July 15, 2020
Moving the threshold from $100 million to $3.5 billion should not occur. I believe, the threshold should remain to maintain the transparency and help prevent the occurrence of malicious actions by a firms directors to mislead investors. Permitting a decrease in your purview enables firms to conduct activities that are not in the best interests of their investors.
These filings provide valuable transparency that otherwise would not be available to investors attempting to perform their own due diligence. As a commission tasked with the enforcement of securities in the United States, moving this threshold up acts in contrast with your stated mission.
Unfortunately, while there is a cost associated with filing, this is the nature of having the privilege of managing investments, and is a completely justifiable and acceptable cost to provide. Regardless of the impact of the cost, the expenses are written off. I would be surprised to find that a investment house became insolvent due to costs associated with filing 13-Fs. Yes, they are a pain and a challenge to comply with, but that does not mean that the standard for compliance should be lessened. These filings bring transparency to the securities markets. While I do not have the resources of an institutional investor to perform a comprehensive review, even by your own standards on page 17, you indicate that this would lessen the reporting of firms by up to 90%. This also funnels retail and accredited investors into all but the largest investment firms. There are suitable options under the $3.5b mark, but moving the spotlight from those firms under that threshold would harm them by requiring accounts to move to less risky firms that have a greater element of transparency. A boon for the large investment firms already.
Enabling the transparency of firm should not be dependent upon the size of their investments. These filings should be performed at all but the lowest levels, which by your chart is $100m. By increasing this limit you are also permitting firms to seek new avenues towards the mitigation of this reporting cap. This could lead to firms choosing to divest and perform other activities in order to sidestep this change. At $100m there is no benefit to attempting to avoid reporting. At $3.5b, theres a huge benefit. Do not enable companies to avoid standard reporting efforts. As an individual citizen, Im expected to report every dollar I earn to the IRS. Firms with $100m in assets should be held to at least the same standard with regards to their own filings.
Please do what is right for individuals and institutions that rely on your enforcement of reporting activities to maintain transparency and mitigate an avenue for malfeasance by firms attempting to utilize a lessened reporting standard.