By Jennifer Dickinson, Senior Managing Director, U.S.
In two sets of cases, the U.S. Securities and Exchange Commission (SEC) charged multiple institutions and individuals for failure to file Forms 13F and 13H, Schedules 13D or G and Forms 3, 4 and 5. The meta-takeaway? If you invest in publicly traded securities, monitor the applicable thresholds and submit your filings on time.
In the first set of cases, eleven institutional investment managers settled charges for failing to file Form 13F when they had discretion over $100m or more in certain U.S.-listed securities, known as “13F Securities.” Two of the firms were also charged with failing to file Form 13H, which is required of large traders that must make the filing and obtain a Large Trader ID when their trading activities meet either a daily or monthly threshold. Collectively, nine of the firms paid $3.4 million in penalties. Two of the firms self-reported the violations to the SEC and were not ordered to pay penalties.
The second case was an industry-wide sweep looking for violations of beneficial ownership and insider transaction reporting. Thirteen institutions were charged with failing to file Schedules 13G and/or D, 10 individuals were charged with failing to file Forms 3, 4 and/or five and two public companies were charged with contributing to the violations; collectively, all paid $3.8 million in penalties. Investors are required to file Schedule 13G or D when they acquire beneficial ownership of 5% or more of a public company’s equity securities. Insiders at public companies, including officers, directors, and shareholders owning 10% or more of the public company’s equity securities, are subject to significant and prompt filing obligations under Section 16 of the Securities Exchange Act, consisting of Forms 3, 4 and 5.
Many stakeholders, including the SEC and investing public, rely on the data provided on these and other filings. For these reasons, the SEC takes violations of filing re quirements quite seriously. Advisers should ensure that they have policies and procedures in place to monitor applicable thresholds and submit the filings in a timely manner. Of note, the deadlines for 13G and D have been shortened, so it is important that firms adjust their processes accordingly. The new deadlines became effective September 30, 2024.
Talk to IQ-EQ
At IQ-EQ, our compliance consultants have the experience to handle all U.S. regulatory requirements of the SEC. We can assist with filing Forms 13F and 13H and consult with legal counsel regarding Schedules 13D or G, and Forms 3, 4 and 5. Contact our team today.
About the author
Jennifer is a Senior Managing Director for IQ-EQ, based in Chicago. She has over 15 years of experience involving compliance and legal matters for private fund managers (hedge, private equity, venture, real estate, and commodity pools), traditional investment advisors, family offices and commodity trading advisers.
