On February 4, 2011, the U.S. Court of Appeals for the District of Columbia Circuit rejected Full Value Advisors LLC’s challenge to Form 13F disclosure requirements. Full Value argued that the disclosure requirements amount to compelled speech in violation of the First Amendment and an uncompensated taking in violation of the Fifth Amendment. Full Value’s requests for exemption from and confidential treatment under Section 13(f) had previously been denied by the U.S. Securities and Exchange Commission (the “SEC”).
Under Section 13(f) of the Exchange Act, institutional investment managers with investment discretion over $100 million or more worth of 13(f) securities are required to complete a reporting form, Form 13F. Section 13(f) securities generally include equity securities traded on securities exchanges or NASDAQ. Advisers must disclose the following: issuer names, security classes, number of shares, and fair market value of securities over which they exercise control. Absent an exemption, information provided on Form 13F may then be made available to the public. The first of these exemptions, Section 13(f)(2), permits the SEC to completely exempt any institutional investment manager, security, or class of investment managers or securities from Section 13(f) requirements. The second exemption, Section 13(f)(3), permits the SEC to delay or altogether prevent public disclosure of confidential information if necessary to protect investors or the interests of the public.
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