The U.S. Securities and Exchange Commission (“SEC”) recently settled charges against 11 institutional investment managers for failing to file Form 13F, a critical filing requirement for those who exercise investment discretion over $100 million or more in certain equity securities. The SEC emphasized the importance of compliance with Form 13F, which ensures transparency in securities holdings and fosters market integrity.
Importance of Form 13F Filing
Form 13F, required under Section 13(f) of the Securities Exchange Act of 1934, is a quarterly filing that institutional investment managers must submit if they manage $100 million or more in securities listed under Section 13(f). This requirement helps the SEC and the public understand the holdings and trading activities of significant market participants. Failing to file Form 13F can lead to penalties and enforcement actions by the SEC.
Recent SEC Enforcement Actions
The SEC’s enforcement actions involved a mix of penalties, ranging from $175,000 to $725,000 in civil fines for nine of the 11 firms charged. However, two firms were not subjected to financial penalties; these firms avoided fines by self-reporting their violations and cooperating fully with the SEC’s investigation. This outcome highlights the SEC’s claim that there is a benefit to self-reporting non-compliance.
The SEC has consistently emphasized that non-compliance with Form 13F filing requirements undermines market transparency, and investment advisers are urged to ensure that they adhere to these obligations.
How to Determine If An Investment Adviser Must File Form 13F
To determine whether an investment adviser firm is required to file Form 13F, the firm with the assistance of its compliance professional should consider the following:
- Review Assets Under Management (AUM): If an investment adviser firm has investment discretion over $100 million or more in equity securities as defined by Section 13(f), the firm is considered an “institutional investment manager” and required to file.
- Check the SEC’s List of 13F Securities: The SEC maintains an updated list of securities that must be reported under Form 13F. An investment adviser firm can access the current list of 13(f) securities at https://www.sec.gov/divisions/investment/13flists.htm . This list is updated quarterly, and an investment adviser firm must review it to ensure accurate reporting.
- File in a Timely Manner: If an investment adviser firm exercises investment discretion over accounts that buy or sell securities listed under Section 13(f) and the total value of these securities reaches or exceeds $100 million on the last trading day of any month during the calendar year, the firm must begin to file Form 13F in the following calendar year. Form 13F must be filed within 45 days of the end of each calendar quarter. The initial report must be filed within 45 days of the end of the first calendar year in which the investment adviser firm exceeds the $100 million threshold on the last trading day of any month during any calendar year.
Available To Assist
If your investment adviser firm is an existing client of RIA Compliance Consultants, Inc. and needs assistance with preparing the Form 13F, please contact our compliance team for guidance. If your investment adviser firm does not currently work with us, please call our Business Development Team at 877-345-4034 for an introductory call to learn more about services.
Related Resources
SEC Fines Investment Adviser for Failure to File Form 13F
FAQs: Form 13F, Form SH, Schedule 13D & Schedule 13G
SEC Proposed Changes to Form 13F for Institutional Investment Managers (8/3/2020)
Deadline Approaching for Filing the Form 13F with the SEC (1/12/2015)
SEC Settles a Form 13F Filing Violation for a $100,000 Penalty (8/16/2007)
Disclosure
This regulatory alert is a brief summary which is general in nature and offered only for educational purposes. It should not be considered as a comprehensive review or analysis of this development. There are certain requirements and exceptions outlined in the rule which are not covered in this regulatory alert. This communication is not intended to constitute compliance consulting advice or apply to any particular investment adviser firm’s specific situation without further analysis. This regulatory alert is not a safe harbor. The reader should study the actual guidance, rule or enforcement action in detail and consult with his or her compliance professionals. This information in this regulatory alert may become out of date.
RIA Compliance Consultants, Inc. is not a law firm and does not provide legal services. This communication is not legal advice. An investment adviser firm which has failed to file Form 13F in accordance with the Securities and Exchange Act of 1934 should immediately consult with qualified legal counsel about self-disclosing such violations to the SEC.
