Last week, the NYSE Euronext, the Society of Corporate Secretaries and Governance Professionals, and the National Investor Relations Institute submitted a joint petition (available here) to the SEC, requesting that the Commission amend the beneficial ownership reporting rules under Section 13(f) of the Securities and Exchange Act of 1934, as amended. Fund managers subject to the 13(f) reporting requirements currently have until 45 days after the last day of each calendar quarter to file their Form 13F; the petition suggests that the time period be shortened to two business days.
The authors of the petition argue that the advantages of a shorter reporting deadline include, among other things, the ability of public companies to accurately contact their shareholders on corporate governance matters — which can be somewhat difficult in the current investment environment with increased levels of institutional ownership of equity securities combined with rapid portfolio turnover — as well as the increased transparency that would benefit the general public. Some fund managers have argued that disclosing their holdings more quickly would effectively tip their hand to the market, resulting in some volatility in the price of the securities under management, and potentially compromise the manager’s investment strategy. The petition addresses such concerns by noting that such complaints illustrate how the status quo benefits large fund managers at the expense of other investors in the market.
A rulemaking petition such as this creates no obligation for the SEC to act or respond. Nevertheless, given the proponents of the proposal, it may well get serious consideration in the months ahead.