SEC Move Could Cause 90% Drop in Investment Managers Reporting Quarterly Holdings

Critiques of 13F Proposal

SEC Commissioner Allison Herren Lee criticized the proposal, noting in a statement that it eliminates “visibility into portfolios controlling $2.3 trillion in assets,” “lacks a sufficient analysis of the costs and benefits,” glosses over the costs of “losing transparency,” and exaggerates the savings for asset managers.

Moreover, according to Lee, the proposal “does not address substantial uncertainty” about the commission’s authority to pursue these changes. The SEC has the authority to lower the threshold but not raise it, according to Lee, who cited the Securities Acts Amendments of 1975.

She said the proposal, which is subject to a 60-day comment period after publication in the Federal Register, “joins a long list of recent actions that decrease transparency and reduce both the Commission’s and the public’s access to information about our markets.”

Others agree. “Investors benefit from more, not less, transparency about the firms they work with and ownership data on stocks and ETFs is already limited,” Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA Research, told ThinkAdvisor. “However, assets are concentrated in larger firms that will continue to have to disclose what they own.”

Securities law professor Ann Lipton of Tulane University tweeted Friday: “The world has changed but the SEC wants to restore the ‘original’ purpose of the 1975 regulation, without considering how the world has changed to adapt to that regulation. It’s like plucking out blocks from a Jenga tower.”