Jul. 27, 2020
Hello, According to SEC.gov, "The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation". This proposed rule directly violates the second guiding principle of the SEC. This rule does not protect retail investors. This rule does not promote or maintain fair, orderly, and efficient markets. In case there is any misinterpretation of the phrase "efficient markets", a definition has been provided. "Market efficiency refers to the degree to which market prices reflect all available, relevant information." - a widely accepted definition, provided by Investopedia.com. By limiting the amount of relevant information available to investors via raising the Form 13F reporting threshold, market efficiency will be degraded. The proposed change of the 13F reporting threshold cites two objectives of the change. 1) "...enabling the SEC to monitor holdings of larger investment managers". Thankfully, the SEC already does this. There is no need to cite it as an objective for the proposed change. 2) "Reducing unnecessary burdens on smaller managers." This is a logical falacy called a, "hasty generalization". The phrase, "unnecessary burdens" has no agreed-upon measure for sufficient evidence. If only fund managers were asked if the 13F filings were necessary, then surely the majority response would be some variation of, "No". These filings are an important source of information to the retail investor community for making investment decisions and are deemed necessary. Saving Fund Managers from Compliance Costs According to the proposal, the "total annual direct compliance cost savings for smaller managers who would no longer file reports on Form 13F would range from $68.1 million to $136 million." The proposal also states, "compliance costs could range from $15,000 to $30,000 annually per manager". Using the objectives stated in the proposal as the foundation for the 13F threshold rule change is irresponsible and will have a negative impact on future market dynamics, as well as the SEC's reputation among the retail investor community.