July 16, 2020
This proposal is a fantastic idea. For too long, the burden on small asset managers has been too great. Often with small teams on tight budgets, it is a distraction away from the core duties of the asset manager, namely appropriately investing protecting client assets.
The dissenting comments are likely to suggest it somehow unfair to not know what small managers are doing. As the proposal points out, in dollars, the vast majority of equity investments will still be accounted for. The unfairness argument gets to what is effectively a peak at the intellectual property of the individual asset manager. Do we require drug development companies to disclose what they're working on before they are prepared to announce it? No. This transparency to the public is a uniquely odd feature to the public equity investing world as a result of this dated dollar threshold that knows no similar requirement in any other aspect of investing let alone other business generally. Do we require distressed investors to disclose what loans they're buying? No. Do we require a construction company to disclose which projects it has won and what price it bid (effectively learnable using an average price each quarter with 13F?) Also no.
Further, any investor relying on tea-leaf reading of other investors investments 45 days after-the-fact should probably stick to etf investing anyways. While they may not like it, the rule probably long run saves them from themselves.
Some may argue companies in some way benefit by 'knowing who their shareholders are', but they can already obtain this information from their agent if they need it. Any material investors over 5% would still be captured by the additional filing requirements there.
From a regulatory standpoint, the Commission and its brethren (FINRA et al) are already free to inquire into trading activities of asset managers as it wishes.
No one loses with this proposal. Any losses are merely perceived by investors who had no business getting a look at this information anyways. Any manager who somehow thinks its a marketing tool is free to file a 13F at whatever level of AUM they see fit. Any investor in a small manager is likewise free to ask for whatever transparency they desire in a privately negotiated structure as you would expect in nearly any other investment vehicle in the world outside of public equities.