The Securities and Exchange Commission should shorten the reporting period for investment managers’ holdings to five business days from the current 45-calendar-day requirement, according to a proposal from the New York Stock Exchange and two professional investor groups .
The plan, posted on the website of the Harvard Law School Forum on Corporate Governance and submitted to the SEC in April, argued that the 45-day rule is outmoded and called on the agency to revamp Section 13F of the Securities Exchange Act of 1934 to compel the shorter reporting period.
Enacted by Congress in 1975 in a revamp of securities laws, Section 13F calls for a quarterly report mandating investment managers with at least $100 million in assets under management disclose their holdings within 45 days from the end of a previous quarter. The SEC is permitted to alter the reporting period under its rulemaking powers.
Critics have long derided the 45-day period as too long, complaining that the information is out of date by the time it is made public.
The proposal was released Monday by the NYSE, the Society for Corporate Governance and the National Investor Relations Institute, a professional organization for investor relation professionals.
In their statement, the three groups wrote: “Given the evidence that investors, issuers and other market participants are increasingly relying on 13F filings, it is imperative that the commission revisit 13F and modernize the outdated 45-day reporting period.”
Shortening the disclosure time would be especially important to retail investors, the proposal stated. It quoted research firm Morningstar’s comment that 13F filings “are the only accurate source of ownership information freely available to individual investors,” who lack the resources to analyze allocator holdings.
The proposal also noted that institutions find that the benefits of 13F data outweigh the costs.
Citing letters to the SEC on a 2020 proposal to change Section 13F by raising the filing threshold to $3.5 billion from $100 million, the groups included comment from Julia Mord, deputy CIO of the Tulane University Investment Management Office, who works on managing the university’s endowment.
“We speak with our managers regularly, and even those firms with small teams and limited assets have managed very successfully to comply with this SEC requirement as part of their regular‐way business,” Mord wrote. “Investment managers already have the information in the 13F at their fingertips and not once in my 15 years as an allocator have I heard a manager complain that the 13F requirement created undue burden or expense. … As an institutional investor who pays these costs regularly, we welcome the burden of these costs in exchange for the transparency this filing provides us.”
The proposal also quoted James Angel, a finance professor at Georgetown University, who said that 13F filings allow potential investors to “see whether the actual investment history of a manager is consistent with its marketing material.”
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Tags: Harvard Law School Forum on Corporate Governance, James Angel, Morningstar, National Investor Relations Institute, New York Stock Exchange, SEC, Section 13F, Society for Corporate Governance