Observations from Examinations of Broker-Dealers and Investment Advisers: Large Trader Obligations
Dec. 16, 2020
OCIE conducted a number of examinations that focused on broker-dealers and investment advisers’ compliance with Rule 13h-1 (“Rule). During these examinations, staff observed numerous instances of potential non-compliance with the Rule including where Large Traders may not have self-identified with the SEC and/or may not have filed their annual Form 13H as required by the Rule. The Rule requires entities and individuals, such as investment advisers, whose transactions in NMS securities meet or exceed the daily or monthly thresholds identified by the Rule to self-identify to the SEC on Form 13H, and also requires certain recordkeeping, reporting, and monitoring responsibilities for broker-dealers. This Risk Alert is intended to assist investment advisers and broker-dealers in reviewing and enhancing their compliance programs with respect to their Large Trader obligations. This Risk Alert is also intended to remind broker-dealers of their regulatory reporting obligations related to the reporting of Large Trader information in Electronic Blue Sheets and their upcoming reporting obligations with respect to the Consolidated Audit Trail.