January 20, 2021

Nasdaq and more than 300 issuers formally oppose SEC 13F proposal

  • The Nasdaq publicly issued a letter Tuesday morning formally opposing the Securities and Exchange Commission’s recent proposal to reduce the number of money managers’ investment disclosures.
  • The commission’s proposal centers on a public filing called the Form 13-F, which investors, companies, and journalists track because they show fund managers’ equity holdings at quarter’s end.
  • The Nasdaq said the proposal, which the SEC argues would alleviate firms’ regulatory-related costs, reduces transparency, especially for small companies whose shareholders tend to be small investors.
  • Since the Nasdaq is a publicly-traded company, the exchange as a business could also suffer from losing a line of vision into who is holding its stock. 
  • Visit Business Insider’s homepage for more stories.

The Nasdaq issued a public letter on Tuesday formally opposing the Securities and Exchange Commission’s recent proposal to reduce the number of money managers’ investment disclosures, arguing the proposed change runs counter to the commission’s mission of protecting investors.

The New York-based exchange’s letter, co-signed by some 300 of the public companies listed on its exchange, follows a similar public rebuke from the New York Stock Exchange published on Monday. 

The proposal, which the SEC first outlined in early July, would raise the 13-F disclosure threshold from $100 million to $3.5 billion. The form 13-F shows institutional investment managers’ public equity holdings at quarters’ end, which managers are required to file quarterly within 45 days of the quarter’s end. The commission says the proposed changes would, among other perceived benefits, alleviate firms’ regulatory-related costs. 

The proposed change would eliminate 90% of current US filers, meaning influential hedge funds like David Einhorn’s Greenlight Capital’s $922 million in equity holdings would no longer have to file. 

“We’ve heard from all sizes of companies, all sectors, and I will tell you, there is a belief that this is a pretty big step backward,” Nelson Griggs, president of the Nasdaq Stock Exchange, told Business Insider in an interview last month.

Read more: ‘Literally no one was asking for this, zero’: How a controversial SEC proposal could shroud big-money managers in secrecy and leave individual investors in the dark

Since the Nasdaq is a publicly-traded company, the exchange as a business and its investor relations department could also suffer from losing a line of vision into who is holding its stock. 

The exchange may also lose out on trading volume if investors are trading less often on investment ideas that emerge from 13-F filings each quarter. 

Individual investors, fund managers, executives from public companies like Ford Motor and Rite Aid, research firm operators whose businesses hinge on scouring filings, and academics have widely criticized the proposal in public comments on the SEC website. 

“Literally no one was asking for this, zero,” Maz Jadallah, the chief executive of of AlphaClone, which uses the filings to create exchange-traded funds out of the best-performing stocks, said in an interview last month.

— Bradley Saacks contributed reporting. 

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