July 14, 2020
Equity in Information -
I have been encouraged by the SEC's changes over the last years to level the playing field for the smaller investor. Removal of filings would make it harder for smaller investors to thoroughly vet smaller managers. Filings can help investors assess a manager's portfolio and whether the firm invests the way it purports to. The filings can be particularly helpful when it comes to managers that invest in small-cap stocks.
Institutional investors such as pension funds have almost unlimited access to speak, visit, and review fund performance. Sometimes on a daily basis. 13-F filing changes would disadvantage the smaller investor who does not have the same access.
Costs -
13-F filing costs are not the main concern for hedge funds. Technology has made this quite automated anyways. It is not in the best interest of the smaller investor to remove simple and cheap transparency measures.
What is the rate of fraud in private placement investments verses hedge funds subject to 13-F filing requirements? Removing this simple accountability measure would put smaller investors at greater risk. Hedge funds eliminating simple disclosures would shift the industry to become akin to private placements. The added costs of due diligence when evaluating funds are transferred to each individual investor. This does not reduce costs from the system, and any reduced cost observed would come at the increased risk of fraud. The SEC website itself provides an Investor Alert for Private Placements.
Thank you for your consideration.