The Securities and Exchange Commission is proposing to raise the minimum for asset managers required to file quarterly disclosures of their investment activities and holdings to $3.5 billion, up from $100 million, drawing the ire of one SEC commissioner and several securities experts.
The move would eliminate the need of some 90% of investment managers — about 4,500 of today’s 5,000 current filers — to complete Form 13F, including many hedge funds and mutual fund firms.
“Today’s proposal will update, for the first time in over 40 years, the 13F reporting threshold to a level that furthers the statutory goal of enabling the SEC to monitor holdings of larger investment managers while reducing unnecessary burdens on smaller managers,” SEC Chairman Jay Clayton said in a statement late Friday.
The proposed new threshold is based on the growth of the U.S. equities market between 1975 and December 2018. The 1975 threshold applied to asset managers representing roughly 75% of the dollar value of all equity securities, as does the much higher $3.5 billion today, according to the SEC.
It does not reflect the value of $100 million, adjusted for inflation, which would be near $500 million, according to the Bureau of Labor Statistics inflation calculator.
Smaller asset managers could save $15,000 to $30,000 in compliance costs, according to the SEC.