicates that the reporting threshold of
section 13(f) was designed so that reporting would cover a large
proportion of managed assets, while minimizing the number of reporting
persons. The $100 million threshold that was adopted thereby limited
the burdens of reporting, particularly on smaller managers. The 1975
Amendments Senate Report noted that, at the time of the section's
adoption, approximately 300 persons--holding about 75 percent of the
dollar value of all institutional equity security holdings--would be
subject to the reporting requirements.\21\ The 1975 Amendments Senate
Report reasoned that, by setting the threshold at $100 million, the
burdens associated with filing Form 13F would be limited to ``the
largest institutional investment managers'' and, therefore, the new
filing requirements could be ``implemented rapidly with the least
amount of unnecessary costs and burdens on the potential respondents.''
\22\
---------------------------------------------------------------------------
\21\ The 1975 Amendments Senate Report indicated that section
13(f) would increase public availability of information regarding
the securities holdings of institutional investment managers. See
supra footnote 13, at 85.
\22\ 1975 Amendments Senate Report, supra footnote 13, at 87.
---------------------------------------------------------------------------
Since 1975, the relative significance of managing $100 million in
securities as compared with the overall size of the U.S. equities
market has declined considerably. More managers have become subject to
the Form 13F reporting obligation, even though $100 million represents
a much smaller fraction of the U.S. equities market, which has grown
substantially in aggregate size. Figure 1 shows the rise in the number
of managers that file Form 13F over time.\23\
---------------------------------------------------------------------------
\23\ Data presented after 1999 only includes managers that file
Form 13F holdings and combination reports (together, ``Form 13F-
HR'') under rule 13f-1. In some instances, two or more managers may
exercise investment discretion with respect to the same securities.
In these cases, subject to certain conditions, Form 13F permits one
such institutional manager to report those securities on behalf of
the other(s). A manager on whose behalf securities are reported,
generally, must file an abbreviated ``notice'' report on Form 13F to
identify the manager(s) reporting on its behalf (``Form 13F-NT'').
See General Instruction 2 to Form 13F (requiring that, where two
managers exercise investment discretion with respect to the same
securities, only one such manager include information regarding
those securities in its Form 13F report).
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[[Page 46019]]
[GRAPHIC] [TIFF OMITTED] TP31JY20.025
Figure 2 shows the significant increase in the overall size of the
U.S. equities market over time and the resulting decrease in the market
significance of managing $100 million in securities as compared with
the overall size of the market.
[GRAPHIC] [TIFF OMITTED] TP31JY20.026
[[Page 46020]]
Today, 5,089 managers that exceed the $100 million threshold file
Form 13F holding reports.\24\ This is approximately 17 times the number
of filers that the threshold covered in 1975. The 1975 Amendments
Senate Report anticipated that the Commission would consider the costs
and burdens on smaller institutional investment managers in preparing
Form 13F reports.\25\ Given the significant increase in the number of
managers required to file 13F reports over the last two decades, and
the substantial reduction in the significance of holdings of $100
million, we believe it is an appropriate time to adjust the reporting
threshold.
---------------------------------------------------------------------------
\24\ See infra footnote 40 (noting that an additional 1,570
managers filed a notice report on Form 13F-NT for December 31,
2018).
\25\ See 1975 Amendments Senate Report, supra footnote 13
(noting that the Commission represented to the Senate that, before
it reduced the 13(f) reporting threshold, it would consider the cost
and burden to such smaller managers of preparing such reports).
---------------------------------------------------------------------------
II. Discussion and Economic Analysis
A. Increase of Form 13F Reporting Threshold
We are proposing to amend rule 13f-1 and Form 13F to raise the
reporting threshold for Form 13F to $3.5 billion.\26\ This adjustment
is based on the growth of the U.S. equities market that occurred
between the adoption of section 13(f) in 1975 and December 2018, and it
is designed to reflect proportionally the same market value of U.S.
equities that $100 million represented in 1975.\27\
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\26\ For purposes of determining whether a manager is required
to file Form 13F, the new reporting threshold would be evaluated for
all months of the calendar year in which the adoption of the new
reporting threshold occurs. Thus, if the Commission were to adopt an
increased reporting threshold in 2020, the increased threshold would
be used to determine Form 13F filing obligations for the cycle
starting with the year ending December 31, 2020. The first Form 13F
report that would apply the new reporting threshold would be due
within 45 days after the end of such calendar year.
\27\ Proposed rule 13f-1(a)(1); see also proposed General
Instruction 1 of Form 13F. We calculated the growth of the U.S.
equities market from 1975 until 2018 using statistical data provided
by the Federal Reserve System. See Federal Reserve Board, Flow of
Funds Chart L.223 for domestic corporate equities, available at
https://www.federalreserve.gov/releases/z1/current/default.htm
(``Federal Reserve Data''). The ratio of U.S. equities market value
in 2018 to U.S. equities market value in 1975 is 3,571.41 percent.
We multiplied that ratio by $100 million and rounded to the nearest
$500 million, which resulted in a dollar value of $3.5 billion.
Because the proposed reporting threshold is a figure in the
billions, we believe that rounding to the nearest $500 million is
appropriate.
---------------------------------------------------------------------------
We have received recommendations from persons representing a
variety of different perspectives to increase the reporting threshold
for Form 13F.\28\ For example, in response to our rulemaking on
shareholder reports and quarterly portfolio disclosure of mutual funds,
two commenters in a joint letter suggested that the 13(f) reporting
threshold should be raised to reflect the ``effects of market
inflation.'' \29\ The Commission's Office of Inspector General
recommended that the staff update its analysis of the impact of
increasing the reporting threshold of $100 million for section 13(f) in
order to determine whether an increase in the threshold amount should
be pursued.\30\ Another commenter called for legislation that would
increase the reporting threshold to $450 million to reflect a consumer
price index (``CPI'') adjustment from 1976 to 2019, with an adjustment
every five years thereafter to reflect changes in the CPI, to ease the
reporting burden on smaller investors.\31\
---------------------------------------------------------------------------
\28\ The Commission has also received petitions for rulemakings
regarding other aspects of Form 13F. We believe that it is
appropriate to propose changes to the scope of managers required to
file reports on Form 13F before considering other potential
amendments to the Form. See Petition for Rulemaking Under Section
13(f) of the Securities Exchange Act of 1934 (Feb. 1, 2013),
available at https://www.sec.gov/rules/petitions/2013/petn4-659.pdf
(requesting that the Commission amend rule 13f-1(a)(1) to shorten
the 45-day delay in Form 13F's reporting deadline); see also
Petition for Rulemaking Pursuant to Sections 10 and 13(f) of the
Securities Exchange Act of 1934 (October 7, 2015), available at
https://www.sec.gov/rules/petitions/2015/petn4-689.pdf (requesting
that the Commission consider requiring periodic public disclosure of
short-sale activities of managers on Form 13F).
\29\ See letter from Fund Democracy and Consumer Federation of
America, File No. S7-51-02 (Feb. 14, 2003). The commenters noted
that ``[t]he $100 million threshold was based on the impact that
such a portfolio could have on the market at the time that Section
13(f) was adopted. If the same standard were applied today, the
threshold would exceed $1 billion dollars. The $100 million
threshold no longer accomplishes the stated purpose of Form 13F
disclosure.''
\30\ See OIG Report, supra footnote 20, at 27. The OIG Report
noted that, in 2006, the staff performed an analysis of increasing
the Form 13F reporting threshold to $300 million, which reflected
inflation using the consumer price index, and staff concluded that
such an adjustment to the threshold would result in a significant
decrease in the number of institutional investment managers that
would be required to file Form 13F, with only a relatively modest
decrease in the total dollar amount of assets covered.
\31\ See National Investor Relations Institute, The Case for 13F
Reform (Sept. 25, 2019), available at https://www.niri.org/NIRI/media/NIRI/Advocacy/NIRI-Case-for-13F-Reform-2019-final.pdf.
---------------------------------------------------------------------------
We believe that increasing the reporting threshold would provide
meaningful regulatory relief for smaller managers that manage less than
$3.5 billion in 13(f) assets and would no longer have to file the form
in terms of a reduction in direct compliance costs and indirect costs.
We believe that some of the direct compliance costs associated with
preparing filings on Form 13F have decreased since 1975, principally
due to lower-cost information processing systems. However, we believe
that direct compliance costs are likely to be proportionately higher
for smaller managers than they are for larger managers.\32\ For
example, in connection with staff outreach to advisers to smaller fund
complexes, these advisers stated that reporting on Form 13F involves
significant compliance burdens. Other indirect costs also may have
increased since 1975, especially for smaller managers. For example,
public reports of smaller managers, as compared with larger managers,
may be more likely to reflect a limited number of separately managed
portfolios that follow the same style or reflect the investment
behavior of a single portfolio manager.\33\ Consequently, Form 13F data
of smaller managers may be more likely to be used by other market
participants to engage in behavior that is damaging to the manager and
the beneficial owners of the managed portfolio, such as front running
(which primarily harms the beneficial owners) or copycatting (which
potentially harms the portfolio manager), which may increase the costs
of investing for smaller managers and hinder their investment
performance.\34\
---------------------------------------------------------------------------
\32\ See infra discussion accompanying and following footnote 43
(discussing the direct compliance costs and indirect costs
associated with Form 13F); see also Section III below for a
discussion of estimated information collection burdens associated
with Form 13F under the Paperwork Reduction Act.
\33\ See Marshall E. Blume and Donald B. Keim, The Changing
Nature of Institutional Stock Investing, 6 Critical Fin. Rev. 1
(2017) (``Blume and Keim'') at 3-4.
\34\ See e.g., Susan E.K. Christoffersen, Erfan Danesh, and
David Musto, Why Do Institutions Delay Their Shareholdings? Evidence
from Form 13F, (Working Paper, June 11, 2018) (``Chistoffersen,
Danesh and Musto''), available at https://www.bwl.uni-mannheim.de/media/Lehrstuehle/bwl/Area_Finance/Finance_Area_Seminar/HWS2018/Christoffersen_Paper.pdf (explaining that a frontrunner is one who
trades ``in front of an expected trade by another investor, thereby
making the same trade on the terms the other investor would
otherwise have got.''); see also Mary Margaret Frank, et al.,
Copycat Funds: Information Disclosure Regulation and the Returns to
Active Management in the Mutual Fund Industry, 47 J.L. & Econ. 515
(2004) (``Frank et al. 2004'') (explaining that copycat funds
``purchase the same assets as actively-managed funds as soon as
those asset holdings are disclosed.'').
---------------------------------------------------------------------------
Smaller managers also account for a significant proportion of the
Form 13F CTRs filed with the Commission. Managers with less than $3.5
billion of 13(f) securities manage 9.2 percent of the dollar value of
all reported securities, yet our staff estimates that those smaller
managers submit approximately three-fourths of all the Form 13F CTRs
filed (see Table 1). Additionally, smaller managers may have limited
resources, which might
[[Page 46021]]
make it difficult for them to file Form 13F CTRs in order to protect
their holdings information from harmful behaviors and the costs of
those behaviors.
Our staff regularly receives inquiries and requests for assistance
from managers regarding compliance with the Form 13F reporting
obligations. Smaller managers make many of the requests. In addition to
relieving smaller managers from the compliance burdens associated with
filing Form 13F (and Form 13F CTRs), our proposal would also reduce the
costs to the Commission associated with administering the regulatory
program for Form 13F by reducing the number of inquiries and requests
for assistance the staff receives and the associated time needed for
staff review.
We considered various approaches to adjusting the reporting
threshold, including the use of:
Stock Market Growth: Using the growth in value of U.S.
public corporate equities from 1975 until 2018 as the basis for
calculating the threshold increase, the threshold would be $3.57
billion.\35\
---------------------------------------------------------------------------
\35\ Based on the Federal Reserve Data, supra footnote 27.
---------------------------------------------------------------------------
Consumer Price Inflation: We evaluated two potential
consumer price inflation calculations:
[cir] Using the Personal Consumption Expenditures Price Index
(``PCE'') inflation standard through 2018, the threshold would be $358
million.\36\
---------------------------------------------------------------------------
\36\ Based on the Personal Consumption Expenditures Chain-Type
Price Index, published by the U.S. Department of Commerce.
---------------------------------------------------------------------------
[cir] Using the CPI inflation standard through 2018, the threshold
would be $453 million.\37\
---------------------------------------------------------------------------
\37\ Based on the Consumer Price Index for All Urban Consumers,
published by the Bureau of Labor Statistics of the U.S. Department
of Labor.
---------------------------------------------------------------------------
Stock Market Returns: Using the total return of the stock
market from the end of December 1975 to the end of December 2018 as the
basis for calculating the threshold increase, the threshold would be
$9.33 billion.\38\
---------------------------------------------------------------------------
\38\ We assembled monthly value-weighted market returns with
dividends reinvested from the Center for Research in Security
Prices. We compounded these returns from January 1976 to December
2018, and we multiplied that product by $0.100 billion, which
resulted in $9.33 billion.
---------------------------------------------------------------------------
Table 1 demonstrates how changing the reporting threshold for
section 13(f) would affect the number of filers at different threshold
amounts and the aggregate holdings reported by such filers.\39\
---------------------------------------------------------------------------
\39\ The staff compiled this data by reviewing filings made on
Form 13F during the relevant period. The data excludes securities
reported as options on Form 13F. The staff has adjusted the reported
data to account for what appeared to be erroneously reported
information, such as data that is reported in the wrong units.
\40\ This data covers Form 13F-HR, but excludes Form 13F-NT. An
additional 1,570 managers filed a Form 13F-NT for December 31, 2018.
Using this data, we cannot determine precisely how many of these
additional 1,570 managers would no longer need to file Form 13F-NT
if the reporting threshold is increased. Therefore, if a Form 13F-NT
filer is linked to a Form 13-HR filing of a manager that exceeds the
3.5 billion threshold, we assumed that such a manager would be
required to file Form 13F-NT if the reporting threshold is increased
as proposed. Therefore, we estimate that 738 notice reports would be
filed on Form 13F-NT if the proposed threshold increase is adopted.
Certain aspects of the Form 13F reporting structure make it
difficult to pinpoint the exact value of reported holdings for an
individual manager. The staff analysis excludes holdings reported as
options. In addition, not all holdings may be reported due to Form
13F CTRs and managers may omit a holding if they hold fewer than
10,000 shares and less than $200,000 in aggregate fair market value.
Therefore, the actual number of Form 13F filers above the threshold,
the aggregate assets of filers above the threshold, and the
percentage of all assets may be higher.
Table 1--Form 13F Reporting Threshold Changes
[13F Holdings Filings as of December 31, 2018 \40\]
Total Number of Holdings Filers: 5,089
Total Reported Assets (billions): $25,198
----------------------------------------------------------------------------------------------------------------
Aggregate Percent of the
Number of Number of Percent of assets of dollar value
Threshold filers above filers below filers below filers above of all
threshold threshold threshold threshold reported
(billions) assets
----------------------------------------------------------------------------------------------------------------
>=$100 billion.................. 37 5,052 99.3 14,286 56.7
>=$30 billion................... 114 4,975 97.8 18,605 73.8
>=$25 billion................... 122 4,967 97.6 18,824 74.7
>=$10 billion................... 278 4,811 94.5 21,261 84.4
>=$5 billion.................... 441 4,648 91.3 22,427 89.0
>=$4.5 billion.................. 467 4,622 90.8 22,550 89.5
>=$4 billion.................... 500 4,589 90.2 22,688 90.0
>=$3.5 billion.................. 550 4,539 89.2 22,876 90.8
>=$3 billion.................... 597 4,492 88.3 23,027 91.4
>=$2.5 billion.................. 672 4,417 86.8 23,233 92.2
>=$2 billion.................... 790 4,299 84.5 23,494 93.2
>=$1.5 billion.................. 955 4,134 81.2 23,780 94.4
>=$1 billion.................... 1,227 3,862 75.9 24,113 95.7
>=$900 million.................. 1,301 3,788 74.4 24,183 96.0
>=$800 million.................. 1,407 3,682 72.4 24,273 96.3
>=$700 million.................. 1,532 3,557 69.9 24,366 96.7
>=$600 million.................. 1,710 3,379 66.4 24,481 97.2
>=$500 million.................. 1,904 3,185 62.6 24,588 97.6
>=$400 million.................. 2,188 2,901 57.0 24,716 98.1
>=$300 million.................. 2,543 2,546 50.0 24,838 98.6
>=$200 million.................. 3,148 1,941 38.1 24,985 99.2
>=$100 million.................. 5,089 0 0.0 25,198 100.0
----------------------------------------------------------------------------------------------------------------
We considered raising the threshold to account for consumer price
inflation, rather than market growth. However, we preliminarily
determined that the group of managers covered by using a market growth
standard better reflects the group of managers intended to be subject
to reporting under section 13(f) because this approach focuses on
managers whose holdings of section 13(f) securities are large relative
to the overall
[[Page 46022]]
size of the U.S. equities market.\41\ Raising the reporting threshold
for rule 13f-1 to $3.5 billion, which would account for the growth in
the U.S. equities market since 1975, would retain disclosure of 90.8
percent of the dollar value of the Form 13F holdings data currently
reported while relieving the reporting burdens from approximately 4,500
Form 13F filers, or approximately 89.2 percent of all current
filers.\42\
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\41\ See supra footnote 22 and accompanying text (noting that
the 1975 Amendments Senate Report stated that the Form 13F reporting
threshold was designed to limit the form's filing obligations to
``the largest institutional investment managers'').
\42\ Since December 31, 2018, there have been significant
fluctuations in the market that may impact our analysis.
---------------------------------------------------------------------------
Managers incur direct compliance costs, including information
collection costs,\43\ associated with Form 13F. These costs include the
following: (1) Developing and maintaining internal hardware and
software systems to collect and analyze the information for submission;
\44\ (2) utilizing internal and external legal and compliance resources
for advice and review in connection with Form 13F filings and to
analyze whether any holdings qualify for confidential treatment and, if
so, to prepare and submit a request for confidential treatment; (3)
preparing the information for submission to the EDGAR system; and (4)
undertaking other reviews or compliance activities as part of the
manager's overall compliance program, such as comparisons of the data
reported on Form 13F against other regulatory filings that may have
similar data reporting obligations to confirm that information is
reported consistently across multiple regulatory filings, as
applicable.
---------------------------------------------------------------------------
\43\ See Section III below for a discussion of estimated
information collection costs associated with Form 13F under the
Paperwork Reduction Act.
\44\ We believe that funds generally do not maintain dedicated
hardware systems for the sole purpose of filing Form 13F. Our cost
estimates therefore are intended to take into account only the
partial cost of those systems attributable to filing Form 13F.
---------------------------------------------------------------------------
Based on staff analysis and outreach to managers, we estimate that,
for the smaller managers that would no longer file reports on Form 13F
under the proposal, these direct compliance costs could range from
$15,000 to $30,000 annually per manager, depending on the complexity
and volume of holdings, the type of third-party legal and compliance
review undertaken prior to the filing, and a filer's experience with
filing Form 13F, among other factors. Therefore, we estimate that the
direct compliance cost savings for these managers per year would range
from $68.1 million to $136 million.\45\ We believe that larger managers
that would continue to be required to file reports on Form 13F under
the proposal incur higher direct compliance costs, on a per manager
basis, than the smaller managers.
---------------------------------------------------------------------------
\45\ These estimates are based on the following calculations:
4,539 filers x $15,000 = $68,085,000; 4,539 filers x $30,000 =
$136,170,000. This is based on our estimate that 4,539 managers
would no longer be required to file reports on Form 13F-HR under the
proposal. These estimates do not include direct compliance costs for
managers filing notice reports on Form 13F-NT. The information
collection burdens associated with these filings are included in the
estimates discussed below in Section III.
---------------------------------------------------------------------------
In addition to these direct compliance costs, managers face
indirect costs such as the potential for front-running and copycatting.
The key determinant of these indirect costs is whether the disclosure
of holdings information enables other market participants to take
actions that harm either the beneficial owners of the fund or its
manager.
The academic literature provides partial evidence about the harm
caused by the actions of third parties that is applicable in the
context of the proposed amendments. For example, several studies show
that managers use confidential treatment requests to delay reporting
stocks on Form 13F that have higher future returns than their other
stocks, but these studies do not directly verify that the delayed
stocks do not continue to have high future returns after the end of the
confidential treatment period.\46\ Other researchers show that managers
who are more likely to face front-running costs choose to file at the
end of the 45-day filing window, but they do not show whether or to
what extent the delay to the end of the filing window eliminates the
potential front-running costs.\47\ Many studies test for copycatting
profits by simulating funds that copy reported 13F portfolios, and the
studies generally find that some copycat funds can match the
performance of the copied funds, although they do not directly test
whether this behavior harms managers or beneficial owners of the copied
funds.\48\ In addition, one study examines hedge funds around the time
they begin filing Form 13F. The study suggests that hedge funds
experience decreased performance after Form 13F disclosure, and it
reports that this drop in performance may be ``due to the revelation of
trade secrets and free-riding activities.'' \49\
---------------------------------------------------------------------------
\46\ See George O. Aragon, Michael Herzel, and Zhen Shi, Why Do
Hedge Funds Avoid Disclosure? Evidence from Confidential 13F
Filings, 48 J. Fin. & Quantitative Analysis, 1499 (Oct. 2013); see
also Agarwal Vikas, Wei Jiang, Yuehua Tang, and Baozhong Yang,
Uncovering Hedge Fund Skill from the Portfolio Holdings They Hide,
68 J. Fin. 739 (2013).
\47\ See Chistoffersen, Danesh and Musto, supra footnote 34 at
23.
\48\ See Frank et al. 2004, supra note 34; see also Marno
Verbeek and Yu Wangb, Better than the Original? The Relative Success
of Copycat Funds, 37 J. Banking & Fin. 3454 (2013); see also
Chistoffersen, Danesh and Musto, supra footnote 34.
\49\ See Shi, Zhen, The Impact of Portfolio Disclosure on Hedge
Fund Performance (2017) the Journal of Financial Economics, Vol.
126, at 38 (``Shi (2017)'') (finding (a) an annual reduction of
certain hedge funds' performance after they begin filing Form 13F,
(b) that ``the return correlations between disclosing funds and
other hedge funds that are in the same investment style increase
after the disclosure,'' and (c) that ``the negative effect of
disclosure is concentrated among funds that hold more illiquid
stocks, have lower turnover rates, have greater portfolio
concentration, are in more competitive investment styles, have
performed well in the past, employ less conventional trading
strategies, or belong to an asset management company with a smaller
number of funds'').
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Under the proposed amendments, the aggregate value of section 13(f)
securities reported by managers would represent approximately 75
percent of the U.S. equities market as a whole, as compared with 83
percent without the proposed amendments and 40 percent in 1981, the
earliest year for which Form 13F data is available.\50\ The proposed
amendments to the Form 13F reporting threshold thus also reflect the
changes in the structure of the market that have occurred over time.
---------------------------------------------------------------------------
\50\ This data is based on the staff's review of data reporting
on Form 13F and Federal Reserve Data.
---------------------------------------------------------------------------
Using CPI or PCE would result in a reporting threshold of $500
million and $400 million, respectively (applying a rounding convention
to the nearest $100 million). The decrease in the dollar value of the
reported holdings would be either about 2.4 percent or 1.9 percent, and
the decrease in the number of current filers would be about 3,200 or
2,900, respectively. In the years since 1975, the overall size of the
U.S. equities market has grown at a rate significantly higher than the
CPI or PCE. The legislative history indicates that the reporting
threshold of section 13(f) was designed to focus on larger managers. We
therefore believe that relying on a consumer price inflation measure
such as CPI or PCE to account for 45 years of market growth would not
adequately or appropriately capture the holdings and universe of
managers contemplated by section 13(f).
Using stock market returns from December 1975 to December 2018,
rather than market growth, would result in a reporting threshold of
$9.5 billion, rounded to the nearest $500 million. The decrease in the
dollar value of the reported holdings would be about 15.2 percent and
the decrease in the number of current filers would be about 4,800. We
believe that section 13(f) was
[[Page 46023]]
intended to provide transparency into a certain segment of the
securities markets--the equity holdings by larger institutional
investment managers. Therefore, we believe that it is more appropriate
to increase the reporting threshold based on the growth of the U.S.
equities market rather than the returns generated by the stock market.
Our preliminary decision to use market growth to adjust the reporting
threshold is designed to require managers to file on Form 13F when
their holdings of section 13(f) securities approximate the same
percentage of the U.S. equities market that was represented by the $100
million threshold in 1975. If we were to use stock market returns
instead, however, the holdings of individual managers required to
report under this threshold would not approximate the same percentage
of the U.S. equities market that was represented by the $100 million
threshold in 1975.
We have considered the potential effects of the reduction in Form
13F data received from smaller managers, and we understand that the
information reported on Form 13F currently is used for a wide variety
of purposes. Since Form 13F data became publicly available, different
uses for the data have developed. These uses developed, in part, due to
the increased volume of Form 13F data as more and more managers became
subject to the filing requirement. While Form 13F was originally
designed to assist regulators and the public in understanding the
effects of institutional equity ownership on the markets, the pool of
users of the data has expanded to include academics, market
researchers, the media, attorneys pursuing private securities class-
action matters, and market participants (including institutional
investors themselves) who use the data to enhance their ability to
compete.\51\ The data can also assist individuals in making investment
decisions, investment managers in managing assets, and corporate
issuers of 13(f) securities interested in determining the beneficial
holders of their publicly traded stock.\52\ Commission staff also uses
Form 13F information for a variety of purposes, some of which were
specifically identified in the legislative history of section 13(f),
while others were not. Since section 13(f) was adopted in 1975, data
available to the Commission about the investment activities of
institutional investment managers has been greatly expanded and
includes data from sources other than Form 13F, such as Form N-PORT.
Commission staff currently uses Form 13F and other data regarding the
investment activities of institutional investment managers in
rulemakings, to support the Commission's examination and enforcement
programs, and to conduct research. For example, Commission staff may
use investor information from Form 13F on a relatively infrequent basis
in estimating shareholder harm as well as shareholder turnover, which
may be considered in the context of potential corporate penalties,
including in determining whether proposed penalties would cause further
harm to shareholders who suffered losses as a result of the violation.
Commission staff typically will have access to additional data sources
for these estimates, including Form N-PORT, and the Commission
generally does not expect the proposed amendments to the Form 13F
reporting thresholds to impact the staff's recommendations regarding
the imposition or amounts of corporate penalties.
---------------------------------------------------------------------------
\51\ Commission staff has noted that ``meritorious private
actions have long been recognized as an important supplement to
civil and criminal law-enforcement actions.'' See Study on the
Cross-Border Scope of the Private Right of Action under Section
10(b) of the Securities Exchange Act of 1934, available at https://www.sec.gov/news/studies/2012/929y-study-cross-border-private-rights.pdf. Some of those private actions use Form 13F data in their
calculations to produce a more reliable, `lower bound' estimate of
damages. See Marcia Mayer, Best-Fit Estimation Of Damaged Volume in
Shareholder Class Actions: The Multi-Sector, Multi-Trader Model of
Investor Behavior, Nat'l Economic Research Assoc. (Oct. 2006);
Daniel Fishel et al., The Use of Trading Models to Estimate
Aggregate Damages in Securities Fraud Litigation: An Update, 10(3)
Briefly (Washington, D.C.) 1 (2006). As a result, a reduction in
publicly available Form 13F data may result in increased use of
other methods to estimate shareholder harm.
\52\ See generally Edward Pekarek, Hogging the Hedge?
``Bulldog's'' 13F Theory May Not be So Lucky, 12 Fordham J. Corp. &
Fin. Law 1079 (2007) (``Pekarek'').
---------------------------------------------------------------------------
We recognize that raising the Form 13F reporting threshold would
decrease holdings data available to the Commission and other regulators
as well as corporate issuers, market participants, and other analysts
and researchers pursuant to section 13(f).\53\ Although we believe the
proposal would retain disclosure of 90.8 percent of the dollar value of
the Form 13F holdings data, some of the holdings data that would no
longer be reported by managers with less than $3.5 billion in section
13(f) securities relates to smaller portfolio companies in which some
commenters assert larger managers may be less likely to invest.\54\ We
estimate that, under the proposal, holdings data for approximately 95.7
percent of portfolio companies that are currently reported by more than
one manager on Form 13F would continue to be reported on the form.\55\
Whether any of these Form 13F data users find the data from smaller
managers to be valuable would depend on their particular use of this
data.\56\ We believe that the investing public specifically would be
less concerned about the availability of portfolio holdings of these
smaller managers because the activities of these smaller managers are
not likely to cause market effects of the type contemplated by section
13(f).\57\
---------------------------------------------------------------------------
\53\ See infra footnote 58 and accompanying text.
\54\ See e.g., Blume and Keim supra footnote 33 at 16 (providing
evidence that portfolios of smaller institutional investors are
weighted more heavily towards smaller stocks compared to portfolios
of larger institutional investors, but noting that both large and
small institutional investors overweight investments in smaller
stocks relative to market weights).
\55\ We believe that data regarding portfolio companies held by
just a single manager would generally be of limited value to many
users of Form 13F data. This is because a smaller sample size
provides less information about the population and, in particular, a
sample size of one provides no basis for an estimate of variance.
However, if we also counted portfolio companies that are currently
held by just a single manager on Form 13F, together with portfolio
companies that are currently held by more than one manager, we
estimate that, under the proposal, holdings data for approximately
87.2 percent of portfolio companies would continue to be reported.
\56\ See e.g., Blume and Keim, supra footnote 33 (observing
that, because the $100 million reporting threshold has not changed
over several decades, whereas stock market capitalization has
increased significantly, the holdings of smaller managers make up
only 6.1 percent of the aggregate institutional portfolio in 2010
and do not affect the main results of their analysis about the
trends of institutional ownership).
\57\ In addition, to the extent that a manager (individually or
collectively with other members of a group) acquires more than 5
percent of any voting class of a company's equity securities
registered under section 12 of the Exchange Act, the manager would
be required to report such an acquisition, along with other
information, on Schedule 13D within 10 days of the purchase.
Depending on the circumstances, the manager may be eligible to file
the more abbreviated Schedule 13G in lieu of filing Schedule 13D.
---------------------------------------------------------------------------
When examining the effects on data availability of the proposed
amounts, we are mindful of alternative sources of holdings data that
either exist or are being developed and may provide overlapping or
similar data to that included on Form 13F. For example, since the
adoption of section 13(f), the Commission has adopted additional rules
and forms that require investment companies to provide additional
holdings data to the Commission, which would provide the Commission and
the public with certain information about these funds' holdings of
section 13(f) securities and other investments.\58\ As
[[Page 46024]]
another example, the Commission adopted a rule to require the self-
regulatory organizations to submit to the Commission a national market
system plan to create, implement and maintain a comprehensive
consolidated audit trail that would allow regulators to track all
activity throughout the U.S. markets in National Market System
securities efficiently and accurately.\59\
---------------------------------------------------------------------------
\58\ See e.g., Form N-PORT [referenced in 17 CFR 274.150] (This
form requires each registered management investment company to
report on a quarterly basis its monthly holdings information to the
Commission. On a quarterly basis, and with a 60-day delay, holdings
information for the last month of the quarter is made publicly
available). Additionally, developments in the market such as the
increased use of technology to capture current data with respect to
market activity, including more sophisticated systems for following
daily transactions, have reduced the need for the Commission to rely
on Form 13F for purposes of market analysis or surveillance.
\59\ See Securities Exchange Act Release No. 67457 (July 18,
2012), [77 FR 45722 (August 1, 2012)].
---------------------------------------------------------------------------
The 1975 Amendments Senate Report noted that Congress was concerned
with the material increase in the concentration of institutional
ownership of securities with managers and the effect of such an
increase on the trade prices of those securities, the issuers of the
securities, as well as on the interests of individual investors.\60\
Congress adopted section 13(f), in part, because it was concerned that
this increase in concentration, coupled with the lack of trading data
of larger managers available to regulators and the market, hampered the
Commission's ability to maintain fair and orderly securities markets
and impaired the stability of stock prices.\61\ We believe that it is
necessary to continue to provide regulators and the public information
regarding the equities holdings of larger managers that have the
potential to significantly affect the securities markets. The need for
public disclosure of holdings of smaller managers is less compelling.
Raising the reporting threshold to $3.5 billion is designed to
recalibrate the reporting threshold to reflect the multiple objectives
of section 13(f). These include providing the Commission, other
regulators and the public with holdings information of larger managers
that may impact the markets without requiring smaller managers to incur
the costs associated with filing reports on Form 13F and subjecting
them to the risks of potentially harmful investment behaviors resulting
from those filing obligations. We believe that the proposed $3.5
billion reporting threshold recalibrates the reporting threshold
appropriately so that it does not impose undue burdens, including
because the dollar value of the aggregate holdings of the smaller
managers that would no longer be required to file reports on Form 13F
under the proposal represent a small percentage of 13(f) securities
overall.
---------------------------------------------------------------------------
\60\ See 1975 Amendments Senate Report, supra footnote 13 at 82.
\61\ Id.
---------------------------------------------------------------------------
We request comment on the proposed amendments to rule 13f-1 and
Form 13F to adjust the reporting threshold.
1. Should we, as proposed, adopt an amendment to rule 13f-1 that
would initially adjust the reporting threshold under rule 13f-1? Is the
proposed threshold of $3.5 billion appropriate? If another threshold
would be more appropriate, what should the threshold be and why?
2. Would raising the reporting threshold for Form 13F to $3.5
billion negatively affect the utility of Form 13(f) data or investor
confidence in the integrity of the U.S. markets? If so, how? And if so,
is there a different threshold that would be more appropriate? Are
there any additional effects of raising the Form 13F reporting
threshold that we have not considered?
3. Should we, as proposed, adopt an amendment to rule 13f-1 that
would initially adjust the Form 13F reporting threshold based on the
growth in the U.S. equities market? Should we, as described above, use
the Federal Reserve Board's flow of funds data on corporate equities as
a basis for this calculation?
4. Rather than adjusting the Form 13F reporting threshold based on
the growth in the U.S. equities market that occurred between 1975 and
December 2018 (a date certain), should we instead use an average rate
of growth, which might effectively reflect market growth while
minimizing the effects of market fluctuations around the time the
Commission is adjusting the threshold? For example, under this
approach, we could take the market size as of the end of 2015, 2016,
2017, 2018, and 2019, average those values, and compare that average to
the size of the U.S. equities market in 1975. If so, why? Is such a
five-year period (or other period) more appropriate for calculating an
average growth rate to apply over the 45 years since the threshold was
initially set?
5. Should we instead adjust the reporting threshold for Form 13F
using stock market returns as a basis for this calculation? If so, how
should we measure stock market returns? For example, would dividends be
included or excluded? Is there another measure that we should use as a
basis for initially adjusting the reporting threshold?
6. Should we instead adjust the reporting threshold for Form 13F to
account for consumer price inflation? If so, what measure of consumer
price inflation--PCE or CPI--should we use? Is there another measure of
consumer price inflation (or other inflation measure) that we should
use? If so, what?
7. Should we adopt a different rounding convention, rather than the
nearest $500 million, such as the nearest $1 billion, $250 million, or
$100 million? For example, if we rounded to the nearest $100 million,
the reporting threshold would be $3.6 billion based on stock market
growth. If we should use a different rounding convention, why?
8. Are the Form 13F filing obligations burdensome to smaller
managers? If so, how? Are they burdensome in absolute terms, relative
terms, or both? Are the burdens on smaller managers different in
character from the burdens on larger managers?
9. What, if any, are the benefits to investors and markets for the
markets to have access to Form 13F data from smaller managers? Do these
benefits justify the filing burdens? If so, why?
10. Are the Form 13F filing obligations burdensome to larger
managers? If so, how? Is it beneficial to the markets to continue to
have access to Form 13F data from larger managers? If so, why? Do these
benefits justify the filing burdens? If so, why?
11. Who uses Form 13F data? Are these uses beneficial to investors,
market integrity, or capital formation? Why or why not? How will these
users of the data be affected if the reporting threshold is increased
and fewer filers report? Do those users prefer a different threshold?
Why or why not? Can those users reasonably find alternative sources of
data that meet their needs? Why or why not?
12. We estimate above direct compliance costs that smaller managers
incur in connection with Form 13F. Are these estimates accurate? What
kinds of costs, and in what amounts, do smaller managers incur in
connection with Form 13F? How do the costs differ for larger and
smaller managers? How much internal time do managers devote to
compliance with Form 13F? What are the external costs, such as the cost
of a third-party vendor or external legal counsel, associated with
complying with Form 13F? We request comment on the direct compliance
costs managers experience in connection with Form 13F, including the
estimates in Section III below, and how these costs vary among
managers.
13. We also request comment on indirect costs that may be incurred
in connection with Form 13F. We discuss above some of these indirect
costs, such as the potential for front-running and copycatting. Do
commenters agree that these indirect costs are incurred? How
[[Page 46025]]
do these indirect costs differ for larger and smaller managers? Are
there other or different indirect costs that are incurred in connection
with Form 13F? What are those and how would they be affected by the
proposed amendments?
B. Future Analysis
We are proposing an increase in the reporting threshold of Form 13F
to account for the change in size and structure of the U.S. equities
market since 1975. However, we recognize that, as the U.S. equities
market continues to change in the future, Form 13F's reporting
threshold, once again, may become significantly misaligned with the
size and structure of the market and, as a result, place unnecessary
reporting burdens on certain managers. Therefore, the staff will
conduct reviews of the Form 13F reporting threshold every five years to
determine whether the reporting threshold continues to be appropriate.
If, as a result of such a review, the staff believes that additional
adjustments should be made to the Form 13F reporting threshold, the
staff will recommend an appropriate adjustment to the Commission.
As an alternative, we considered proposing to amend rule 13f-1 to
provide that the Commission would make automatic future adjustments to
the Form 13F reporting threshold on an ongoing basis every five years
to keep the reporting threshold aligned with the size and structure of
the market.\62\ For example, we considered proposing that these
automatic adjustments take into account the growth in the U.S. equities
market. However, we are concerned that adjusting the Form 13F reporting
threshold to account for the growth in U.S. equities market for
regularly recurring, automatic, and ongoing adjustments could cause
volatile changes in the reporting threshold. Alternatively, we
considered using inflation indexes, such as the PCE or CPI, to make
automatic adjustments to the Form 13F reporting threshold. While these
measures would result in less volatile changes to the 13F reporting
threshold, we are concerned that the growth in the size of the market
may outpace inflation over time. This would cause the 13F reporting
threshold to burden smaller managers unnecessarily.
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\62\ Such a requirement would be similar to other automatic
periodic adjustments that the Commission makes. For example, 17 CFR
275.205-3 [rule 205-3 under the Investment Advisers Act of 1940
(``Advisers Act'')] provides that the Commission will issue an order
every five years to adjust the dollar amounts in that rule for the
effects of inflation.
---------------------------------------------------------------------------
Based on these considerations, we determined not to propose
automatic future adjustments to the reporting threshold. The staff's
periodic review of the Form 13F reporting threshold and any resulting
staff recommendation would inform the Commission's consideration of
whether to propose additional changes to the threshold in the future.
Addressing any future change to the reporting threshold in notice and
comment rulemaking, as opposed to an automatic adjustment required by
an order, would allow the Commission to actively consider and receive
public comment on the effects of any future adjustments to the
reporting threshold, including the effects on the mix of information
available to the market and the reporting burdens associated with
filing Form 13F reports. We request comment on the following:
14. Rather than the staff conducting periodic reviews of the Form
13F reporting threshold, should we instead adopt a periodic automatic
adjustment to the Form 13F reporting threshold? If so, how often should
the reporting threshold be automatically adjusted? If we adopt an
automatic adjustment, what measure should we use to make the
adjustment? Should we use consumer price inflation measures such as the
CPI or PCE? Should we use stock market growth or stock market returns
instead? Is there a different measure that would be more appropriate?
If so, please explain why. If we use any of these measures, how should
they be measured and as of what date? If we use an adjustment based on
stock market growth or returns, the adjustment could be positive or
negative compared with the present level. Would such an automatic
adjustment raise any additional issues that the Commission should take
into account in considering such an automatic adjustment?
C. Omission Threshold for Form 13F
Form 13F allows, but does not require, a manager to omit holdings
of fewer than 10,000 shares (or less than $200,000 principal amount of
convertible debt securities) (``share limit'') and less than $200,000
aggregate fair market value (``value limit'') (together, with the share
limit, ``omission threshold'').\63\ The omission threshold was intended
to further the Commission's goals of structuring Form 13F in a manner
that would provide meaningful holdings data while minimizing the form's
reporting burdens.\64\ The Commission included the omission threshold
when it first adopted Form 13F because it viewed aggregate holdings in
these amounts as de minimis and, therefore, unlikely to have the
potential to materially impact the market.\65\
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\63\ See Special Instruction 10 of Form 13F.
\64\ See supra footnote 17 and accompanying text.
\65\ See 13F Adopting Release, supra footnote 10 at n.12 and
accompanying text.
---------------------------------------------------------------------------
In conjunction with the proposal to increase the reporting
threshold, we are proposing to eliminate the omission threshold for
Form 13F. We believe that, if the reporting threshold is substantially
increased, the omission threshold would no longer be necessary or
appropriate. We have proposed a significant increase in the reporting
threshold for Form 13F to $3.5 billion and, as a result, reporting all
of a manager's holdings would be less burdensome to managers of that
size. For these larger managers, we believe that the incremental
increase in cost, if any, of including securities holdings information
below the omission threshold on Form 13F would be immaterial, including
because larger managers are more likely to have trading and other
systems that can export all of the manager's positions (regardless of
size) for purposes of reporting on Form 13F. Eliminating the omission
threshold therefore may not materially increase burdens for these
filers. Although we do not have data on the extent to which managers
currently utilize the omission threshold, our staff has examined
current filings on Form 13F by managers reporting more than $3.5
billion in holdings and found that a number of these managers currently
report holdings that fall below the omission threshold.\66\ These
managers choose not to omit certain holdings even where Form 13F would
permit them to do so. Should a manager determine that disclosure of a
smaller holding may cause harm and qualify for confidential treatment,
we believe that managers with at least $3.5 billion under management
would be able to seek appropriate protection by filing Form 13F CTR.
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\66\ In December 2018, we estimate that 1,162 managers, or 23.1
percent, voluntarily reported at least some positions that fell
within the omission threshold. Additionally, approximately 212
managers (or 38.27 percent) who had at least $3.5 billion in assets
under management voluntarily reported positions that fell below the
omission threshold.
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Rather than eliminate the omission threshold entirely, as proposed,
we considered adjusting it, including adjusting it upwards to account
for market growth, akin to the adjustment we are proposing to the
reporting threshold (e.g., increasing the share limit to 50,000 and the
value limit to $1,000,000 \67\). We are not taking this or
[[Page 46026]]
a similar approach because, as discussed, we believe that the
incremental increase in cost, if any, of including securities holdings
information below the current omission threshold--or any revised
threshold--is likely immaterial.
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\67\ Based on the staff's review of data reported on Form 13F,
increasing the share and value limits in this way would result in
25.83 percent of the number of holdings qualifying for omission on
Form 13F and a decrease in the value of the reported securities of
0.22 percent.
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We seek comment on our proposal to eliminate the omission
threshold, including the following issues:
15. Should we, as proposed, eliminate the omission threshold? Why
or why not?
16. If the Form 13F reporting threshold is raised to $3.5 billion
as proposed, to the extent it is not already reported on a voluntary
basis, would investors and the markets find the disclosure of smaller
holdings information for larger managers valuable? Why or why not?
17. Among Form 13F filers with at least $3.5 billion of 13(f)
securities under management, is it costly to report small positions?
Why or why not? How many of these filers' positions have fewer than
10,000 shares? How many of their positions are valued under $200,000?
What is the incremental cost of reporting these small positions on Form
13F? Is the incremental cost significant? Are there other costs
associated with identifying these specific positions for purposes of
excluding them? Are there other reasons that it would be beneficial to
keep the omission threshold?
18. Rather than eliminating the omission threshold, should we
increase it? If so, what part should we increase? Should we adjust only
the share limit of the omission threshold? If so, to what? Should we
adjust only the value limit of the omission threshold? If so, to what?
Should we adjust both components of the omission threshold? If so, to
what? Should we, for example, increase the share limit to 50,000 and
the value limit to $1,000,000?
19. Should we mirror the adjustment to the omission threshold
proportionately to the adjustment we are proposing for the Form 13F
reporting threshold using stock market growth? Would such an adjustment
result in a significant decrease in securities reported on Form 13F?
Would such an adjustment impede the ability of the public to observe
the impact managers have on the markets?
20. If we maintain an omission threshold, should we adopt a
mechanism for automatic future adjustments of the omission threshold?
Should future adjustments be for the share limit, for the value limit,
or for both? What is an appropriate mechanism for adjusting the share
limit?
D. Additional Identifying Information
We are proposing to amend Form 13F to require filers to provide
additional identifying information. The proposed amendments would
require each Form 13F filer to provide its CRD number and SEC filing
number, if any.\68\ If a manager is making a Form 13F-NT filing, the
manager must include the CRD number and SEC filing number, if any, of
any other manager included in the ``List of Other Managers Reporting
for this Manager'' table on the cover page.\69\
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\68\ See proposed amendments to Special Instruction 5 of Form
13F.
\69\ A manager can make a Form 13F-NT filing if all the
securities for which the manager has investment discretion are
reported by another manager. See Special Instruction 6 of Form 13F.
Similarly, if a manager's Form 13F-HR reports the holdings of
managers other than the reporting manager, the reporting manager
would be required to include the CRD number and SEC filing number of
those other managers in the ``List of Other Included Managers'' on
the cover page. See Special Instruction 8 of Form 13F.
---------------------------------------------------------------------------
We believe that this information would allow the Commission and
other consumers of Form 13F data to identify a Form 13F filer's other
regulatory filings and the interrelationships between managers who
share investment discretion over 13(f) securities more easily. This
could identify for the public additional sources of market
information.\70\ We estimate that each manager will initially spend six
hours per year implementing these changes.\71\ Therefore, we estimate
that these amendments will initially impose $1,164,798 of costs on all
managers who would be required to file Form 13F under the proposed
reporting threshold.\72\ We believe that the estimated additional costs
of requiring this disclosure would be justified by informational
efficiencies and benefits.\73\
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\70\ See section 13(f)(4) of the Exchange Act [15 U.S.C.
78m(f)(4)] (requiring the Commission to tabulate information
contained in Form 13F reports in a manner that would ``maximize the
usefulness of the information to other Federal and State authorities
and the public''). The ability to identify interrelationships
between managers easily could also allow third party vendors that
compile Form 13F data to provide more complete trading information.
See Pekarek, supra footnote 52, at n.91 (noting that most academic
studies rely on 13F filings compiled quarterly by third party
vendors).
\71\ See Section III below for a discussion of estimated burdens
associated with Form 13F under the Paperwork Reduction Act.
\72\ Id.
\73\ Other regulatory filings also require similar identifying
information. See e.g., Form N-CEN [referenced in 17 CFR 274.101];
Form ADV [referenced in 17 CFR 279.1].
---------------------------------------------------------------------------
We seek comment on the following issues:
21. Should we require managers to provide their CRD number and SEC
filing number, if any, on Form 13F?
22. Should we require managers to provide the CRD number and SEC
filing number, if any, of other managers identified in their 13F
report?
23. Would this additional identifying on Form 13F be useful
information? If so, how?
24. Would disclosing this information be unduly burdensome for 13F
filers?
25. Are there any other amendments we should make to the
information provided on Form 13F? For example, is there any information
currently required that is not useful or does not have a beneficial
effect for investors, reporting managers, or users of the data? Should
we consider omitting Form 13F's requirement to provide a CUSIP number
for each security? Why or why not? Should we permit managers to
provide, in lieu of a CUSIP number, other identifiers such as a
Financial Instrument Global Identifier (FIGI) for each security? Why or
why not? Would permitting voluntary use of an alternate identifier have
a beneficial effect for investors, reporting managers, or users of the
data?
E. Technical Amendments
We are proposing to make certain nonsubstantive technical
amendments to Form 13F designed to account for the previous change in
the format of Form 13F from the plain-text ASCII format to the
structured XML data format. For example, we are proposing to simplify
the rounding conventions of Form 13F by requiring all dollar values
listed on Form 13F to be rounded to the nearest dollar, rather than to
the nearest one thousand dollars as is currently required.\74\ We are
also proposing to remove the requirement that filers, when reporting
dollar values on Form 13F, omit the ``000''.\75\ As a space saving
measure, current Form 13F instructs filers to omit the ``000'' and
thus, for example, report a security with a value of $5 million as
$5,000. As proposed, such a filer would report the security's value as
$5,000,000. Since column width is no longer an issue with the
structured XML data format, we believe that this change will reduce
filer mistakes and data inaccuracies.\76\ For
[[Page 46027]]
similar reasons, we also are proposing to remove the 80 character limit
imposed on the information filers can include on the cover page and the
summary page and the 132 character limit on the information table.\77\
We believe that these amendments would enhance the accuracy of the data
provided on Form 13F and make it easier to understand and use.
Additionally we are proposing to remove duplicative definitions and
streamline certain sections to simplify Form 13F's instructions.\78\ We
estimate that each manager will initially spend 10 hours per year
implementing these changes.\79\ Therefore, these amendments would
impose $1,417,350 of costs on all managers who would be required to
file Form 13F under the proposed reporting threshold.\80\
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\74\ See proposed amendments to Special Instruction 9 of Form
13F.
\75\ Id.
\76\ See Anne Anderson & Paul Brockman, An Examination of 13F
Filings, 41 J. Fin. Res. 295, 312-314 (2018) (the authors analyzed
the accuracy of Form 13F data and concluded that mistakes in
applying Form 13F's rounding guidelines leads to many discrepancies
in the reported values on Form 13F).
\77\ These character limits are imposed by 17 CFR 232.305 [rule
305 of Regulation S-T].
\78\ See proposed amendments to General Instructions 1 and 3
well as Special Instructions 3, 7, 8, and 13 of Form 13F. We are
also proposing to streamline the discussion in the Paperwork
Reduction Act Section of Form 13F.
\79\ See Section III below for a discussion of estimated burdens
associated with Form 13F under the Paperwork Reduction Act.
\80\ Id.
---------------------------------------------------------------------------
We request comment on our proposed technical amendments, and the
following issues:
26. Should we require filers to round all dollar values listed on
Form 13F to the nearest dollar and remove the requirement to omit
``000''? Should we, alternatively, maintain the current rounding
conventions? Should we adopt some other rounding conventions? Should we
no longer permit rounding?
27. Are there any other amendments we should make to streamline
Form 13F or simplify its instructions? If so, what are they?
28. Will our proposed technical amendments increase the accuracy of
Form 13F data?
29. Will our proposed technical amendments make Form 13F data
easier to understand and more accessible to the public?
30. Would these proposed technical amendments impose costs or
burdens on filers?
We are also proposing to amend the instructions on the Form 13F for
confidential treatment requests to require managers seeking
confidential treatment for information contained in Form 13F 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.\81\ We believe the proposed amendment
is necessary in light of a U.S. Supreme Court decision in June 2019
that changed the standard for determining whether information is
``confidential'' under exemption 4 of the Freedom of Information Act
(``FOIA'').\82\ Our proposed amendment is necessary because a FOIA
analysis is part of a Form 13F CTR determination. Section 13(f)(4) of
the Exchange Act authorizes the Commission, as it determines to be
necessary or appropriate in the public interest or for the protection
of investors, to delay or prevent public disclosure of certain Form 13F
information in accordance with the FOIA. Additionally, Section 13(f)(5)
of the Exchange Act requires that the Commission, in exercising its
authority under section 13(f), ``determine (and so state) that its
action is necessary or appropriate in the public interest and for the
protection of investors or to maintain fair and orderly markets.'' We
seek comment on our proposed modified standard for Form 13F CTRs, and
the following issue:
---------------------------------------------------------------------------
\81\ See proposed amendments to Instruction 2.d for Confidential
Treatment Requests of Form 13F.
\82\ 5 U.S.C. 552(b)(4). See Food Marketing Institute v. Argus
Leader Media, 139 S. Ct. 2356 (2019) (stating that ``[a]t least
where commercial or financial information is both customarily and
actually treated as private by its owner and provided to the
government under an assurance of privacy, the information is
`confidential' within the meaning of Exemption 4'').
---------------------------------------------------------------------------
31. Does the amendment appropriately reflect the effect of the U.S.
Supreme Court's June 24, 2019, decision in Food Marketing Institute v.
Argus Leader Media on the type of information that is required to
substantiate confidential treatment in accordance with Exchange Act
sections 13(f)(4) and (5) and rule 24b-2 thereunder?
Finally, we are proposing technical amendments to Form 13F's
instructions for confidential treatment requests to reflect amendments
to the Commission's FOIA regulations that were amended in 2018.\83\
---------------------------------------------------------------------------
\83\ Proposed amendments to Instructions for Confidential
Treatment Requests of Form 13F. See Amendments to the Commission's
Freedom of Information Act Regulations, Exchange Act Release No.
83506 (June 25, 2018) [83 FR 30322] (June 28, 2018).
---------------------------------------------------------------------------
F. Efficiency, Competition, and Capital Formation
We are sensitive to the costs and benefits of the rules we are
proposing, and section 23(a)(2) of the Exchange Act requires us to
consider, among other matters, the impact that any new rule would have
on competition and states that the Commission shall not adopt any rule
that would impose a burden on competition not necessary or appropriate
in furtherance of the purposes of the Exchange Act. In addition,
section 3(f) of the Exchange Act directs us, when engaging in
rulemaking that requires us to consider or determine whether an action
is necessary or appropriate in the public interest, to consider, in
addition to the protection of investors, whether the action will
promote efficiency, competition, and capital formation. The impacts of
the proposed amendments on efficiency, competition, and capital
formation are discussed throughout this section and elsewhere in this
release. The following discussion highlights several such impacts.
The Commission believes that, for smaller managers, the proposed
Form 13F reporting threshold increase is likely not only to enhance
competition by lowering the cost to participate in the market but also
to promote efficiency, which can benefit investors in the form of lower
management fees and/or enhanced services. Furthermore, because the
proposed Form 13F reporting threshold increase would potentially reduce
the exposure of smaller managers to harmful, and in many cases
inappropriate, actions by other market participants, such as front
running, smaller managers would likely be encouraged to invest in small
and mid-size portfolio companies that are more susceptible to the
harmful effects of these behaviors.\84\ This increased investment would
facilitate capital formation in smaller and medium sized companies.
Similarly, protecting smaller managers from these harmful behaviors
would likely promote competition between smaller and larger managers by
helping to level the playing field for smaller managers. Investors
would similarly benefit from the price impacts of this competition as
well as any reduction in harmful trading behaviors.
---------------------------------------------------------------------------
\84\ See supra footnote 34.
---------------------------------------------------------------------------
The Commission also believes that the proposed increase in the Form
13F reporting threshold would enhance efficiency by reducing the
reporting burden of Form 13F which would enable smaller managers to
devote more resources to, for example, market research that might
promote price discovery. Similarly, the Commission believes that the
proposed technical amendments would increase efficiency by enhancing
the accuracy of the data provided on Form 13F and thus improving the
data's usefulness. Furthermore, by requiring managers to provide
additional identifying information, and identifying information of
other managers covered
[[Page 46028]]
by the report, these proposed amendments would enhance efficiency by
making it easier for regulators and the public to identify a Form 13F
filer's other regulatory filings and the interrelationships between
managers who share investment discretion over 13(f) securities.
This rulemaking also would remove the omission threshold for Form
13F filers. The Commission believes that this will have only negligible
effects on efficiency, competition, and capital formations because, on
the one hand, the additional immaterial information is not likely to be
of significant value, and on the other hand, the costs of reporting
these small positions is de minimis for filers with at least $3.5
billion of 13(f) securities. Further, to the extent an asymmetry in
reporting could occur between larger and smaller managers with respect
to holdings in small and medium sized companies, if a larger manager
were to determine that disclosure of a small holding may negatively
affect its competitive position, we believe that a larger manager would
be able to seek appropriate protection without undue burden by filing a
Form 13F CTR.
We request comment on all aspects of our analysis, including the
potential benefits and costs of the proposed amendments, and whether
the proposed amendments, if adopted, would promote efficiency,
competition, and capital formation or have an impact on investor
protection. Commenters are requested to provide empirical data,
estimation methodologies, and other factual support for their views, in
particular, on the estimates of costs and benefits for the affected
parties.
32. Would relieving smaller managers from the compliance burdens of
Form 13F reduce costs and enhance competition and add efficiency,
including enhancing the ability of smaller managers to compete in the
market? To what extent, if any, would the benefits be passed on to
investors in the form of lower management fees and/or enhanced
services? Would the proposed increase in the Form 13F threshold protect
smaller managers from harmful behaviors such as front-running? Would
reducing this risk for smaller managers promote capital formation by
encouraging these managers to invest more in small and mid-size
portfolio companies? Would reducing this risk for smaller managers
benefit investors?
33. Would the proposed technical amendments increase efficiency by
enhancing the accuracy of Form 13F data? Are the cost estimates
appropriate?
34. Would the proposed additional identifying information increase
efficiency by making it easier to identify a Form 13F filer's other
regulatory filings and the interrelationships between managers who
share investment discretion over 13(f) securities?
III. Paperwork Reduction Act Analysis
Certain provisions of the proposed amendments to Form 13F would
affect the ``collection of information'' burden under Form 13F within
the meaning of the Paperwork Reduction Act of 1995 (``PRA'').\85\ We
are submitting the proposed collection of information to the Office of
Management and Budget (``OMB'') for review in accordance with the
PRA.\86\ The title for the existing collection of information is:
``Form 13F, Report of Institutional Investment Managers (Pursuant to
Section 13(f) of the Securities Exchange of 1934)'' (OMB Control No.
3235-0006). An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid OMB control number. The requirements of this
collection of information are mandatory. Responses are not kept
confidential, unless they are confidential pending review pursuant to
rule 24b-2(c) under the Exchange Act or the Commission grants an
application for confidential treatment pursuant to section 13(f)(4) of
the Exchange Act.
---------------------------------------------------------------------------
\85\ 44 U.S.C. 3501 through 3520.
\86\ 44 U.S.C. 3507(d); 5 CFR 1320.11.
---------------------------------------------------------------------------
A. Form 13F
In our most recent PRA submission for Form 13F, we estimated a
total hour burden of 472,521.6 hours, with an internal cost burden of
$31,186,425.60, and with no annual external cost burden.\87\ Based on
staff analysis and outreach to managers, however, we believe that these
estimates do not reflect all of the information collection costs
associated with Form 13F. The current burden estimates for Form 13F
assume that all of the functions are carried out by a compliance clerk,
whereas we understand that additional professionals are typically
involved. The current burden estimates also do not include external
costs for third-party vendors, which we understand many managers use in
connection with their filings on Form 13F, or external legal counsel,
who may provide advice in connection with the form's reporting
requirements or actual or potential requests for confidential
treatment. Furthermore, the current burden estimates assume that the
same number of hours and costs are necessary to prepare and file Form
13F-HR and 13F-NT filings, even though reports on Form 13F-HR would
involve greater burdens. This results in a current overestimation of
the costs associated with filing Form 13F-NT. Therefore, we are
revising the current PRA burdens associated with filing Form 13F.
---------------------------------------------------------------------------
\87\ This estimate is based on the last time the rule's
information collection was submitted for PRA renewal in 2018.
---------------------------------------------------------------------------
The table below summarizes our adjustments to the current PRA
estimates and the initial and ongoing annual burden estimates
associated with the proposed amendments to Form 13F. Staff estimates
that the proposed amendments will not change the PRA hour burdens
associated with making amended filings on Form 13F.
Table 2--Form 13F PRA Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Initial hours Annual hours Wage rate Internal time cost External costs \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
REVISIONS TO CURRENT PRA BURDEN ESTIMATES
Revised Burdens for 13F-HR Filings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current estimated annual burden of .............. 80.8 hours............ x $66 \2\.............. $5,332.80............
Form 13F-HR per filer.
[[Page 46029]]
Revised current annual estimated .............. 80.8 hours x 5,089 x $257.70 (blended rate $20,822.16 x 5,089 $789 \5\ x 5,089
burden per filer. filers \3\. for compliance filers. filers.
Revised current annual burden of ...................... attorney, senior ..................... .....................
Form 13F-HR filings. 411,191.2 hours....... programmer, and ..................... .....................
compliance clerk) $105,963,972......... $4,015,221.\6\
\4\.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revised Burdens for 13F-NT Filings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current estimated annual burden of .............. 80.8 hours............
Form 13F-NT.
Revised current estimated Form 13F- .............. 4 hours x 4 filings...
NT burden per filing.
Revised current annual burden of .............. 16 hours x 1,570 x $71 (wage rate for $1,136 x 1,570 filers $300 x 1,570 filers.
Form 13F-NT per filer. filers \7\. compliance clerk).
25,120 hours.......... ..................... $1,783,520........... $471,000.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revised Burdens for Form 13F Amendment Filings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current estimated burden per .............. 4 hours............... $66.00............... $264.................
amendment filing.
Revised current estimated burden .............. 4 hours x 1,066 x $257.70 (blended rate $1,030.80 x 1,066 $300 x 1,066
per amendment. .............. amendments. for compliance amendments. amendments.
Revised current annual estimated .............. ...................... attorney, senior ..................... .....................
burden of all amendments. .............. 4,264 hours........... programmer, and ..................... $319,800.
compliance clerk). $1,098,832.80........
--------------------------------------------------------------------------------------------------------------------------------------------------------
PROPOSED AMENDMENTS TO FORM 13F
Estimated Form 13F-HR Burdens
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Amendments to Form 13F-HR 16 5.8 hours \8\......... x $257.70 (blended rate $1,494.66............ $0.
(additional identifying .............. ...................... for compliance ..................... .....................
information, technical amendments, .............. ...................... attorney, senior ..................... .....................
change in omission threshold) per .............. ...................... programmer, and ..................... .....................
filer. .............. ...................... compliance clerk) ..................... .....................
New annual estimated Form 13F-HR .............. ...................... \9\. ..................... .....................
burden per filer. .............. ...................... ..................... .....................
.............. ...................... ..................... .....................
.............. 86.6 hours............ $22,316.82........... $789.
Number of annual filers............ .............. x 550 filers \10\..... x 550 filers......... x 550 filers.
Total new annual burden........ .............. 47,630 hours.......... $12,274,251.......... $433,950.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Form 13F-NT Burdens
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Amendments to Form 13F-NT 6 2.5 hours \8\......... x 71.00 (wage rate for $177.50.............. $0.
(additional identifying compliance clerk)
information). \11\.
New annual estimated Form 13F-NT .............. 18.5 hours x 738 $1,313.50 x 738 $300 x 738 filers.
burden per filer. filers \12\. filers.
Number of annual filers............
Total new annual burden........ .............. 13,653 hours.......... $969,363............. $221,400.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Amendment Filings Burdens
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revised estimated number of .............. 344 amendments \13\ x ..................... ..................... $300 x 344
Amendments. 4 hours. amendments.
Estimated total burden of .............. 1,376 hours........... x $257.70 (blended rate $354,595.2........... $103,200.
amendments. for compliance
attorney, senior
programmer, and
compliance clerk).
--------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL ESTIMATED FORM 13F BURDEN
--------------------------------------------------------------------------------------------------------------------------------------------------------
Currently approved burden estimates 472,521.6 hours ..................... $31,186,425.60....... $0.
Revised current burden estimates... 440,575.2 hours ..................... $108,846,325......... $4,806,021.
[[Page 46030]]
Burden estimates under the proposal 62,659 hours ..................... $13,598,209.2........ $758,550.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\1\ The external costs of complying with Form 13F can vary among filers. Some filers use third-party vendors for a range of services in connection with
filing reports on Form 13F, while other filers use vendors for more limited purposes such as providing more user-friendly versions of the list of
section 13(f) securities. For purposes of the PRA, we estimate that each filer will spend an average of $300 on vendor services each year in
connection with the filer's four quarterly reports on Form 13F-HR or Form 13F-NT, as applicable, in addition to the estimated vendor costs associated
with any amendments. In addition, some filers engage outside legal services in connection with the preparation of requests for confidential treatment
or analyses regarding possible requests, or in connection with the form's disclosure requirements. For purposes of the PRA, we estimate that each
manager filing reports on Form 13F-HR will incur $489 for one hour of outside legal services each year.
\2\ $66 was the estimated wage rate for a compliance clerk in 2018.
\3\ This estimate is based on the number of 13F-HR filers as of December 2018.
\4\ The $257.7 wage rate reflects current estimates of the blended hourly rate for an in-house compliance attorney ($368), a senior programmer ($334)
and in-house compliance clerk ($71). $257.7 is based on the following calculation: ($368 + $334 + $71)/3 = $257.7. The $368 per hour and $334 per hour
figures for a compliance attorney and a senior programmer, respectively, are based on salary information for the securities industry compiled by the
Securities Industry and Financial Markets Association's Office Salaries in the Securities Industry 2013 (``SIFMA Report''), modified by Commission
staff to account for an 1800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead.
The $71 per hour figure for a compliance clerk is based on salary information from the SIFMA Report, modified by Commission staff to account for an
1800-hour work-year and inflation, and multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead.
\5\ $789 includes an estimated $300 paid to a third-party vendor in connection with the Form 13F-HR filing as well as an estimated $489 for one hour of
outside legal services.
\6\ We estimate that Form 13F-HR filers will require some level of external legal counsel in connection with these filings.
\7\ This estimate is based on the number of Form 13F-NT filers as of December 2018.
\8\ Includes initial burden estimates annualized over a three-year period, plus 0.5 hours of ongoing annual burden hours.
\9\ These PRA estimates assume that the same types of professionals would be involved in satisfying the proposed amendments that we believe otherwise
would be involved in preparing and filing reports on Form 13F-HR.
\10\ This estimate is based on the Form 13F-HR filers as of December 2018 that would continue to be required to file Form 13F under the proposed $3.5
billion reporting threshold.
\11\ These PRA estimates assume that the same types of professionals would be involved in satisfying the proposed amendments that we believe otherwise
would be involved in preparing and filing reports on Form 13F-NT.
\12\ This estimate is based on the number of Form 13F-NT filers as of December 2018, and assumes that a Form 13F-NT filing linked to a Form 13F-HR
filing of a manager that exceeds the $3.5 billion threshold would continue to be filed.
\13\ We estimate that 86 filers would file amendments to Form 13F if the $3.5 billion reporting threshold is adopted. 86 amendments x 4 annual filings =
344 amendments.
B. Request for Comments
We request comment on whether these estimates are reasonable.
Specifically, we request comment on whether our estimated average costs
are reasonable in light of the proposed increase in the Form 13F
reporting threshold. The proposal would limit the form's reporting
obligations to larger managers, while the average burden estimate of
86.6 hours represents the average burden of complying with Form 13F
across all current filers. Furthermore, the proposal assumes that a
compliance attorney, a senior programmer, and a compliance clerk would
be equally involved in fulfilling a manager's compliance burdens
associated with Form 13F. We request comment on these assumptions,
recognizing that there will be some variation among different managers.
Additionally, we seek comment on our estimated external costs of
complying with Form 13F-HR and any amendments and Form 13F-NT.
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits
comments in order to: (1) Evaluate whether the proposed collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information will have practical
utility; (2) evaluate the accuracy of the Commission's estimate of the
burden of the proposed collection of information; (3) determine whether
there are ways to enhance the quality, utility, and clarity of the
information to be collected; and (4) determine whether there are ways
to minimize the burden of the collection of information on those who
are to respond, including through the use of automated collection
techniques or other forms of information technology.
Persons wishing to submit comments on the collection of information
requirements of the proposed amendments should direct them to the OMB
Desk Officer for the Securities and Exchange Commission,
[email protected], and should send a copy to,
Vanessa A. Countryman, Secretary, Securities and Exchange Commission,
100 F Street NE, Washington, DC 20549-1090, with reference to File No.
S7-08-20. OMB is required to make a decision concerning the collections
of information between 30 and 60 days after publication of this
release; therefore a comment to OMB is best assured of having its full
effect if OMB receives it within 30 days after publication of this
release. Requests for materials submitted to OMB by the Commission with
regard to these collections of information should be in writing, refer
to File No. S7-08-20, and be submitted to the Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736.
IV. Initial Regulatory Flexibility Analysis
Pursuant to Section 605(b) of the Regulatory Flexibility Act
(``RFA''),\88\ the Commission hereby certifies that the proposed
amendments to rule 13f-1 and Form 13F under the Exchange Act, relating
to increasing the reporting threshold for Form 13F from $100 million to
$3.5 billion, along with certain technical amendments, would not, if
adopted, have a significant economic impact on a substantial number of
small entities. The definition of the term ``small entity'' in the
Exchange Act does not explicitly reference institutional investment
managers.\89\ However, rule 0-10 provides that the Commission may
``otherwise define'' small entities for purposes of a particular
rulemaking proceeding. For purposes of the proposed amendments relating
to the reporting threshold of Form 13F, the Commission has determined
to use the definition of small entity under 17 CFR 275.0-7(a) as more
appropriate to the functions of managers. The Commission believes that
the proposed definition would help ensure that all persons or entities
that might be institutional investment managers under section 13(f) of
the Exchange Act will be included within a category addressed by the
definition. Therefore, for purposes of
[[Page 46031]]
this rulemaking and the RFA, a manager is a small entity if it: (i) Has
assets under management having a total value of less than $25 million;
(ii) did not have total assets of $5 million or more on the last day of
its most recent fiscal year; and (iii) does not control, is not
controlled by, and is not under common control with another investment
adviser that has assets under management of $25 million or more, or any
person (other than a natural person) that had total assets of $5
million or more on the last day of its most recent fiscal year.\90\ The
Commission requests comments on the use of this definition.
---------------------------------------------------------------------------
\88\ 5 U.S.C. 605(b).
\89\ 17 CFR 240.0-10 (``rule 0-10'').
\90\ 17 CFR 275.0-7(a) (``rule 0-7(a)''). Recognizing the growth
in assets under management at investment advisers since rule 0-7(a)
was adopted, the Commission plans to revisit the definition of a
small entity in rule 0-7(a).
---------------------------------------------------------------------------
Managers are not required to submit reports on Form 13F unless they
exercise investment discretion with respect to accounts holding 13(f)
securities having an aggregate fair market value on the last trading
day of any month of any calendar year of at least $100 million.
Therefore, no small entities for purposes of rule 0-10 under the
Exchange Act are affected by the form or by an increase to the
reporting threshold. The Commission requests written comments regarding
these certifications. The Commission requests that commenters describe
the nature of any impact on small businesses and provide empirical data
to support the extent of the impact.
V. Consideration of the Impact on the Economy
For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''),\91\ we must advise OMB whether a proposed
regulation constitutes a ``major'' rule. Under SBREFA, a rule is
considered ``major'' where, if adopted, it results in or is likely to
result in (1) an annual effect on the economy of $100 million or more;
(2) a major increase in costs or prices for consumers or individual
industries; or (3) significant adverse effects on competition,
investment or innovation.
---------------------------------------------------------------------------
\91\ Public Law 104-121, Title II, 110 Stat. 857 (1996)
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. 601).
---------------------------------------------------------------------------
The Commission requests comment on the potential impact of the
proposed amendments on the economy on an annual basis. The Commission
requests that commenters provide empirical data and other factual
support for their views to the extent possible.
VI. Statutory Authority
The Commission is proposing amendments to rule 13f-1 and Form 13F
pursuant to the authority set forth in sections 3(b), 13(f), 23, 24,
and 36 of the Exchange Act [15 U.S.C. 78c(b), 78m(f), 78w, 78x, and
78mm].
List of Subjects
17 CFR Part 240
Confidential business information, Reporting and recordkeeping
requirements, Securities.
17 CFR Part 249
Reporting and recordkeeping requirements, Securities.
Text of Proposed Rule and Form Amendments
For the reasons set out in the preamble, the Commission proposes to
amend title 17, chapter II of the Code of Federal Regulations as
follows:
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
0
1. The general authority citation for part 240 continues to read as
follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4,
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll, 78mm,
80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201 et
seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C.
1350; Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-
106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
Sec. 240.13f-1 [Amended]
0
2. Amend Sec. 240.13f-1 by:
0
a. In paragraph (a)(1), removing ``$100,000,000'' and adding in its
place ``$3.5 billion'';
0
b. In paragraph (c), removing ``$100,000,000'' and adding in its place
``$3.5 billion''; and
0
c. Removing the authority citation at the end of the section.
PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934
0
3. The general authority citation for part 249 continues to read as
follows:
Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C.
5461 et seq.; 18 U.S.C. 1350; Sec. 953(b), Pub. L. 111-203, 124
Stat. 1904; Sec. 102(a)(3), Pub. L. 112-106, 126 Stat. 309 (2012);
Sec. 107, Pub. L. 112-106, 126 Stat. 313 (2012), and Sec. 72001,
Pub. L. 114-94, 129 Stat. 1312 (2015), unless otherwise noted.
* * * * *
0
4. Form 13F (referenced in Sec. 249.325) is amended by:
0
a. In General Instruction 1, revising ``$100,000,000'' to read ``$3.5
billion'';
0
b. In General Instruction 3, revising the first sentence to read ``Rule
13f-1(a)(1) provides that a Manager must file a Form 13F report with
the Commission within 45 days after the end of the calendar year and
each of the first three calendar quarters of the subsequent calendar
year.'';
0
c. In General Instruction 3, replacing ``the EDGAR Filing'' with ``the
filing made on the Commission's Electronic Data Gathering, Analysis,
and Retrieval (``EDGAR'') system'';
0
d. In the last sentence of the second paragraph of the Instructions for
Confidential Treatment Requests, delete the phrase ``the Commission's
rules and regulations adopted under'';
0
e. In Instruction 2.d for Confidential Treatment Requests, revising it
to read as follows: ``Demonstrate that the information is both
customarily and actually kept private by the Manager, and how release
of this information could cause harm to the Manager.''
0
f. In Special Instruction 3, deleting the phrase ``(and in the EDGAR
submission header)'';
0
g. In Special Instruction 5, revising it to read as follows: ``Present
the Cover Page and the Summary Page information in the format and order
provided in the form. If the Manager has a number assigned by the
Financial Industry Regulatory Authority's Central Registration
Depository system or by the Investment Adviser Registration Depository
system (``CRD number''), provide the Manager's CRD number. If the
Manager has a filing number (e.g., 801-, 8-, 866-, 802-) assigned by
the Commission (``SEC filing number''), provide the Manager's SEC
filing number. The Cover Page may include information in addition to
the required information, so long as the additional information does
not, either by its nature, quantity, or manner of presentation, impede
the understanding or presentation of the required information. Place
all additional information after the signature of the person signing
the report (immediately preceding the Report Type section). Do not
include any additional information on the Summary Page or in the
Information Table.'';
0
h. In Special Instruction 7, deleting the phrase ``on the Summary
Page'';
0
i. In Special Instruction 7.a, deleting the phrase ``on the Summary
Page'';
0
j. In Special Instruction 8, deleting the phrase ``on the Summary
Page'';
0
k. Replacing the first sentence of Special Instruction 8.b with the
following ``If this Form 13F report reports the holdings of one or more
[[Page 46032]]
Managers other than the Manager filing this report, enter in the List
of Other Included Managers all such Managers together with any CRD
Number or SEC filing number assigned to each Manager and, if known, the
Managers' respective Form 13F file numbers (The Form 13F file numbers
are assigned to Managers when they file their first Form 13F.).'';
0
l. In Special Instruction 9, revising ``rounded to the nearest one
thousand dollars (with ``000'' omitted)'' to read ``rounded to the
nearest dollar'';
0
m. Deleting Special Instruction 10 and renumbering Special Instructions
11, 12, and 13 to 10, 11, and 12, respectively;
0
n. In renumbered Special Instruction 10, revising ``$100,000,000'' to
read ``$3.5 billion'';
0
o. In renumbered Special Instruction 11.b.i, revising the phrase ``rule
13f-1(c) (the ``13F List'')'' to read ``the 13F List''; and
0
p. Deleting renumbered Special Instruction 12 in its entirety and
replacing it with the following:
``Filing of Reports
0
13. Reports must be filed electronically using EDGAR in accordance with
Regulation S-T. Consult the EDGAR Filer Manual and Appendices for EDGAR
filing instructions.''
0
q. Deleting the Paperwork Reduction Act Information section in its
entirety and replacing it with the following:
``PAPERWORK REDUCTION ACT INFORMATION
Persons who are to respond to the collection of information
contained in this form are not required to respond to the collection of
information unless the form displays a currently valid Office of
Management and Budget (``OMB'') control number. Please direct comments
concerning the accuracy of the information collection burden estimate
and any suggestions for reducing the burden to the Secretary,
Securities and Exchange Commission, Washington, DC 20549. OMB has
reviewed this collection of information under the clearance
requirements of 44 U.S.C. 3507.'';
0
r. In the Institutional Investment Manager Filing this Report section
on the Cover Page, adding ``CRD Number (if applicable):__'' and ``SEC
Filing Number (if applicable):__ '';
0
s. In the List of Other Managers Reporting for this Manager section on
the Cover Page, adding ``CRD Number (if applicable)'' and ``SEC Filing
Number (if applicable)'' columns;
0
t. In the Report Summary on the Form 13F Summary Page, replacing
``(thousands)'' with ``(round to the nearest dollar)'' in the Form 13F
Information Table Value Total row.
0
u. In the List of Other Included Managers section of the Form 13F
Summary Page, adding ``CRD Number (if applicable)'' and ``SEC Filing
Number (if applicable)'' columns; and
0
v. In the Form 13F Information Table, replacing ``(x$1000)'' with ``(to
the nearest dollar)'' in the Value subcolumn.
By the Commission.
Dated: July 10, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020-15322 Filed 7-30-20; 8:45 am]
BILLING CODE 8011-01-P
