Jul. 14, 2020
Dear Sir &/or Madam, I am a lifelong practitioner in institutional financial markets and an Adjunct Professor of Finance in San Francisco. I believe S7-08-20 is an ill-advised change that should be rejected, since it will eliminate a vast window of transparency into US securities markets. Congress passed Section 13(f) of the Securities Exchange Act in 1975 in order to increase the public availability of information regarding the securities holdings of institutional investors. Congress believed that this institutional disclosure program would increase investor confidence in the integrity of the United States securities markets. The SEC now suggests we reverse course by eliminating the 13(f) filing requirements for 4,500 institutional investors representing over $2.3 trillion in assets. This will undermine confidence in financial markets and in government more generally. The SEC’s recommendation is premised on the notion that 13(f) filings, which have been required for over 45 years, have become overly burdensome. This is frankly an absurd position, since in all walks of life technology has made similar ministerial tasks much faster, simpler and cheaper. In addition, the SEC’s position implicitly suggests that transparency is necessary and desirable for institutional investors managing over $3.5 billion in assets, but is overly burdensome for managers with under $3.5 billion in assets. This is naïve and/or unrealistic. One of the main purposes of transparency is to encourage and monitor regulatory compliance. Eliminate transparency for managers with under $3.5 billion in assets and we should expect a decline in regulatory compliance. Is this a policy the SEC really wants to endorse? Finally, the plain language of the Exchange Act precludes the SEC from raising the reporting threshold for 13(f) compliance. It is a mystery why the Commission would pursue a change with such legal vulnerability. Thank you, Robert W. Scannell