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Back in April, the Society for Corporate Governance, NIRI and NYSE jointly submitted a petition requesting the SEC to initiate rulemaking to shorten the 45-day filing period for Form 13F filings to no more than five business days. The petition calls the current filing period “outdated” and says it’s “the one prominent ownership transparency rule that has not yet been modernized.” It argues shortening the deadline would “improve the utility of 13F filings for market participants and increase investor confidence in the integrity of the U.S. securities markets.”

Wachtell supports the rulemaking petition in this article, which notes that the petitioners urge public company stakeholders to submit comment letters (available here) in support of the petition. Here’s more from Wachtell:

Under current rules, adopted in 1979, investment managers with at least $100 million in U.S. publicly traded assets under management are required to disclose their share ownership positions on Form 13F within 45 days after each calendar quarter. Given the speed of today’s equity markets, 13F disclosure is generally considered already stale when published, and moreover, does not include information on options, swaps and other derivatives that are commonly used by activist hedge fund investors.

The fact that 13F positions are reportable as of the last day of the calendar year or quarter also means that short-term trades that occur between the reportable dates are underreported, or as the petition notes, “an investment manager can still buy a 4.99 percent stake on Jan. 2 and not have to report that position until May 15.” The lack of transparency of 13F disclosures hinders issuers’ ability to make informed decisions on key matters including preparing for shareholder outreach and engagement and identifying and responding to activism and takeover threats. Many companies and boards continue to fly blind even as shareholder activism and hostile takeover activity continue at high levels.

As the SEC has continued to shorten filing deadlines for other disclosures, including amending Sections 13(d) and 13(g) of the Exchange Act last year to shorten reporting deadlines for Schedule 13D and 13G filings, the time has also come to move 13F reporting toward realtime disclosures that promote market transparency.

Form 13F filings are on the SEC’s radar! This week, the Commission announced charges against 11 institutional investment managers for failing to file required 13Fs, with nine firms agreeing to pay more than $3.4 million in civil penalties. A few firms had no civil penalties since they self-reported the violations and cooperated with the SEC’s investigation.

– Meredith Ervine