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September 24, 2015 at 06:07 AM
A recent U.S. Supreme Court ruling in favor of California raisin growers Marvin and Laura Horne could dovetail with investment managers’ rights to property interest in portfolio information required by the SEC’s Form 13F.
In the ruling, Horne v. Department of Agriculture, the Court addressed a 1933 New Deal statute and related administrative rules designed to maintain an “orderly market.”
For decades, a federal government agency required raisin growers to surrender a portion of their crops, much of which the agency turned around and donated free to the public. The Hornes objected to the government’s appropriation of their property, relying on the Fifth Amendment, which requires just compensation for a “taking” of private property for public use.
After more than a decade of litigation and appeals (and with an 8-1 majority), the Supreme Court sided with the Hornes, finding among other things that “a governmental mandate to relinquish specific, identifiable property as a ‘condition’ on permission to engage in commerce effects a per se taking.”
Investment advisors are, of course, very familiar with another 1933 (and ’34 and ’40) statute and related administrative rules established to ensure an orderly market.
One such example includes the requirement of certain investment managers to file Forms 13F.
Ostensibly for the purpose of promoting competition and decreasing volatility in the markets, in 1975 Congress amended the Securities Exchange Act of 1934 to add a provision requiring certain institutional investment managers to disclose on Form 13F the names, shares and fair market value of the securities over which the institutional managers exercise control.
