There are several provisions in the Securities Act of 1933 (“Securities Act”) or the Securities Exchange Act of 1934 (“Exchange Act”) that require investment advisers to report their holdings or other investment activity to the SEC. Most of these filings are available to the public via the SEC’s Electronic Document Access and Retrieval (“EDGAR”) system, with some exceptions, which are discussed below. Notably, many of these filings are required whether a firm is registered with the SEC or not (including Exempt Reporting Advisers and state registrants). Deadlines and other requirements may also vary depending on a firm’s registered status. These are discussed in more detail below.
- EDGAR Filing Generally
EDGAR requires market participants to file electronically with the SEC, enables the SEC to catalog and analyze filing data, and allows the public to quickly search most filings. First-time filers will need to apply for EDGAR access by filing Form ID with the SEC on its EDGAR Filer Management website (“Filer Management”). Form ID asks for basic business and contact information and an 8 character “Passphrase” selected by the filer. Within 48 hours, the SEC will assign a Central Index Key (“CIK”) number to the filer, which will be emailed to the contact person identified on the Form ID. Once a CIK number has been assigned, filers must return to Filer Management to generate the passcodes (“Codes”) used to make filings.
These Codes are all 8 characters and are randomly assigned by Filer Management. They include:
- Password (NB: this is not the same as the Passphrase that filers select initially). The Password expires annually on the anniversary of its assignment and must be changed within 10 days of that anniversary (the “Grace Period”). The Password is used for all EDGAR filings;
- CCC: This is the CIK Confirmation Code and must also be used for all EDGAR filings; and
- PMAC: This is the Password Modification Access Code and can be used to update only the Password within the Grace Period. Following expiry of the Grace Period, filers must use their CIK and Passphrase to generate an entirely new set of Codes.
Filers should ensure that their Passphrase and Codes are kept in a secure location and updated as needed. This will prevent unauthorized use (including access to confidential filings) and avoid delays when making filings.
- Schedule 13D and 13G
Generally, a Schedule 13D filing is required where a person (including entities) beneficially owns more than 5% of a class of publicly traded equity securities of an issuer for the purpose of changing or influencing control (in other words, is an activist investor, or anticipates becoming one). A shorter form Schedule 13G is applicable where a person holds the position in the ordinary course of business and not for the purpose of changing or influencing control of the issuer (i.e., is a passive investor).
A person “beneficially owns” a security if it has or shares the power to vote or dispose of the security. To the extent that an investment adviser has discretionary authority over client accounts, it may be a beneficial owner for purposes of these filings. A person also beneficially owns any securities that it has the right to acquire (e.g. exercise of an option), if the right is exercisable within sixty days.
The initial Schedule 13D or 13G, as applicable, is due within ten days following the acquisition that causes the person to cross the 5% threshold. Thereafter, 13D must be amended promptly (no more than two days) following a material change, including a 1% change in ownership. SEC or State registered investment advisers have the luxury of longer deadlines. If at the end of their fiscal year a registered adviser is still over 5%, they have forty-five days to file their initial 13G, which is amended annually thereafter. Additional requirements apply at 10% and 20% ownership thresholds, or if a passive investor becomes an activist and must file on 13D.
- Form 13F
Any investment adviser that on the last trading day of any month of a calendar year exercises investment discretion over $100 million or more invested in equity securities traded on stock exchanges or the Nasdaq is subject to reporting on Form 13F. The SEC compiles a list of “13F Securities” which is published quarterly on its website. The filing is due in mid-February (the exact deadline will vary depending on the calendar) using data as of December 31. Thereafter, a quarterly 13F report is required forty-five days after the end of each calendar quarter. Firms that met the threshold and then fell below will still need to make the initial and quarterly filings the following year. See also the SEC’s 13F FAQ.
13F is a public filing, though filers can request confidential treatment.
- Form 13H
Any investment adviser who directly or indirectly exercises investment discretion over transactions in US exchange-listed securities equal to or greater than either (a) 2 million shares or $20 million per calendar day or (b) 20 million shares or $200 million per calendar month must report identifying and other data about itself and its affiliates to the SEC on Form 13H promptly (within ten days) after reaching the either of the foregoing activity levels. Thereafter, an annual 13H report is required within forty-five days after the end of each full calendar year (the same timeframe as for 13F and 13G for registered investment advisers). Interim amendments are required following any change to the information provided on the form.
Options must be included in calculating the thresholds. The SEC’s 13H FAQ is a useful resource for calculations and other questions.
13H is a confidential filing and is not searchable via EDGAR (though it is filed on the EDGAR system; it is subject to an earlier cut-off time than public filings).
- Section 16
Section 16 of the Exchange Act mandates filings by certain insiders of public companies. Officers, directors and 10% shareholders are all considered insiders with respect to the shares of the public companies that employ them, or in which they hold 10% of the outstanding shares. Investment advisers registered with the SEC may be eligible for relief from the filing requirement if their aggregate holdings (i.e. across all funds and clients) meet the 10% threshold. However, if a single fund or another client meets that threshold, it will still be required to file.
The filings are made on Form 3 (initial filing), Form 4 (amendment filing) and Form 5 (annual filing). Amendments must be filed promptly, no later than two days following the change. It is best practice to file as soon as possible following the change, e.g., the same business day, especially given the increased SEC enforcement focus on this area.
See also the SEC’s guidance and electronic filing FAQs.