Section 13(f) and Rule 13f-1 of the Securities Exchange Act of 1934 require certain institutional investment managers exercising investment discretion over accounts having an aggregate fair market value of $100 million or more in certain securities specified as “13(f) securities” by the Securities and Exchange Commission (“SEC”) at the end of any trading month to report these holdings to the SEC on Form 13F.

 

 

Generally, an institutional investment manager is: (1) an entity that invests in, buys or sells securities for its own account; or (2) a natural person or an entity that exercises investment discretion over the account of any other natural person or entity. 

 

An institutional investment manager exercises investment discretion if the manager has the power to determine which securities are bought or sold for the account(s) under management or makes decisions about which securities are bought or sold for the account(s). 

 

Institutional investment managers may be investment advisors, banks, insurance companies, broker-dealers, pension funds, and corporations. All institutional investment managers that meet the requirements of Section 13(f) must file Form 13F, regardless of whether they are SEC-registered investment advisors. 

 

Section 13(f) securities generally include U.S. exchange-traded stocks, exchange-traded funds, certain convertible securities, equity options, warrants, shares of closed-end investment companies, and certain convertible debt securities.  Shares of open-end investment companies (i.e., mutual funds) are not Section 13(f) securities.  

 

Section 13(f) securities are listed in the SEC’s Official List of Section 13(f) Securities [this should be a hyperlink to: https://www.sec.gov/divisions/investment/13flists.htm] updated quarterly. The SEC has stated that institutional investment managers may rely on the most recent list of these securities published by the SEC in determining their filing obligations. 

 

 

Form 13F must be filed within 45 days of the end of a calendar quarter. It requires disclosure of the name of the institutional investment manager that files the report, and the name and class, the CUSIP number, the number of shares as of the end of the calendar quarter for which the report is filed, and the total market value with respect to each section 13(f) security over which it exercises investment discretion.

 

Rule 13f-1 requires an investment manager to make four separate Form 13F filings if it meets the $100 million filing threshold on the last trading day of any month during a calendar year.  Institutional investment managers must calculate the aggregate fair market value of their Section 13(f) security holdings as of the last trading day of each month to determine whether or not they meet the $100 million filing threshold. 

 

The four filings must be made at the beginning of the following calendar year and then quarterly after that. The rule requires an investment manager to make all four Form 13F filings even if it falls back under the $100 million threshold after initially exceeding it. 

 

The four mandatory Form 13F filings must be made on the following schedule:

·         The first filing is due within 45 days after the year in which the investment manager exceeds the $100 million threshold, i.e., by February 14 of the subsequent calendar year; and

·         The next three filings are due within 45 days of the end of the first 3 quarters of that same year. 

 

For instance, if an investment manager exceeds the $100 million threshold in August 2015, it will need to make Form 13F filings by February 16, May 16, August 15 and November 14, 2016. The manager must make all these four filings even if the investment manager only briefly exceeds the $100 million threshold and never exceeds it again. The Form 13F filed must report the fair market value of each Section 13(f) security as of the close of trading on the last trading day of the calendar year (for the first filing) or quarter (for the three subsequent filings), even if that amount is less than $100 million. 

 

An investment manager may need to make one of the following types of filings, depending on whether another investment manager is also reporting some or all of the same holdings:

·         A 13F Holdings Report – appropriate if all of the investment manager’s Section 13(f) securities are listed only on its Form 13F;

·         A 13F Combination Report – appropriate if some of the investment manager’s Section 13(f) securities are listed on someone else’s Form 13F; or

·         A 13F Notice – appropriate if all of the investment manager’s Section 13(f) securities are reported on someone else’s Form 13F. 

 

There are many aggregation, de minimis, shared investment discretion, and other specific reporting rules that may impact what information must or may not be reported on Form 13 and who must report it. For instance, a manager may omit holdings otherwise reportable if it holds, on the last day of the reporting fewer than 10,000 shares (or less than $200,000 principal amount in the case of convertible debt securities) and less than $200,000 aggregate fair market value (including options to purchase such amounts). The SEC also expects any 13F reports to meet certain file format requirements. 

 

For more information on Form 13F and Section 13(f) securities, please review these resources on the SEC’s website:

·         SEC Overview of Form 13F: http://www.sec.gov/answers/form13f.htm