House Financial Services Committee Chair Maxine Waters urged the SEC to rescind "harmful" proposed amendments to Form 13F and SEA Rule 13f-1 ("Reporting by institutional investment managers of information with respect to accounts over which they exercise investment discretion").

As previously covered, the proposed amendments to Form 13F would (i) raise the reporting threshold for institutional investment managers from $100 million to $3.5 billion, (ii) modernize its data reporting framework, and (iii) update the instructions for confidential treatment requests.

In her letter to the Commission, Ms. Waters urged the SEC to withdraw the proposed amendments based on the following:

  • Impairment of Shareholder Engagement. Ms. Waters stated that a number of publicly-traded companies rely on the information reported in Form 13F to identify shareholders and then to engage with them. As a result, Ms. Waters likened the restriction of access to this information to the restriction of shareholders' access to investment information.
  • Reduced Transparency of Market Information. Ms. Waters argued that the amendments would result in the elimination of reporting on investment managers controlling more than $2.3 trillion in assets.
  • The Proposed Amendments Represent an Improper Use of the SEC's Exemptive Authority. Ms. Waters posited that under a proper interpretation of Section 13(f)(1) of the Securities Exchange Act, the SEC has authority to lower the threshold at which investors are subject to reporting (albeit to not less than $10,000,000), but not to raise it.

Commentary

House Financial Services Committee Chair Waters reiterates the criticisms of the Form 13F amendments that were made by Commissioner Allison Herren Lee when the SEC first proposed them. For a convincing argument to be made against the Form 13F changes, Representative Waters should explain why the information is important and why no adjustment in the reporting threshold is appropriate 45 years after the statutory provision was adopted. While Representative Waters describes her position in terms of shareholder protection, the burden of the Form 13F requirement falls on investors, not issuers, and it disadvantages investors by forcing them to disclose their investment positions.

Primary Sources

  1. U.S. House Committee on Financial Services Press Release: Waters Urges SEC to Rescind Proposed Amendments that Reduce Capital Market Transparency
  2. Congresswoman Maxine Waters, Comment Letter: Proposed Amendments to Rule 13-F

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