On July 10th, the SEC proposed amendments to Exchange Act Rule 13f-1 that would raise the Form 13F reporting threshold from $100 million to $3.5 billion. If effected, this would be the first change to the reporting threshold since the SEC adopted Form 13F in 1978.
Section 13(f) of the Exchange Act has long required investment advisers exercising discretion over $100 million or more of so-called “Section 13(f) securities” to file a Form 13F on a quarterly basis. When adopted more than 40-years ago, the $100 million threshold was intended to capture the largest institutional managers. According to the SEC release, the proposal is intended to realign the threshold with the original intent and thereby provide relief for smaller managers. The proposed rule would also do away with the current Omission Threshold for Form 13F, which allows 13F filers to omit certain de minimis holdings from their reporting. The SEC has also proposed that additional identifying information be included in Form 13F filings and has proposed certain technical amendments.
While proposing an increase in the threshold is not surprising, as $100 million in 1978 dollars would be worth over $400 million today, the proposed increase is much more dramatic. As such, we expect the proposal to generate considerable debate, as it would dramatically reduce the number of investment advisers subject to the reporting requirements and, as a result, would dramatically reduce the amount of publicly-available information the reports provide.
The SEC has requested comments on the proposed changes. A 60-day comment period will follow publication of the proposed rule in the Federal Register.