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Opposition to Raising Dollar Threshold of 13F Reports

By Stephen Barlas
December 1, 2020

A solid wall of opposition from public companies has risen to a proposed U.S. Securities & Exchange Commission (SEC) rule that would substantially raise the dollar threshold for institutional investors who must submit Form 13F reports, which detail their stock holdings.

 

The threshold hasn’t been raised in 45 years, and the SEC wants to bump it up from $100 million to $3.5 billion. Currently, 5,089 managers exceed the $100 million threshold. This is approximately 17 times the number of filers that the threshold covered in 1975.

 

Thomas W. Sweet, CFO of Dell Technologies Inc., says many companies besides his agree that the SEC should modernize its ownership disclosure rules. “We believe the proposed 35-fold increase in the 13F threshold does not properly consider the impact to issuers like Dell Technologies that depend on 13F data to effectively engage with our shareholders and activist investors,” he wrote in a letter to the SEC.

 

Molly Sorg, vice president of investor relations at Vistra Corp., stated, “We estimate that with the proposed increase in the 13F threshold from $100 million to $3.5 billion, we would lose insight into approximately 20% of our current shareholders.”

 

But the SEC believes that given the significant increase in the number of managers required to file 13F reports over the last two decades, and the substantial reduction in the significance of holdings of $100 million, it’s an appropriate time to adjust the reporting threshold. The National Investor Relations Institute has been the primary supporter of increasing the threshold.

 

In making the case for relieving managers of smaller portfolios from the reporting requirement, the SEC cites its own data that managers with less than $3.5 billion of 13F securities manage 9.2% of the dollar value of all reported securities, yet SEC staff estimates that those smaller managers submit approximately three-quarters of all the 13F reports filed.

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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