Changes to SEC Form 13F: What Investment Managers Need to Know

Changes to SEC Form 13F: What Investment Managers Need to Know

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By Zachary Baker, Business Assurance & Advisory Services Senior Associate | Financial Services Industry Team

SEC Change in Holding Amount to Remain Confidential

Earlier this year, the Securities and Exchange Commission (SEC) proposed amending Form 13F and most importantly the threshold requirements for filing Form 13F for institutional investment managers from a 100 million dollar threshold to a 3.5 billion dollar threshold. The results of increasing the threshold requirements could have significant impacts on currently required institutional investment managers. Dating back to 1975, Congress originally established Section 13(f) as a means of providing additional information to the public with regard to institutional investors that held certain equity positions due to the potential impacts that their holdings could have upon market values. The SEC cited the growth of the U.S equity markets as a reason for the proposal as the equity markets have increased from approximately 1.1 trillion dollars when Form 13F was implemented in 1978 to approximately 36.3 trillion dollars today while the threshold requirement has not changed. The proposal was determined to be necessary in light of a U.S. Supreme Court decision (Food Marketing Institute v. Argus Leader Media) in June 2019 which challenged the definition of information determined to be trade secrets as stated in 13(f)(4) of the Freedom of Information Act.


What are the Significant changes to SEC Form 13F?

The SEC has proposed several changes to the Form 13F. The most significant of which are as follows:

  • Threshold requirements increase from 100 million to 3.5 billion dollars
  • Eliminate the omission threshold of less significant positions held by investment managers
  • Add additional identifying information to the Form 13F

Automatic Future Adjustments

Automatic future adjustments were also considered every five years to align with the current size of the U.S. equity markets; however, due to concerns regarding potential volatility in the threshold requirement, automatic future adjustments were not included as part of the proposal. Rather, the SEC would periodically review future reporting thresholds in comparison to U.S. Equity Markets.

Impact of SEC’s Form 13F Proposal on Small Investment Managers

During the proposal process, the SEC also highlighted the relief it would have upon the small investment managers as burdensome costs of filing having more significant impacts on smaller institutions. Compliance costs related to Form 13F are estimated between 15,000 to 30,000 dollars for smaller institutions. The SEC also highlighted that the impacts of the increase threshold would likely retain 90 percent of the current disclosures available to the public as larger filers make up the majority of the disclosures. Proponents of the update also cite potential harm to smaller investment managers under the current threshold such as front running and investment mimicking.

Opposition to the proposal state difficulties for companies to be able to determine which investment institutions hold their stocks more likely enabling unwanted ownership.

You can read more about the proposal on the SEC’s website.

Questions on these changes or other Financial Services Industry accounting topics? Contact your Opportunity Advisor or Email | Call: 804.747.0000


About the Author

Keiter CPAs is a certified public accounting firm serving the audittax, accounting and consulting needs of businesses and their owners located in Richmond and across Virginia. We focus on serving emerging growth businesses and companies in the financial servicesconstructionreal estatemanufacturingretail & distribution industries and nonprofits. We also provide business valuations and forensic accounting servicesfamily office services, and inbound international services.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

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