Proposed Rule2021-24522
Electronic Submission of Applications for Orders Under the Advisers Act and the Investment Company Act, Confidential Treatment Requests for Filings on Form 13F, and Form ADV-NR; Amendments to Form 13F
Primary source
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Published
November 19, 2021
Issuing agencies
Securities and Exchange Commission
Abstract
The Securities and Exchange Commission is proposing amendments to rules to convert the filing of certain applications, confidential treatment requests, and forms from paper to electronic submission. Specifically, we propose to amend our rules to require that the following types of filings be submitted via our Electronic Data Gathering, Analysis, and Retrieval ("EDGAR") system: Applications for orders under any section of the Investment Advisers Act of 1940 ("Advisers Act") and confidential treatment requests for filings made under section 13(f) of the Securities Exchange Act of 1934 ("Exchange Act"). We also propose rule amendments to harmonize the requirements for the submission of applications for orders under the Advisers Act and the Investment Company Act of 1940 ("Investment Company Act"). In addition, we propose to amend other rules and a form to require the electronic submission of Form ADV-NR through the Investment Adviser Registration Depository ("IARD") system. We also propose to require non-resident general partners and non-resident managing agents to amend their Form ADV-NR within 30 days whenever any information contained in the form becomes inaccurate by filing with the Commission a new Form ADV-NR. Further, we are re- proposing amendments to Form 13F to require managers to provide additional identifying information. Finally, we are re-proposing certain technical amendments to Form 13F, including modernizing the structure of data reporting and amending the instructions on Form 13F for confidential treatment requests in light of a recent decision of the U.S. Supreme Court.
Full Text
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<title>Federal Register, Volume 86 Issue 221 (Friday, November 19, 2021)</title>
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[Federal Register Volume 86, Number 221 (Friday, November 19, 2021)]
[Proposed Rules]
[Pages 64839-64881]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-24522]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 232, 240, 249, 270, 275, and 279
[Release Nos. 34-93518; IA-5903; IC-34415; File No. S7-15-21]
RIN 3235-AM97
Electronic Submission of Applications for Orders Under the
Advisers Act and the Investment Company Act, Confidential Treatment
Requests for Filings on Form 13F, and Form ADV-NR; Amendments to Form
13F
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
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SUMMARY: The Securities and Exchange Commission is proposing amendments
to rules to convert the filing of certain applications, confidential
treatment requests, and forms from paper to electronic submission.
Specifically, we propose to amend our rules to require that the
following types of filings be submitted via our Electronic Data
Gathering, Analysis, and Retrieval (``EDGAR'') system: Applications for
orders under any section of the Investment Advisers Act of 1940
(``Advisers Act'') and confidential treatment requests for filings made
under section 13(f) of the Securities Exchange Act of 1934 (``Exchange
Act''). We also propose rule amendments to harmonize the requirements
for the submission of applications for orders
[[Page 64840]]
under the Advisers Act and the Investment Company Act of 1940
(``Investment Company Act''). In addition, we propose to amend other
rules and a form to require the electronic submission of Form ADV-NR
through the Investment Adviser Registration Depository (``IARD'')
system. We also propose to require non-resident general partners and
non-resident managing agents to amend their Form ADV-NR within 30 days
whenever any information contained in the form becomes inaccurate by
filing with the Commission a new Form ADV-NR. Further, we are re-
proposing amendments to Form 13F to require managers to provide
additional identifying information. Finally, we are re-proposing
certain technical amendments to Form 13F, including modernizing the
structure of data reporting and amending the instructions on Form 13F
for confidential treatment requests in light of a recent decision of
the U.S. Supreme Court.
DATES: Comments should be received on or before December 20, 2021.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/submitcomments.htm">https://www.sec.gov/rules/submitcomments.htm</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#1b696e777e36787476767e756f685b687e78357c746d"><span class="__cf_email__" data-cfemail="4a383f262f67292527272f243e390a392f29642d253c">[email protected]</span></a>. Please include
File Number S7-15-21 on the subject line.
Paper Comments
<bullet> Send paper comments to Secretary, Securities and Exchange
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number S7-15-21. This file number
should be included on the subject line if email is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
website (<a href="http://www.sec.gov/rules/proposed.shtml">http://www.sec.gov/rules/proposed.shtml</a>). Comments are also
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Operating
conditions may limit access to the Commission's public reference room.
All comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly.
Studies, memoranda, or other substantive items may be added by the
Commission or staff to the comment file during this rulemaking. A
notification of the inclusion in the comment file of any such materials
will be made available on the Commission's website. To ensure direct
electronic receipt of such notifications, sign up through the ``Stay
Connected'' option at <a href="http://www.sec.gov">www.sec.gov</a> to receive notifications by email.
FOR FURTHER INFORMATION CONTACT: Zeena Abdul-Rahman, Senior Counsel,
Sara Cortes, Senior Special Counsel, Investment Company Rulemaking
Office, at (202) 551-6792; or Alexis Palascak, Senior Counsel,
Investment Adviser Regulation Office, at (202) 551-6787 or <a href="/cdn-cgi/l/email-protection#723b3f5f20071e1701320117115c151d04"><span class="__cf_email__" data-cfemail="87cecaaad5f2ebe2f4c7f4e2e4a9e0e8f1">[email protected]</span></a>, Division of Investment Management, Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549-8549.
SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission is
proposing amendments to 17 CFR 232.11 (``rule 11''), 17 CFR 232.100
(``rule 100''), 17 CFR 232.101 (``rule 101''), 17 CFR 232.102 (``rule
102''), and 17 CFR 232.201 (``rule 201'') of Regulation S-T relating to
electronic filing on the EDGAR system; 17 CFR 275.0-4 (``rule 0-4'')
and 17 CFR 275.203-1 (``rule 203-1'') under the Advisers Act; 17 CFR
279.4 (``Form ADV-NR'') and the instructions to 17 CFR 279.1 (``Form
ADV'') under the Advisers Act; 17 CFR 270.0-2 (``rule 0-2'') under the
Investment Company Act; 17 CFR 240.24b-2 (``rule 24b-2'') under the
Exchange Act; and 17 CFR 249.325 (``Form 13F'').
Table of Contents
I. Background
II. Discussion
A. Applications
1. Electronic Filing
2. Availability of Hardship Exemptions
3. Elimination of Certain Requirements
4. Form ADV-NR
B. Rule 13f-1 and Form 13F
1. Electronic Filings of 13(f) Confidential Treatment Requests
2. Other Amendments to Form 13F
C. Compliance Date
III. Economic Analysis
A. Introduction and Primary Goals of the Proposed Regulations
and Form Amendments
B. Economic Baseline
C. Economic Effects
1. Benefits
2. Costs
3. Efficiency, Competition, and Capital Formation
D. Reasonable Alternatives
1. Alternative Filing System for Advisers Act Orders
2. Alternative Filing System for 13(f) Confidential Treatment
Requests
3. Single Form 13F Filing With Electronic Attachment
E. Request for Comment
IV. Paperwork Reduction Act
A. Amendments to Rule 0-4
1. Burden Estimate for Rule 0-4
B. Amendment to Form ADV-NR
1. Burden Estimate for Form ADV-NR
C. Form ADV and Rule 203-1
D. Amendments to Form 13F
E. Request for Comments
V. Regulatory Flexibility Act Certification
VI. Consideration of the Impact on the Economy
VII. Statutory Authority
Text of Proposed Rule and Form Amendments
Signature
I. Background
The Commission seeks to promote efficiency, transparency, and
operational resiliency by modernizing the manner in which information
is submitted to us and, where appropriate, disclosed to the public.
Electronic filing improves our ability to achieve these goals.
Specifically, electronic filing minimizes the risks of delay in staff
receiving the information via paper submissions, and it increases
efficiency in the staff review process by reducing staff processing
time, increasing quality assurance, and improving the ability to review
and analyze information contained in electronic submissions. In
addition to increasing staff efficiency of review, publicly filed
electronic submissions are more readily available on our website in
easily searchable formats, which benefits both investors and the asset
management industry.
In addition, electronic filing capabilities have proved to be an
effective measure in addressing certain of the logistical and
operational issues raised by the spread of coronavirus disease
(``COVID-19''). We believe that converting paper submissions to
electronic submissions would allow the Commission, and those persons
filing the submissions, to more effectively and efficiently navigate
any future disruptive events--like COVID-19--that make the paper
submission process unnecessarily burdensome, impractical, or
unavailable. Further, we believe that the proposed electronic
submission process better reflects the current business practices and
operations of those persons that file the submissions and, as a result,
would likely reduce the burden associated with submitting such filings.
These benefits are among the reasons that the Commission has
[[Page 64841]]
transitioned filings from paper to electronic format in many
contexts.\1\
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\1\ See Updating Edgar Filing Requirements, Securities Act
Release No. 11005 (Nov. 4, 2021); see also Amendments to the
Commission's Rules of Practice, Exchange Act Release No. 90442 (Nov.
17, 2020) [85 FR 86464 (Dec. 30, 2020)]; Cf. Electronic Signatures
in Regulation S-T Rule 302, Securities Act Release No. 10889 (Nov.
17, 2020) [85 FR 78224] (Dec. 4, 2020).
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We are proposing to require electronic filing of applications for
orders under any section of the Advisers Act,\2\ and of confidential
treatment requests for filings made under section 13(f) of the Exchange
Act (``13(f) Confidential Treatment Requests''). These filings would be
required to be submitted through the EDGAR system.\3\ In addition, we
are re-proposing certain amendments to Form 13F that we originally
proposed in July 2020.\4\ The Commission is not re-proposing the
amendments to raise the reporting thresholds for Form 13F that were
included in the 2020 Form 13F Proposal. As discussed further below, and
consistent with the original proposal, we are proposing (i) a
requirement for an institutional investment manager \5\ (``manager'')
that files Form 13F to provide certain identifying information, (ii)
certain technical amendments to modernize the information reported on
Form 13F, consistent with its existing structured eXtensible Markup
Language (``XML'') format, and (iii) a modification to instruction 2.d.
of Form 13F's Confidential Treatment Instructions to update that
instruction and make it consistent with a recent U.S. Supreme Court
decision.\6\ We also are proposing other rule amendments to harmonize
the requirements for submission of applications for orders under the
Advisers Act and the Investment Company Act.
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\2\ Applications for registration as an investment adviser under
the Advisers Act and applications for withdrawal from registration
are filed via IARD. See 17 CFR 275.203-1; 17 CFR 275.203-2. We are
not proposing to alter these requirements.
\3\ The EDGAR Filer Manual, which is promulgated by the
Commission, sets out the technical formatting requirements for
electronic submissions. See 17 CFR 232.301.
\4\ See Reporting Threshold for Institutional Investment
Managers, Exchange Act Release No. 89290 (July 10, 2020) [85 FR
46016 (July 31, 2020)] (``2020 Form 13F Proposal'').
\5\ The term ``institutional investment manager'' includes any
person, other than a natural person, investing in or buying and
selling securities for its own account, and any person exercising
investment discretion with respect to the account of any other
person. See section 13(f)(6)(A) of the Exchange Act [15 U.S.C.
78m(f)(6)]. The term ``person'' includes any natural person,
company, government, or political subdivision, agency, or
instrumentality of a government. See section 3(a)(9) of the Exchange
Act [15 U.S.C. 78c(3)(9)].
\6\ Food Marketing Institute v. Argus Leader Media, 139 S.Ct.
2356 (2019) (overturning the longstanding interpretation set forth
in National Parks v. Morton, 498 F.2d 765 (D.C. Cir. 1974) of
``confidential'' for purposes of FOIA exemption 4).
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Finally, we are proposing to require the electronic submission of
Form ADV-NR by non-resident general partners and non-resident managing
agents of investment advisers (domestic or non-resident) registered
with the Commission. Form ADV-NR is filed in connection with an
adviser's initial Form ADV submission and requires a non-resident
general partner or managing agent of an investment adviser to appoint
an agent for service of process in the United States.\7\ Under the
proposed amended rules, filers would be required to submit Form ADV-NR
through the IARD system.
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\7\ See proposed amended rule 203-1(d) [17 CFR 275.203-1(d)].
The proposed amendments would continue to permit a paper filing of
Form ADV-NR if a continuing hardship exemption is granted under
Advisers Act rule 203-3(b) [17 CFR 275.203-3].
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II. Discussion
A. Applications
1. Electronic Filing
Section 206A of the Advisers Act gives the Commission the authority
to provide exemptions from any provision of the Advisers Act or any
rule or regulation thereunder, provided the exemption is necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policy and
provisions of the Advisers Act.\8\ Applicants seeking an exemption must
apply to the Commission to obtain an order.\9\ The processes for
submitting an application are addressed in Advisers Act rule 0-4 \10\
and Commission Guidelines issued in 1985 (``1985 Release'').\11\ Since
the 1985 Release, the process for handling exemptive applications in
the Division of Investment Management (``Division'') has evolved. While
an applicant seeking Investment Company Act relief submits its
application electronically to the Commission via EDGAR, an applicant
seeking Advisers Act relief submits its application, as well as a
proposed notice of application, in paper and in quintuplicate.\12\ The
paper copies of the applications are delivered to the Commission's
mailroom for stamping, logging, and ultimately for routing to the
Division staff. Staff then create a notification in the EDGAR system in
order to assign an appropriate file number, manually upload the
application onto our public website, and process the application for
internal tracking. The current manual process for submitting and
handling Advisers Act applications creates inefficiencies in a number
of ways, including those resulting from the absence in Advisers Act
rule 0-4 of a specific addressee at the Commission for
applications.\13\
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\8\ See section 206A of the Advisers Act [15 U.S.C. 80b-6a].
\9\ Possible applicants include, but are not limited to,
registered investment advisers, exempt reporting advisers, and
persons not registered with the Commission but who meet the
definition of investment adviser under the Advisers Act.
\10\ 17 CFR 275.0-4.
\11\ Commission Policy and Guidelines for Filing of Applications
for Exemption from Some or All of the Provisions of the Investment
Company Act of 1940 and the Investment Advisers Act of 1940,
Investment Advisers Act Release No. 969 (Apr. 30, 1985) (``1985
Release'').
\12\ Pursuant to rule 0-4(b), every application for an order
under any provision of the Advisers Act, for which a form with
instructions is not specifically prescribed, and every amendment to
such application shall (among other requirements) be filed in
quintuplicate. 17 CFR 275.0-4(b). Rule 0-4(g) requires that a
proposed notice of the proceeding initiated by the filing of the
application accompany each application as an exhibit thereto. 17 CFR
275.0-4(g).
\13\ Any delay between Commission receipt and receipt by the
appropriate staff member means that there is delay in public
availability of the application. We propose to designate the
Secretary of the Commission as the addressee for paper applications
for an order under both the Advisers Act and the Investment Company
Act (e.g., applications made in paper pursuant to a hardship
exemption under Regulation S-T). See infra footnotes 33 and 34 and
accompanying text.
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Moreover, in order to achieve an expeditious review of an
application, applicants often, to the extent possible, adhere to
applicable precedent and address any differences from prior
applications.\14\ Applicants and staff, accordingly, rely on the ready
availability of applications that have been evaluated by the Commission
and its staff. Commission staff place the applications (including
amendments, notices of applications, and the resulting orders) on the
Commission's website in order to improve transparency and to facilitate
this reliance. Unlike other filings made in EDGAR, Advisers Act
applications are not readily available to the public upon submission;
instead they require the staff actions described above to be posted.
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\14\ See 1985 Release, supra footnote 11 (discussing that
applicants should recognize the differences between their proposal
and prior applications requesting similar relief and, to the extent
possible, bring their proposal within applicable precedent. Further,
applicants should cite and discuss applicable precedent.).
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Prior to the Commission amending its rules in 2008 to mandate
electronic submission of applications for orders under any section of
the Investment Company Act,\15\ applicants filed their
[[Page 64842]]
applications for Investment Company Act orders in paper using a similar
process as those seeking orders under the Advisers Act.\16\ In our
experience, the transition from paper to electronic filing of
Investment Company Act applications has led to more streamlined and
timely application processing. Commission staff have immediate access
to an Investment Company Act application through EDGAR, eliminating the
need for manually processing the application. The ability to review
applications in EDGAR immediately creates internal efficiencies by
shortening the time to create and maintain records as well.
Additionally, the Commission has received applications from parties
seeking relief under both the Advisers Act and the Investment Company
Act that were unable to file a single application because of the
current multiple-system requirements for the differing
applications.\17\ Our proposal would allow such applications to be
filed jointly in a single submission.
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\15\ See generally Mandatory Electronic Submission of
Applications for Orders under the Investment Company Act and Filings
Made Pursuant to Regulation E, Securities Act Release No. 8981 (Oct.
29, 2008) [73 FR 65516 (Nov. 4, 2008)] (``2008 IC Applications
Release'').
\16\ The amendments mandating electronic submission of
Investment Company Act exemptive applications followed a report by
the Commission's Office of Inspector General that recommended a
transition to electronic submission of Investment Company Act
applications. See IM Exemptive Application Processing, SEC Office of
Inspector General, Audit Report No. 408, Recommendation B (Sept. 29,
2006).
\17\ For such applications, the applications under the
Investment Company Act were made in HTML on EDGAR, and the Advisers
Act applications were submitted in paper.
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The transition to electronic submission in the Investment Company
Act context has led to increased transparency for filers seeking
similar relief, who can now more easily search for and replicate (as
appropriate) similar applications for an exemptive order.\18\ Similarly
requiring Advisers Act applications to be submitted electronically in
EDGAR would benefit investors, applicants, and other interested parties
by making information contained in these filings more readily and
immediately available and more easily searchable. We also believe that
making these filings and applications immediately available in
electronic format in the EDGAR database would provide a more complete
and more easily reviewable picture for the investing public, to the
extent such applications might inform investors' decisions with respect
to selection or retention of investment advisers.\19\
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\18\ See Amendments to Procedures With Respect to Applications
Under the Investment Company Act of 1940, Investment Company Act
Release No. 33921 (July 6, 2020) [85 FR 57089 (Sept. 15, 2020)]
(``2020 IC Applications Procedures Release'') (adopting amendments
to rules under the Investment Company Act to establish an expedited
review procedure for applications that are substantially identical
to recent precedent as well as a rule to establish an internal
timeframe for review of applications outside of such expedited
procedure). We are not proposing to extend the rules adopted in the
2020 IC Applications Procedures Release to applications for
exemptions from provisions of the Advisers Act.
\19\ As noted above, because of the current manual process of
categorizing and uploading Advisers Act applications, there can be a
delay in making a paper application public. See supra at text
accompanying footnote 13.
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a. The EDGAR Filing System
While most electronic filings made with the Commission are filed
via the EDGAR system,\20\ investment advisers submit certain filings
and reports electronically via the IARD system (including registration
applications under the Advisers Act).\21\ We are proposing, however, to
require electronic submission of Advisers Act applications on
EDGAR.\22\ We do so for a number of reasons. First, the cost to
advisers of submitting electronic applications through the EDGAR system
would be relatively low.\23\ Second, the EDGAR system should require
fewer technological changes than IARD in order to accept Advisers Act
applications, as it is already designed to accept Investment Company
Act applications. Third, EDGAR would allow for applications under both
the Investment Company Act and the Advisers Act to be made in a single
filing.\24\ Fourth, the process for filing applications under the
Advisers Act on EDGAR would be consistent with the process for filing
applications under the Investment Company Act, which we believe would
facilitate internal processing efficiencies by Commission staff.
Finally, we believe that having applications under both the Investment
Company Act and the Advisers Act in the same system would increase
transparency for the public as users would only need to learn how to
access one system to locate all relevant applications.
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\20\ This includes applications for orders under any section of
the Investment Company Act as well as Regulation E filings of small
business investment companies and business development companies.
See 2008 IC Applications Release, supra footnote 15.
\21\ See e.g., 17 CFR 275.203-1 (application for investment
adviser registration), 275.203-2 (withdrawal from investment adviser
registration), 275.203-3 (hardship exemptions from the requirement
to make Advisers Act filings electronically with IARD), and 275.204-
4 (reporting by exempt reporting advisers).
\22\ Although investment advisers register using the IARD
system, some advisers may be familiar with the EDGAR system as a
result of other required filings on EDGAR, such as certain filings
made pursuant to sections 13 and 16 of the Exchange Act or
registration statements filed on behalf of registered investment
companies they manage. See 17 CFR 240.13f-1, 17 CFR 240.13d-1, 15
U.S.C. 78p(a).
\23\ See infra at text accompanying footnote 143 and section
IV.A (discussing the costs associated with submitting applications
electronically).
\24\ For applications with multiple co-applicants (i.e., if
certain applicants were included for Advisers Act relief and others
were included for Investment Company Act relief), the applicants
would be able to submit the application with all co-applicants
included in one submission. The applicants would choose one
applicant to list first as the ``primary'' co-applicant. Then, they
would include in the EDGAR submission the information for all other
co-applicants.
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b. Proposed Rule Amendments
We are proposing to amend certain rules of Regulation S-T \25\ and
Advisers Act rule 0-4 to require electronic filing on EDGAR of
applications for an order under any section of the Advisers Act.
Proposed amendments to rule 101(a)(1) of Regulation S-T would include
within its mandatory electronic submissions any application for an
order under any section of the Advisers Act.\26\ Regulation S-T
includes rules concerning mandatory and permissive electronic EDGAR
submissions. It also generally requires the electronic filing of any
amendments and related correspondence and supplemental information
pertaining to a document that is the subject of mandated EDGAR
submission.\27\ Additionally, Regulation S-T generally requires
exhibits to an electronic filing to be filed in electronic format,
absent a hardship exemption.\28\ The proposed amendments to these
requirements would apply to persons who submit applications under the
Advisers Act, as they do to persons who
[[Page 64843]]
submit applications under the Investment Company Act.\29\
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\25\ 17 CFR 232.11, 232.100, 232.101, 232.102 and 232.201.
\26\ See proposed section (a)(1)(xxiii) of rule 101 of
Regulation S-T. As part of such changes, we are proposing to add the
term ``Investment Advisers Act'' as a defined term in rule 11 of
Regulation S-T, meaning the Investment Advisers Act of 1940. See
proposed amendments to rule 11 of Regulation S-T; see also infra
footnote 95 (discussing other proposed non-substantive conforming
edits to rule 101 of Reg S-T).
\27\ See rule 101(a)(1) of Regulation S-T [17 CFR
232.101(a)(1)]. Related correspondence and supplemental information
are not automatically disseminated publicly through the EDGAR system
but are immediately available to the Commission staff.
\28\ See rule 102(a) of Regulation S-T [17 CFR 232.102(a)].
Proposed amendments to rule 102(a) of Regulation S-T would provide
that previously filed exhibits, whether in paper or electronic
format, may be incorporated by reference to the extent permitted by
Advisers Act rule 0-6 [17 CFR 275.0-6]. See EDGAR Filer Manual,
Volume II: ``EDGAR Filing'' (Version 57) (Mar. 2021) (``2021 EDGAR
Filer Manual''), at Sections 2.1 (EDGAR Filing Process) and 5.2
(Document Formats).
\29\ In order to clarify that all applicants for an order under
the Advisers Act (and not just registered investment advisers) are
subject to Regulation S-T, we also propose to amend rule 100(b) to
replace the term ``registrants'' and state that ``[p]ersons or
entities'' whose filings are subject to review by the Division shall
be subject to the electronic filing requirements of Regulation S-T.
See proposed amendment to section (b) of rule 100 of Regulation S-T,
the wording of which would conform to section (c) of the rule.
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Rule 0-4 generally prescribes requirements for filings made under
the Advisers Act.\30\ Proposed amendments to rule 0-4 would require
that every application for an order under any provision of the Advisers
Act, for which a form with instructions is not specifically prescribed,
and every amendment to such application, be filed electronically
pursuant to Regulation S-T.\31\ Rule 0-4's specifications for the
submission of paper applications would continue to apply for any
remaining paper applications, such as filings made pursuant to a
hardship exemption under Regulation S-T.\32\ Although we anticipate
paper submissions would be rare, we propose to amend rule 0-4 to
require that the Secretary of the Commission be the designated
addressee of such paper submissions.\33\ We propose an identical
clarifying change to designate the Secretary of the Commission as
addressee of any remaining paper submissions under the Investment
Company Act.\34\
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\30\ See 17 CFR 275.0-4.
\31\ See proposed amendment to Advisers Act rule 0-4(b).
\32\ See id. Regulation S-T generally requires requests for
confidential treatment of an application to be filed in paper, and
it provides a process for seeking a continuing hardship exemption.
See rule 101(c)(1)(i) [17 CFR 232.101(c)(1)(i)] (confidential
treatment) and rule 202 [17 CFR 232.202] (continuing hardship
exemption) of Regulation S-T.
\33\ See proposed amendment to Advisers Act rule 0-4(a).
\34\ See proposed amendment to Investment Company Act rule 0-
2(a).
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c. Request for Comment
We request comment on our proposal to require that applications for
orders under any section of the Advisers Act be submitted
electronically via EDGAR.
1. Are there burdens or other issues related to electronic filing,
as opposed to paper filing, that the Commission should consider with
regard to applications for an order under the Advisers Act? Should we
allow (but not require) electronic submission of such applications?
Should certain types of Advisers Act applications be excluded from
mandatory electronic submission? If so, which types of applications
should be excluded?
2. Is the EDGAR system the appropriate system for Advisers Act
applications? Should the Commission use, for example, the IARD system,
or a secure file transfer system instead? Would requiring Advisers Act
applications to be filed on IARD be more beneficial for investors and
other market participants? If so, why? Alternatively, is there another
method of electronic submission that is preferable? If so, please
identify the method you believe we should adopt, why you believe it
should be used, and the estimated costs of such system for filers.
3. Similar to many other provisions of Regulation S-T, including
the provision for Investment Company Act applications, the proposed
rule does not specify a particular filing format though we anticipate
the filing format would be HTML or ASCII, like many other EDGAR
filings, including Investment Company Act applications. What format or
formats should the rule permit for filing of Advisers Act applications?
Should the Commission require a single, specified format or permit
filers to select a format among two or more possible formats? What time
or expense is associated with particular formats? What time or expense
would be required of the public to view documents in a particular
format? Would a particular format require any filers or users to
license commercial software they otherwise would not, and, if so, at
what expense?
4. Is there any additional information that commenters can provide
with respect to the difficulties and/or considerations unique to the
proposed amendments? In the event that commenters believe that any
aspect of the proposed amendments would affect the costs of filing or
using the information, we ask for specific details, quantitative data,
and alternative approaches.
2. Availability of Hardship Exemptions
a. General
Under the proposal, temporary hardship exemptions from electronic
filing would not be available for applications for orders under the
Advisers Act, but continuing hardship exemptions from electronic filing
would be available. Rule 201 of Regulation S-T provides that if an
electronic filer experiences unanticipated technical difficulties
preventing the timely preparation and submission of an electronic
filing, the electronic filer may file in paper format no later than one
business day after the date on which the filing was to be made, subject
to certain requirements and exclusions (``temporary hardship
exemption''). This temporary hardship exemption is available
automatically but must be followed by a confirming electronic copy
within six business days. Currently, rule 201 does not address
applications for orders under the Advisers Act because such
applications are filed in paper rather than filed electronically. We
are proposing to amend rule 201 so it would exclude applications for
orders under the Advisers Act, as it does with applications for orders
under the Investment Company Act.\35\ As a result, temporary hardship
exemptions would not be available for applications for orders under the
Advisers Act, as is the case with applications for orders under the
Investment Company Act. We believe that submission exigencies or
submission deadlines associated with applications for orders under the
Advisers Act would be rare.
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\35\ See 2008 IC Applications Release, supra footnote 15.
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A filer may apply for a continuing hardship exemption from
electronic filing under rule 202 of Regulation S-T if it cannot file
all or part of a filing without undue burden or expense.\36\ A
continuing hardship exemption may be granted for a limited time period
or indefinitely. Time-limited continuing hardship exemptions may be
conditioned upon filing the document in electronic format by a certain
date. Continuing hardship exemptions would be available for
applications for orders under the Advisers Act under rule 202, as it is
currently written, without any amendments.
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\36\ 17 CFR 232.202.
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b. Request for Comment
We request comment on the availability of hardship exemptions.
5. Like applications for orders under the Investment Company Act,
should a temporary hardship exemption not be available for applications
for orders under the Advisers Act, as proposed? Why or why not? Could
there be any submission exigency or submission deadline associated with
applications for orders under the Advisers Act? If so, with what
frequency might such exigency occur? Alternatively, should a temporary
hardship exemption be available for applications for orders under the
Investment Company Act or the Advisers Act? Why or why not?
6. Like applications for orders under the Investment Company Act,
should a continuing hardship exemption be available for applications
for orders under the Advisers Act, as proposed?
[[Page 64844]]
Should a continuing hardship exemption not be available for
applications for orders under the Investment Company Act? Why or why
not?
3. Elimination of Certain Requirements
a. General
We are proposing to amend rule 0-4 governing the form of
applications under the Advisers Act to harmonize the requirements with
the requirements for applications under the Investment Company Act and
further reduce the burden of filing such applications.\37\ First, we
are proposing to eliminate the requirement to have verifications of
applications and statements of facts made in connection with
applications notarized.\38\ We believe that this requirement is
unnecessary in the context of these filings.\39\ In the 2008 IC
Applications Release, we removed the corresponding requirement for
applications for an order under the Investment Company Act,\40\ and we
have not had significant issues or concerns with the removal of
notarizations in that context. Second, we are proposing to eliminate
the requirement that applicants include proposed notices as exhibits to
applications.\41\ This requirement was also removed for applications
under the Investment Company Act in the 2008 IC Applications
Release.\42\ Moreover, the elimination of this requirement for
applications submitted under the Investment Company Act has resulted in
reduced filing burdens for applicants. Finally, we are removing the
reference to microfilming in Advisers Act rule 0-4(b) and Investment
Company Act rule 0-2(b), as the Commission no longer microfilms
applications for an order under either Act.\43\
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\37\ We also propose to correct a typo in [17 CFR 275.0-4(i)]
(Advisers Act rule 0-4(i)) concerning duplicate original copies in
paper applications (concerning the singular and plural of
``original'').
\38\ See rule 0-4(d) [17 CFR 275.0-4(d)]; proposed amendments to
Advisers Act rule 0-4(d).
\39\ Regulation S-T requires that each signatory to an
electronic filing manually sign a signature page or other document
authenticating, acknowledging or otherwise adopting his or her
signature that appears in typed form in the electronic filing. This
document must be executed before or at the time the electronic
filing is made, must be retained by the filer for a period of five
years, and must be made available to the Commission upon request.
See rule 302(b) of Regulation S-T [17 CFR 232.302(b)]. Moreover,
filers must submit a notarized authentication to the Commission when
submitting a Form ID to gain initial access to the EDGAR filing
system. We believe that these requirements provide sufficient
assurance of the legitimacy of signatures contained in the
electronic filings so that notarization of each application and each
amended application is unnecessary.
\40\ See 2008 IC Applications Release, supra footnote 15, at
text accompanying nn.44 and 45.
\41\ See rule 0-4(g) [17 CFR 275.0-4(g)]; proposed amendments to
Advisers Act rule 0-4(g).
\42\ See 2008 IC Applications Release, supra footnote 15, at
text accompanying and following n.46.
\43\ See proposed amendments to Advisers Act rule 0-4(b) and
Investment Company Act rule 0-2(b).
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b. Request for Comment
We request comment on the proposed amendments to eliminate the
notarization and proposed notice requirements for Advisers Act
applications, to remove the reference to microfilming in Advisers Act
rule 0-4 and Investment Company Act rule 0-2, and to revise the wording
in Advisers Act rule 0-4(i) related to duplicate original copies in a
paper applications.
7. Should we maintain any of these requirements that we are
proposing to either modify or eliminate? Why or why not? Should we
instead modify, or otherwise replace, any of these requirements with
alternative and/or additional requirements? If so, how should we modify
and/or supplement these requirements and/or what alternatives should
the rule(s) require? If we make these, or other, modifications to the
Advisers Act rules, should we also make the same, or similar,
modifications to the analogous rules under the Investment Company Act?
If so, please describe what, if any, modifications and/or differences
we should include in any amendments made to the Investment Company Act
rules.
8. What costs, benefits and/or other effects might be associated
with the proposed modifications? Please describe how such costs,
benefits or other effects relate to the current requirements of the
proposed rule.
4. Form ADV-NR
a. General
Filing Form ADV-NR is mandatory for non-resident general partners
and non-resident managing agents of investment advisers and must be
filed in connection with an adviser's initial Form ADV submission.\44\
The Commission collects this information to ensure that a non-resident
general partner or managing agent of an investment adviser appoints an
agent for service of process in the United States.\45\ Currently, Form
ADV-NR must be filed as a paper filing submission.\46\ The Commission
makes Form ADV-NR publicly available by posting an update to EDGAR
indicating that the Commission received a Form ADV-NR filing. Members
of the public can view such updates by searching for an adviser, and
can use the information in the update to request the Form ADV-NR
through a Freedom of Information Act (``FOIA'') request.\47\
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\44\ 17 CFR 279.4.
\45\ See 17 CFR 279.4.
\46\ See 17 CFR 279.4. See also 17 CFR 275.0-4(a).
\47\ The Commission's website sets forth instructions on how to
make a FOIA request, available at <a href="https://www.sec.gov/page/office-foia-services">https://www.sec.gov/page/office-foia-services</a>; see 5 U.S.C. 552.
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We are proposing amendments to Advisers Act rule 203-1 to require
investment advisers' non-resident general partners and non-resident
managing agents to file Form ADV-NR electronically through IARD, which
is the same system advisers use to file Form ADV.\48\ We anticipate
that IARD would present proposed Form ADV-NR in fillable format.
Members of the public would be able to view Forms ADV-NR through the
same system they view Forms ADV, which is the Investment Adviser Public
Disclosures (IAPD), the public interface of IARD. We believe that
requiring electronic submission of Form ADV-NR would enhance our
ability to collect and access the information on the form and likely
reduce the burden associated with filing and processing such forms.
Furthermore, we believe that requiring electronic submission of Form
ADV-NR would allow filers to more effectively and efficiently navigate
future disruptive events--like COVID-19--when staff and filers are
unable to access their physical work facilities to complete, submit and
process paper fillings. The proposed amendments would still, however,
permit those required to file Form ADV-NR to file the form via paper
submission if granted a hardship exemption under rule Advisers Act rule
203-3.\49\ The proposed amendments would, like the current rule,
require (1) advisers, non-resident general partners and a non-resident
managing agents to complete and file Form ADV-NR in connection with the
adviser's initial registration with the Commission; and (2) a person
who becomes a non-resident general partner or a non-resident managing
agent after the date the adviser files its
[[Page 64845]]
initial registration with the Commission, to file Form ADV-NR with the
Commission within 30 days of becoming a non-resident general partner or
a non-resident managing agent.\50\
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\48\ There is precedent to requiring persons other than the
adviser to file a form through IARD. Independent public accountants
must file [17 CFR 279.8] (``Form ADV-E'') through IARD. See 17 CFR
275.206(4)-2(a)(4) and 17 CFR 279.8. See proposed amendments to
Advisers Act rule 203-1. As part of the proposed amendments, the
signatures required for Form ADV-NR would also be in electronic,
rather than ``wet'', format as currently required. We are also
proposing conforming technical amendments to the General
Instructions of Form ADV and to Form ADV-NR that describe the
electronic filing requirements included in the proposed amended
rules. See proposed amendments to 17 CFR 279.4; proposed amendments
to General Instructions to Form ADV.
\49\ See Advisers Act rule 203-3. See also proposed amended rule
203-1(d)(3).
\50\ See proposed amended rule 203-1(d)(1).
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Additionally, we are proposing to require non-resident general
partners and non-resident managing agents to amend their Form ADV-NR
within 30 days whenever any information contained in the form becomes
inaccurate by filing with the Commission a new Form ADV-NR.\51\ The
current form does not specify when a new Form ADV-NR must be filed with
the Commission when the information on a filed Form ADV-NR becomes
inaccurate.\52\ We believe allowing non-resident general partners and
non-resident managing agents 30 days to file a new form provides
sufficient time for the filings to be made--without imposing an undue
burden on filers--and would help ensure that the Commission has
accurate mailing information with which to contact filers.
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\51\ See proposed amended rule 203-1(d)(2).
\52\ See Form ADV-NR.
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Proposed amended rule 203-1 also would state that Form ADV-NR is
considered filed with the Commission upon acceptance by the IARD and
that no fee shall be assessed for filing Form ADV-NR through IARD.\53\
Proposed rule 203-1 would specify that each Form ADV-NR (and any
amendment to Form ADV-NR) required to be filed under the rule is a
``report'' within the meaning of section 204 and 207 of the Advisers
Act.\54\ These amendments are similar to those provided for in Advisers
Act rule 203-2 for Form ADV-W and are intended to provide specificity
to filers regarding their filing obligations.\55\
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\53\ See proposed amended rule 203-1(d)(4) and (5).
\54\ See proposed amended rule 203-1(d)(6). The fee associated
with submitting Form ADV through IARD contemplates the cost of
filing Form ADV-NR. Advisers Act section 207 provides that it shall
be unlawful for any person willfully to make any untrue statement of
a material fact in any registration application or report filed with
the Commission under section 203 or 204, or willfully to omit to
state in any such application or report any material fact which is
required to be stated therein.
\55\ See Advisers Act rule 203-2 [17 CFR 275.203-2]. We are also
proposing conforming technical amendments to the General
Instructions of Form ADV and Form ADV-NR to reflect the proposed
requirement to file the form electronically through IARD.
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b. Request for Comment
We request comment on the proposed amendments to require electronic
submission of Form ADV-NR through IARD and the related amendments to
proposed rule 203-1.
9. Should we amend rule 203-1, as proposed, to require the
electronic submission of Form ADV-NR? Why or why not? Would requiring
the electronic submission of Form ADV-NR likely reduce the burden of
filing the form for filers?
10. Should we require the investment adviser's non-resident general
partner and non-resident managing agent to file Form ADV-NR
electronically, as proposed, or should we allow or require advisers to
file Form ADV-NR on behalf of their non-resident general partner and
non-resident managing agent? Why or why not? If advisers would file
Form ADV-NR on behalf of their non-resident general partners and non-
resident managing agents, how would the non-resident general partners
and non-resident managing agents sign Form ADV-NR?
11. Should rule 203-1 require submission of Form ADV-NR through
IARD, or an alternative system, such as EDGAR, a file transfer system,
or another system? What factors should we consider when selecting a
system for filing ADV-NR?
12. Should rule 203-1 require filers of Form ADV-NR to update the
form within 30 days of whenever any information contained in the form
becomes inaccurate by filing with the Commission a new Form ADV-NR?
Should the rule specify some other amount of time? If so, please state
what length of time should be allowed and why you believe that length
of time to be appropriate and necessary.
B. Rule 13f-1 and Form 13F
Section 13(f) of the Exchange Act, in pertinent part, requires a
manager to file a report with the Commission if the manager exercises
investment discretion with respect to accounts holding certain equity
securities (``13(f) Securities'') having an aggregate fair market value
on the last trading day of any month of any calendar year of at least
$100 million.\56\ The Commission has rulemaking authority under section
13(f) to determine, among other things, the format and frequency of the
reporting requirements and the information to be disclosed in each
report.\57\
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\56\ Section 13(f)(1) of the Exchange Act [15 U.S.C. 78m(f)(1)].
\57\ The Commission is required under section 13(f) to adopt
rules which would create a reporting and disclosure system to
collect specific information concerning certain equity securities
held in accounts over which certain managers exercise investment
discretion. See Section 13(f)(4) of the Exchange Act [15 U.S.C.
78m(f)(4)]; see also Filing and Reporting Requirements Relating to
Institutional Investment Managers, Exchange Act Release No. 15461
(Jan. 5, 1979), at 1 (``13F Quarterly Reporting Release'').
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Section 13(f) was designed to increase the public availability of
information regarding the securities holdings of managers, to
consolidate the information with the Commission as a central repository
of the data, and to facilitate consideration of the influence and
impact of managers on the maintenance of fair and orderly securities
markets and the public policy implications of that influence and
impact.\58\ To implement the institutional investment disclosure
program mandated by Congress in section 13(f), the Commission adopted
rule 13f-1 and related Form 13F under the Exchange Act.\59\ Rule 13f-1
requires managers that exercise discretion over accounts holding 13(f)
Securities having an aggregate fair market value of at least $100
million on the last trading day of any month of any calendar year to
file quarterly reports of 13(f) Securities holdings with the Commission
on Form 13F within 45 days after the last day of such calendar year and
within 45 days after the last day of each of the first three calendar
quarters of the subsequent calendar year.\60\ In 1999, the Commission
required electronic filing through EDGAR of public Form 13F
reports.\61\ In 2013, the Commission modernized the filing format of
Form 13F by replacing the plain-text ASCII format with a structured XML
format and accompanying online form.\62\ In 2020, the Commission
proposed, but did not adopt, certain amendments to Form 13F that would
have increased the reporting threshold of Form 13F, required managers
to provide additional identifying information, and made certain
technical amendments to Form
[[Page 64846]]
13F.\63\ Finally, in 2020, as part of a series of initiatives designed
to modernize the agency's filing requirements, the Commission adopted
amendments to Regulation S-T that permit the use of electronic
signatures when executing authentication documents in connection with
certain documents filed with Commission, including Form 13F
filings.\64\
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\58\ See Filing and Reporting Requirements Relating to
Institutional Investment Managers, Exchange Act Release No. 14852
(July 31, 1978) (citing to the Securities Acts Amendments of 1975:
Report of the Committee on Banking, Housing and Urban Affairs United
States Senate to Accompany S. 249, 94th Cong., 1st Sess. (S. Report
No. 94-75) (1975), at 85 (``1975 Amendments Senate Report'')).
\59\ Id.
\60\ See section 13(f) of the Exchange Act [15 U.S.C. 78m(f)]
and rule 13f-1 thereunder [17 CFR 240.13f-1]; see also 13F Quarterly
Reporting Release, supra footnote 57. The Form 13F reports must be
filed within 45 days after the last day of such calendar year and
within 45 days after the last day of each of the first three
calendar quarters of the subsequent calendar year. If two or more
managers exercise investment discretion with respect to the same
securities, only one of the managers is required to include
information regarding such securities in its reports on Form 13F-HR.
The other manager(s) are required to file a Form 13F notice report
on Form 13F-NT stating the name of the other manager(s) reporting on
their behalf.
\61\ See Rulemaking for EDGAR System, Exchange Act Release No.
40934 (Jan. 12, 1999).
\62\ Adoption of Updated EDGAR Filer Manual, Investment Company
Act Release No. 30515 (May 14, 2013) [78 FR 29616 (May 21, 2013)]
(``EDGAR Filer Manual Release'').
\63\ See 2020 Form 13F Proposal, supra footnote 4.
\64\ See Electronic Signatures in Regulation S-T rule 302,
Exchange Act Release No. 10889 (Nov. 17, 2020) [85 FR 78224 (Dec. 4,
2020)].
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Section 13(f) mandates that the Commission disseminate the
information appearing in the quarterly reports to the public.\65\
Congress recognized that, in some instances, public disclosure of
certain types of information could have harmful market effects.\66\
Thus, Section 13(f) of the Exchange Act authorizes the Commission, as
it determines to be necessary or appropriate in the public interest or
for the protection of investors or to maintain fair and orderly
markets, to delay or prevent public disclosure of certain Form 13F
information in accordance with the FOIA, which is referred to in this
release as ``commercial'' information. Section 13(f) also explicitly
prohibits the Commission from disclosing to the public any reported
personal information that identifies the securities held by the account
of a natural person or an estate or trust, other than a business trust
or an investment company, which is referred to in this release as
``personal'' information.\67\
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\65\ See Section 13(f)(4) of the Exchange Act [15 U.S.C.
78m(f)(4)]. Reports made on Form 13F are publicly available in XML
format.
\66\ 1975 Amendments Senate Report, supra footnote 57.
\67\ See Sections 13(f)(4) and (5) of the Exchange Act [15
U.S.C. 78m(f)(4)] [15 U.S.C. 78m(f)(5)]; see also rule 24b-2(b)(2)
under the Exchange Act [17 CFR 240.24b-2]; see generally Freedom of
Information Act [5 U.S.C. 552]. The Commission amended the
instructions to Form 13F pertaining to confidential treatment
requests to state the procedural and substantive criteria that such
requests must satisfy before they may be granted. See Requests for
Confidential Treatment of Information Filed by Institutional
Investment Managers, Exchange Act Release No. 15979 (July 6, 1979)
(``1979 Confidential Treatment Amendments'').
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Confidential treatment for personal information, as specified in
section 13(f)(4), is required for an indefinite time period if public
disclosure would identify the securities held by the account of a
natural person, an estate, or a trust (other than a business trust or
an investment company).\68\ The Commission, however, does have
discretion to determine whether to grant confidential treatment
requests for commercial information in accordance with section 13(f),
rule 24b-2, and the FOIA.\69\ The Commission provided delegated
authority to the Division of Investment Management to grant, deny, or
revoke a grant of confidential treatment for any application for
confidential treatment that is filed under Exchange Act section 24(b)
and rule 24b-2 thereunder for confidential treatment of information
filed pursuant to Exchange Act section 13(f) and rule 13f-1.\70\
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\68\ Section 13(f)(4) of the Exchange Act [15 U.S.C. 78m(f)(4)];
see also Requests for Confidential Treatment Filed by Institutional
Investment Managers, Exchange Act Release No. 21539 (Dec. 4, 1984).
\69\ See 1975 Amendments Senate Report, supra footnote 57. The
Commission used this discretion to simplify the requirements for
requesting confidential treatment of open risk arbitrage positions
based upon a claim that the information is confidential, commercial,
or financial. See Requests for Confidential Treatment Filed by
Institutional Investment Managers, Exchange Act Release No. 22038
(May 14, 1985) (adopting requirement for good faith representations
in Confidential Treatment Instruction 2.f., and limiting the
confidential treatment request to a period of one year or less). The
Commission also uses this discretion in evaluating confidential
treatment requests for commercial information. See Form 13F
Instructions for Confidential Treatment Requests; Rulemaking for
EDGAR System, Investment Company Act Release No. 23640 (Jan. 12,
1999) (``Form 13F Instructions for Confidential Treatment
Requests''); see also rule 24b-2(b)(2)(ii) under the Exchange Act
[17 CFR 240.24b-2]; see also 1979 Confidential Treatment Amendments,
supra footnote 66.
\70\ See rule 30-5(c-1)(1) and (2) of the Commission's
organizational rules [17 CFR 200.30-5].
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Currently, a manager seeking confidential treatment must file
multiple lists of securities. First, it must electronically file via
EDGAR a public Form 13F that identifies the securities that are
required to be publicly disclosed under section 13(f) and rule 13f-1,
excluding, if applicable, any security(ies) for which it is requesting
confidential treatment. Second, it must file a paper 13(f) Confidential
Treatment Request that includes both: (i) A separate, non-public Form
13F for the same calendar quarter that lists any 13(f) Security(ies)
for which the manager is requesting confidential treatment; and (ii) a
supporting request letter to substantiate the substantive basis for
confidential treatment. Third, following the submission of a commercial
confidential treatment request, a manager must file an amendment(s)
upon the expiration or denial of confidential treatment to disclose
publicly any security(ies) for which confidential treatment was
requested.\71\ Furthermore, the 13(f) Confidential Treatment Requests,
which are filed in paper, must be filed in quintuplicate with the
Commission's Office of the Secretary.\72\
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\71\ See Form 13F Instructions for Confidential Treatment
Requests, supra footnote 68, at instruction 2.g. A manager may need
to file multiple amendments in connection with a 13(f) Confidential
Treatment Request, such as when the expiration or denial of
confidential treatment occurs at different quarterly intervals for
different holdings. For example, the period of confidential
treatment for open risk arbitrage holdings typically varies between
three, six, nine, or twelve months, based on different completion or
termination dates for a proposed merger or acquisition.
\72\ See rule 24b-2 under the Exchange Act [17 CFR 240.24b-2];
see also Form 13F Instructions for Confidential Treatment Requests,
supra footnote 68.
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The Form requires 13(f) Confidential Treatment Requests to include
the Form 13F reporting information for which the manager requests
confidential treatment, as well as factual support to enable the
Commission to make an informed judgment as to the merits of the
request.\73\ The manager also must submit a public filing of Form 13F
that lists the manager's quarter-end holdings, and, when confidential
treatment is requested, indicates that the confidential portion of the
Form 13F has been omitted and filed separately with the Commission.\74\
These types of paper confidential treatment request submissions are
subject to a time-consuming, manual receipt and distribution process
within the Commission and could lead to undue procedural delay that can
increase the time that the information receives de facto confidential
treatment between the time a 13(f) Confidential Treatment Request is
received and when the subject holdings are made public in an amendment
to the requestor's public Form 13F report following either (i) a denial
of a 13(f) Confidential Treatment Request, or (ii) the expiration of
confidential treatment.\75\ These challenges were highlighted during
the COVID-19 pandemic that resulted in delays in receiving paper
filings and, ultimately, in granting or denying 13(f) Confidential
Treatment Requests filed with the Commission in paper.\76\
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\73\ See Form 13F Instructions for Confidential Treatment
Requests supra footnote 68; see also rule 101(c)(1)(i) of Regulation
S-T; see also 1979 Confidential Treatment Amendments, supra footnote
66 (stating that requests for confidential treatment should not be
broad in scope or conclusory in nature and stating that confidential
treatment requests can be granted only to managers who make an
affirmative showing that they satisfy the standards of section
13(f)(3)).
\74\ See rule 24b-2(b) under the Exchange Act [17 CFR 240.24b-
2].
\75\ See Office of Inspector General's Review of the SEC's 13(f)
Reporting Requirements (Sept. 27, 2010), available at <a href="https://www.sec.gov/about/offices/oig/reports/audits/2010/480.pdf">https://www.sec.gov/about/offices/oig/reports/audits/2010/480.pdf</a>; see also
rule 24b-2(c) under the Exchange Act (providing confidentiality
pending a determination about the merits of a 13(f) Confidential
Treatment Request), infra footnote 82.
\76\ Staff sought to mitigate these delays by, among other
things, responding to questions regarding the electronic submission
of such requests through a secure file transfer service. See
Division of Investment Management Coronavirus (COVID-19) Response
FAQs, available at <a href="https://www.sec.gov/investment/covid-19-response-faq">https://www.sec.gov/investment/covid-19-response-faq</a> (stating that filers should contact the staff for questions
regarding whether 13(f) Confidential Treatment Requests could be
submitted electronically). The FAQs represent the views of the staff
of the Division of Investment Management. They are not a rule,
regulation, or statement of the Commission. The Commission has
neither approved nor disapproved their content. The FAQs, like all
staff statements, have no legal force or effect: They do not alter
or amend applicable law, and they create no new or additional
obligations for any person.
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[[Page 64847]]
1. Electronic Filings of 13(f) Confidential Treatment Requests
a. General
As part of our continuing efforts to modernize filings made with
the Commission and enhance the efficiency of the Commission's process
in reviewing 13(f) Confidential Treatment Requests, we are proposing
amendments to Form 13F and related rules under the Exchange Act and
Regulation S-T that would require managers to file requests for
confidential treatment electronically via EDGAR.\77\ Thus, under the
proposed amendments, the 13(f) Confidential Treatment Requests that
filers currently submit to the Commission in paper, typically through
the mail or by express delivery, would be required to be submitted
electronically via EDGAR.\78\
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\77\ See proposed amendments to rule 24b-2(i) under the Exchange
Act; see also proposed amendments to Form 13F Instructions for
Confidential Treatment Requests; see also proposed rule
101(a)(1)(xxii) and proposed amendments to rule 101(d) of Regulation
S-T; see also infra footnote 95 and accompanying text.
\78\ Id.; see also supra footnotes 25-28 and accompanying text
(discussing proposed amendments to the electronic filing requirement
of rule 101 of Regulation S-T and rule 0-4 under the Advisers Act).
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The Commission has permitted or required the electronic submission
of other confidential treatment requests.\79\ In modernizing the manner
in which a confidential treatment request may be submitted, the
Commission has previously stated that such rules will reduce the burden
on filing entities by avoiding the filing of a separate paper
submission, and where such a request is made electronically, will
expedite Commission review of the requests for confidential
treatment.\80\ We believe that this proposal would provide significant
benefits to managers that request confidential treatment and would both
further the goals of section 13(f) (as noted above) and assist the
Commission's review of such requests. First, electronic filings would
relieve the burdens on managers of sending paper 13(f) Confidential
Treatment Requests to the Commission.\81\ In addition, filings made
through EDGAR are easier for the Commission to receive and maintain in
accordance with the Commission's record retention requirements,
particularly during disruptive events like COVID-19.\82\ Furthermore,
the Commission would be able to review all of a manager's holdings more
efficiently because 13(f) Confidential Treatment Requests would be
viewable on the same system as a manager's public Form 13F filing.
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\79\ See rule 24b-2(g) (Reg. SCI requires certain entities
(including clearing agencies and alternative trading systems, among
others), known as SCI Entities, to report certain business events
(such as systems and compliance disruptions and system intrusions)
to the Commission electronically on Form SCI. Filers may file
confidential treatment requests electronically for all of the
information reported on Form SCI); see also rule 24b-2(h); see also
Security-Based Swap Data Repository Registration, Duties, and Core
Principles, Exchange Act Release No. 74246 (Feb. 11, 2015) (requires
security-based swap data repositories (``SDRs'') to register and
make certain electronic filings with the Commission via EDGAR. The
rules require SDRs, when seeking confidential treatment, to do so
electronically via EDGAR).
\80\ See Regulation Systems Compliance and Integrity (``Reg.
SCI''), Exchange Act Release No. 73639 (Nov. 19, 2014) [79 CFR 72251
(Dec. 5, 2014)], at 408 (``Reg. SCI Adopting Release'').
\81\ We noted similar benefits to permitting electronic
submission of confidential treatment requests in other contexts. See
Reg. SCI Adopting Release, supra footnote 79, at 408-409.
\82\ The Commission recognizes the importance of sound data
security practices and protocols for confidential information filed
electronically, including information that may be competitively
sensitive. The Commission has substantial experience handling other
non-public information in the course of its regular business, such
as, for example, with the storage and use of non-public information
reported electronically on Form PF, Form N-PORT, and Form N-LIQUID.
As with all other confidential information, the staff would
carefully evaluate the data security protocols that would apply to
applications for confidential treatment. Drawing on its experience,
the staff would work to design controls and systems for the use and
handling of such applications and associated confidential data in a
manner that reflects the sensitivity of the data and is consistent
with the maintenance of its confidentiality. See Investment Company
Reporting Modernization Adopting Release, Securities Act Release No.
10231 (Oct. 16, 2016), at n.470 and accompanying text.
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Electronic filing of 13(f) Confidential Treatment Requests also
would assist the staff in evaluating such requests by facilitating more
prompt delivery of the requests to the reviewing staff. We believe this
increased efficiency could reduce the period of de facto confidential
treatment that accrues pending review \83\ and thus ultimately allow
for the quicker public dissemination of Form 13F holdings information
consistent with the purpose of section 13(f), thereby enhancing the
availability of public information about managers' holdings of 13(f)
Securities.\84\
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\83\ Rule 24b-2(c) under the Exchange Act preserves the
confidentiality of Form 13F holdings that are the subject of a
confidential treatment request pending a determination on the merits
of such request. [17 CFR. 240.24b-2].
\84\ See, e.g., 1975 Amendments Senate Report, supra footnote
57, at 82 (``Thus, with the dissemination of data about
institutional investment managers, an institutional disclosure
program should stimulate a higher degree of confidence among all
investors in the integrity of our securities markets.'').
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We considered whether we should require 13(f) Confidential
Treatment Requests to be filed via a secure file transfer system other
than EDGAR.\85\ However, in light of the fact that all managers are
already familiar with the process of making filings on EDGAR, we
believe it would be less burdensome for managers to make 13(f)
Confidential Treatment Request filings on EDGAR as well. We also
believe such an option would be less efficient for the Commission
because the non-public holdings data related to the 13(f) Confidential
Treatment Request would not be viewable in the same system as the
manager's other holdings.
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\85\ Commission staff utilized such systems for a variety of
submissions during the events of COVID-19, including 13(f)
Confidential Treatment Requests. See, e.g., SEC Coronavirus (COVID-
19) Response, Guidance and Targeted Regulatory Assistance and
Relief, available at <a href="https://www.sec.gov/sec-coronavirus-covid-19-response">https://www.sec.gov/sec-coronavirus-covid-19-response</a>. The Commission received a limited number of 13(f)
Confidential Treatment Requests via such systems.
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b. Amendments to Form 13F
As discussed above, we are proposing to modify Form 13F to require
electronic filing of 13(f) Confidential Treatment Requests.\86\ The
proposed changes to Form 13F are described in more detail below.\87\
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\86\ See infra section II.B.2 (discussing other proposed
amendments to Form 13F).
\87\ In addition to the changes described above, Form 13F's
Paperwork Reduction Act Information section would also be modified
to remove duplicative information on the form relating to the form's
burdens and to update certain citations to section 13(f) of the
Exchange Act. See proposed amendments to Paperwork Reduction Act
Information section of Form 13F.
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<bullet> Instructions for Confidential Treatment Requests. We
propose to modify the instructions to require that a 13(f) Confidential
Treatment Request be filed electronically.\88\ Such requests would be
made electronically via EDGAR as a separate, non-public filing.
Requests also would include a confidential Form 13F report that is
limited to the 13(f) Securities holdings for which the manager is
requesting confidential treatment. The proposed changes to the
Instructions for
[[Page 64848]]
Confidential Treatment Requests would also provide updated references
to new subparagraph (i) of rule 24b-2.\89\ In order to make the
instructions more consistent with current rule 24b-2(b)(2), Instruction
2.e. would be amended to require the manager to ``provide justification
for'' the period of time for which confidential treatment of the
securities holdings is requested. In order to make the instructions
more consistent with current rule 24b-2(e), Instruction 4 would be
amended to state that a manager must also submit electronically its
updated Form 13F at the expiration of the time period for which a
manager requested confidential treatment or earlier, e.g., upon the
denial of the 13(f) Confidential Treatment Request.\90\
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\88\ See supra footnote 76. The attached request must also
include the period of time for which confidential treatment is
requested, and a justification of such requested period of
confidential treatment, as required by rule 24b-2(b)(2) under the
Exchange Act [17 CFR 240.24b-2(b)(2)]. See proposed Instruction 2(e)
for Confidential Treatment Requests of Form 13F.
\89\ See proposed amendments to Form 13F; see also infra section
II.B.1.c.
\90\ Conforming amendments would be made to Instruction 2.e. to
implement the proposed changes to Instruction 4.
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<bullet> Summary Page. The summary page as proposed to be amended
would include all the same information currently required but would add
a requirement for a manager seeking confidential treatment to indicate
if confidential treatment is being requested for some or all of the
manager's holdings for the quarter-end period.\91\
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\91\ See proposed Summary Page of Form 13F; see also proposed
Special Instruction 6(d) of Form 13F (requiring managers to indicate
on the Form 13F summary page whether confidential treatment is being
sought for some or all of the manager's holdings for the quarter-end
period and to file the 13(f) Confidential Treatment Request in a
separate submission).
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<bullet> Proposed Special Instructions. Proposed Special
Instruction 6(d) would require managers to identify on the Summary Page
if confidential treatment is being requested for some or all of the
manager's holdings for the quarter-end period. This instruction would
assist the Commission and the public in identifying whether a manager
has omitted some or all of its holdings.
Proposed changes to current Special Instruction 13 would remove the
EDGAR filing type designation, as such information is now found in the
Commission's EDGAR Filer Manual.\92\ We are also proposing to revise
current Special Instruction 13 to state that filers can consult the
Commission's EDGAR Filer Manual for filing instructions.\93\
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\92\ See proposed Special Instruction 12 of Form 13F. Under the
proposal, current Special Instruction 13 of Form 13F would be
renumbered to Special Instruction 12.
\93\ Id.
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c. Amendments to Rule 24b-2
We are proposing to amend rule 24b-2 to include an additional
subparagraph governing the filing of confidential information required
by section 13(f) of the Exchange Act.\94\ New subparagraph (i) would
require that managers request confidential treatment electronically for
any material required to be reported on Form 13F and continue to omit
the confidential portion from the materials required to be reported.
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\94\ See proposed rule 24b-2(i) under the Exchange Act.
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d. Amendments to Regulation S-T
Regulation S-T would be amended in connection with the mandatory
electronic submission of 13(f) Confidential Treatment Requests. Rule
101(a) would be amended to add 13(f) Confidential Treatment Requests to
the list of mandated electronic filings.\95\ Additionally, 13(f)
Confidential Treatment Requests would be added to the list of requests
for confidential treatment required to be submitted in electronic
format in rule 101(d).\96\
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\95\ See proposed rule 101(a)(1)(xxii) of Regulation S-T.
\96\ See proposed amendments to rule 101(d) of Regulation S-T.
We would also make non-substantive conforming edits to rules
101(a)(1)(xxi) and conforming edits to rule 101(a)(3) of Regulation
S-T.
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We seek comment on the proposal to require managers to file
requests for confidential treatment of information pursuant to section
13(f) of the Exchange Act and rule 13f-1 thereunder electronically via
EDGAR.
13. Do commenters agree that requiring electronic filing of 13(f)
Confidential Treatment Requests would improve the 13(f) Confidential
Treatment Request process by making it more efficient and secure? What
would be the burdens, if any, associated with requiring such requests
to be filed electronically?
14. Should we allow, but not require, filers to submit 13(f)
Confidential Treatment Requests electronically? Why or why not?
15. Similar to many other provisions of Regulation S-T, proposed
rule 101(a)(1)(xxii) of Regulation S-T does not specify a particular
filing format for 13(f) Confidential Treatment Requests. We anticipate
the filing format would be HTML or ASCII, like many other EDGAR
filings. What format or formats should we require for filing 13(f)
Confidential Treatment Requests? Should the Commission require a
single, specified format or permit filers to select a format among two
or more possible formats? What time or expense is associated with
particular formats? What time or expense would be required of the
public to view documents in a particular format? Would a particular
format require any filers or users to license commercial software they
otherwise would not, and, if so, at what expense?
16. We are proposing to require electronic 13(f) Confidential
Treatment Requests be filed on EDGAR. As an alternative, as discussed
above, should we require 13(f) Electronic Treatment Requests to be
submitted via an electronic file transfer system? Would an electronic
file transfer system be a more appropriate vehicle, and why? Are there
any particular costs or burdens with filing such requests on EDGAR as
opposed to other systems? If so, what are those costs or burdens and
what are potential remedies for them?
17. We are proposing to require the entirety of a 13(f)
Confidential Treatment Request, both the list of confidential holdings
and the justification, to be filed electronically. As an alternative,
should we require managers to complete a separate electronic report on
Form 13F that would include the manager's confidential holdings in an
XML format and attach the justification portion of the 13(f)
Confidential Treatment Request to the Form as a separate file? Why or
why not? Would filing a separate confidential electronic report on Form
13F present other burdens? Would the benefits of a separate electronic
report on Form 13F be justified notwithstanding the risk of
confidential information inadvertently being made public?
18. Currently, rule 24b-2(d)(2) requires the Commission to
communicate its decision to deny, or revoke a previously granted, 13(f)
Confidential Treatment Request to the requesting manager in paper via
registered or certified mail. Should we allow the Commission to
communicate its decision to deny or revoke 13(f) Confidential Treatment
Requests electronically? Why or why not? If so, should such
notification be made via EDGAR? Why or why not?
19. Are there any burdens or efficiencies associated with changing
the filing format of 13(f) Confidential Treatment Requests from paper
to electronic that we have not discussed? If so, what are these burdens
or efficiencies?
2. Other Amendments to Form 13F
a. Additional Identifying Information
We are re-proposing amendments to Form 13F that would require
filers to provide additional identifying information.\97\ These
amendments
[[Page 64849]]
would require each Form 13F filer to provide its CRD number and SEC
file number, if any.\98\ If a manager is filing a Form 13F notice
report on Form 13F-NT, the manager must include the CRD number and SEC
file number, if any, of any other manager included in the ``List of
Other Managers Reporting for this Manager'' table on the cover
page.\99\
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\97\ The amendments related to additional identifying
information that we are proposing in this document are the same as
those that were included in the 2020 Form 13F Proposal. See 2020
Form 13F Proposal, supra footnote 4.
\98\ See proposed amendments to proposed Special Instruction 4
of Form 13F. Under the proposal, current Special Instruction 5 would
be renumbered to Special Instruction 4 of Form 13F.
\99\ See supra footnote 59 (noting that a manager can make a
Form 13F-NT filing if all the securities for which the manager has
investment discretion are reported by another manager). Similarly,
if a manager's Form 13F-HR reports the holdings of managers other
than the reporting manager, the reporting manager would be required
to include the CRD number and SEC file number of those other
managers in the ``List of Other Included Managers'' on the cover
page. See proposed Special Instruction 7 of Form 13F. Under the
proposal, current Special Instruction 8 would be renumbered to
Special Instruction 7 of Form 13F.
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A majority of commenters to the 2020 Form 13F Proposal supported
requiring this information.\100\ These commenters agreed that this
information would allow the Commission and other consumers of Form 13F
data to identify a Form 13F filer's other regulatory filings and the
interrelationships between managers who share investment discretion
over 13(f) Securities more easily.\101\ One commenter also stated that
the requirement to include additional information would not be unduly
burdensome for managers.\102\ Another commenter, however, opposed this
requirement stating that it did not see a need for managers to provide
additional identifying information.\103\ We are re-proposing these
amendments because we continue to believe that it would be useful to
the Commission and the public to be able to efficiently identify
interrelationships between managers as well as a manager's other
regulatory filings. As we stated in the 2020 Form 13F Proposal, we also
believe that this information could identify for the public additional
sources of market information.\104\
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\100\ See Comment Letter of Bloomberg L.P. on File No. S7-08-20
(Sept. 28, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7843279-223798.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7843279-223798.pdf</a> (``Bloomberg 2020 Form 13F Proposal
Comment Letter''); Comment Letter of the Alternative Investment
Management Association on File No. S7-08-20 (Sept. 29, 2020),
available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7860160-223935.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7860160-223935.pdf</a> (``AIMA 2020 Form 13F Proposal Comment Letter''); Comment
Letter of Dow Inc. on File No. S7-08-20 (Sept. 11, 2020), available
at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7760706-223269.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7760706-223269.pdf</a>;
Comment Letter of BrilLiquid LLC on File No. S7-08-20 (Sept. 25,
2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7843321-223785.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7843321-223785.pdf</a> (``BrilLiquid 2020 Form 13F Proposal Comment
Letter''); Comment Letter of Lumen on File No. S7-08-20 (Sept. 29,
2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7860205-223943.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7860205-223943.pdf</a>; Comment Letter of Wachtell, Lipton, Rosen & Katz
on File No. S7-08-20 (Sept. 29, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7860154-223924.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7860154-223924.pdf</a> (``Wachtell
Lipton 2020 Form 13F Proposal Comment Letter''); Comment Letter of
Epsilon Asset Management on File No. S7-08-20 (July 21, 2020),
available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7455216-221027.htm">https://www.sec.gov/comments/s7-08-20/s70820-7455216-221027.htm</a>; Comment Letter of WhaleWisdom on File No. S7-08-20
(Sept. 29, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7860238-223968.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7860238-223968.pdf</a> (``WhaleWisdom 2020 Form 13F Proposal
Comment Letter''). See also 2020 Form 13F Proposal, supra footnote
4, at text accompanying n.70.
\101\ Id.
\102\ WhaleWisdom 2020 Form 13F Proposal Comment Letter, supra
footnote 99.
\103\ Comment Letter of the Investment Adviser Association on
File No. S7-08-20 (Sept. 29, 2020), at n.11, available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7859973-223872.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7859973-223872.pdf</a> (``IAA 2020
Form 13F Proposal Comment Letter'').
\104\ See section 13(f)(4) of the Exchange Act [15 U.S.C.
78m(f)(4)] (requiring the Commission to tabulate information
contained in Form 13F reports in a manner that would ``maximize the
usefulness of the information to other Federal and State authorities
and the public''). The ability to identify interrelationships among
managers easily could also allow third party vendors that compile
Form 13F data to provide more complete information. See Edward
Pekarek, Hogging the Hedge? ``Bulldog's'' 13F Theory May Not be So
Lucky, 12 FORDHAM J. CORP. & FIN. LAW 1079 (2007), at n.91 (noting
that most academic studies rely on 13F filings compiled quarterly by
third party vendors).
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We seek additional comments on the following issues:
20. Should we require managers to provide their CRD number and SEC
file number, if any, on Form 13F?
21. Should we require managers to provide the CRD number and SEC
file number, if any, of other managers identified in their 13F report?
22. Would this additional identifying information on Form 13F be
useful? If so, how? If not, why not?
23. Would disclosing this information be unduly burdensome for 13F
filers?
24. Is there any information currently required that is not useful
or does not have a beneficial effect for investors, reporting managers,
or other users of the data? If so, are there ways we can enhance the
reported information? For example, in addition to, or in lieu of, the
CUSIP number for each security, should we permit managers to provide
other identifiers such as a Financial Instrument Global Identifier
(FIGI) for each security? \105\ Why or why not? Would permitting
voluntary use of an alternate identifier have a beneficial effect for
investors, reporting managers, or other users of the data? What would
be the costs associated with obtaining CUSIPs for investments? What
would be the costs associated with obtaining a FIGI or other identifier
for investments? One commenter on the 2020 Form 13F Proposal stated a
belief that requiring a security identifier could increase errors in
filings.\106\ Do commenters agree? If so, are there measures we could
take to mitigate such effects?
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\105\ The 2020 Form 13F Proposal asked if the Commission should
consider omitting Form 13F's requirement to provide a CUSIP number
for each security and instead adopt other security identifiers such
as the FIGI. Commenter responses to these suggested changes were
mixed. See, e.g. WhaleWisdom 2020 Form 13F Proposal Comment Letter,
supra footnote 99; Bloomberg 2020 Form 13F Proposal Comment Letter,
supra footnote 99 (supporting the adoption of the FIGI in lieu of a
CUSIP number); but see IAA 2020 Form 13F Proposal Comment Letter,
supra footnote 102, and BrilLiquid 2020 Form 13F Proposal Comment
Letter supra footnote 99 (opposing the replacement of the CUSIP
number with a different identifier).
\106\ IAA 2020 Form 13F Proposal Comment Letter, supra footnote
102.
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b. Instructions for Confidential Treatment Requests
We are proposing an amendment to the instructions on Form 13F for
13(f) Confidential Treatment Requests to require managers seeking
confidential treatment for information contained in Form 13F to
demonstrate that the information is customarily and actually kept
private by the manager and that failure to grant the request for
confidential treatment would be likely to cause harm to the
manager.\107\ We are proposing this amendment to conform our
instructions to a June 2019 U.S. Supreme Court decision that overturned
the standard for determining whether information is ``confidential''
under Exemption 4 of the FOIA on which the current instruction is
based.\108\
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\107\ See proposed amendments to Instruction 2.d for
Confidential Treatment Requests of Form 13F. As is currently
required under this instruction, the proposed amendments would
continue to require managers to show what use competitors could make
of the information and how harm to the Manager could ensue.
\108\ 5 U.S.C. 552(b)(4). See Food Marketing Institute v. Argus
Leader Media, 139 S.Ct. 2356 (2019) (``Food Marketing v. Argus
Leader'') (stating that ``[a]t least where commercial or financial
information is both customarily and actually treated as private by
its owner and provided to the government under an assurance of
privacy, the information is `confidential' within the meaning of
Exemption 4'').
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We proposed a similar amendment in the 2020 Form 13F Proposal.\109\
One commenter to the 2020 Form 13F Proposal opposed this amendment,
stating its belief that the current standard is appropriate and not
inconsistent with the Supreme Court decision.\110\ We disagree with the
[[Page 64850]]
commenter. While we recognize that the facts of the case in the Supreme
Court decision did not involve 13(f) Confidential Treatment Requests,
section 13(f) requires the Commission to conduct a FOIA analysis as
part of its determination of whether to grant such requests as
discussed above.\111\ Because FOIA Exemption 4 typically is relied on
in connection with a request for confidential treatment of commercial
information under section 13(f) and the Supreme Court overturned the
standard on which the current instruction is based, we believe it is
necessary to ensure that the instructions for 13(f) Confidential
Treatment Requests are consistent with the Supreme Court's
decision.\112\ We seek additional comment on the following issues:
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\109\ See 2020 Form 13F Proposal, supra footnote 4, at nn.81-83
and accompanying text.
\110\ Comment Letter of the Managed Funds Association on File
No. S7-08-20 (Sept. 29, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7860189-223951.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7860189-223951.pdf</a> (``MFA 2020 Form 13F
Proposal Comment Letter'') (also stating that, if the Commission
were to adopt this amendment, the Commission should provide
additional guidance to managers on how they can meet the new
standard).
\111\ Section 13(f)(4) of the Exchange Act [15 U.S.C.
78m(f)(4)]; see also supra at text accompanying footnote 66.
\112\ See Food Marketing v. Argus Leader, supra footnote 107
(stating that ``[n]otably lacking from dictionary definitions, early
case law, or any other usual source that might shed light on the
statute's ordinary meaning is any mention of the `substantial
competitive harm' requirement'').
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25. Does the amendment appropriately reflect the requirements of
the FOIA, including the effect of the U.S. Supreme Court's June 24,
2019, decision in Food Marketing Institute v. Argus Leader Media on the
type of information that is required to substantiate confidential
treatment in accordance with Exchange Act sections 13(f)(4) and (5) and
rule 24b-2 thereunder?
26. Are the proposed amendments sufficiently clear? If we adopted
the amendments, would managers know how to comply with the new
standard? Would managers require additional guidance on how to comply
with the new standard? If so, what additional guidance should we
provide?
c. Technical Amendments to Form 13F
In addition to the amendments discussed above, we are re-proposing
certain technical amendments to Form 13F that were included in the 2020
Form 13F Proposal designed to account for the change in the required
format of Form 13F submissions from the plain-text ASCII format to the
structured XML data format in 2013.\113\ For example, we are re-
proposing amendments to simplify the rounding conventions of Form 13F
by requiring all dollar values listed on Form 13F to be rounded to the
nearest dollar, rather than to the nearest one thousand dollars as is
currently required.\114\ Additionally, we are re-proposing amendments
to remove the requirement that filers, when reporting dollar values on
Form 13F, omit the ``000.'' \115\ As a space saving measure, current
Form 13F instructs filers to omit the ``000'' and thus, for example,
report a security with a value of $5 million as $5,000. As re-proposed,
such a filer would report the security's value as $5,000,000. Since
column width is no longer an issue with the structured XML data format,
we believe that this change will reduce filer mistakes and data
inaccuracies.\116\ For similar reasons, we also are re-proposing to
remove the 80 character limit imposed on the information filers can
include on the cover page and the summary page and the 132 character
limit on the information table.\117\
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\113\ See 2020 Form 13F Proposal, supra footnote 4, at nn.74-80
and accompanying text; see also EDGAR Filer Manual Release, supra
footnote 61.
\114\ See proposed amendments to proposed Special Instruction 8
of Form 13F. Under the proposal, current Special Instruction 9 would
be renumbered to Special Instruction 8.
\115\ Id.
\116\ See Anne Anderson & Paul Brockman, An Examination of 13F
Filings, 41 J. FIN. RES. 295, 312-314 (2018) (the authors analyzed
the accuracy of Form 13F data and concluded that mistakes in
applying Form 13F's rounding guidelines leads to many discrepancies
in the reported values on Form 13F).
\117\ These character limits are imposed by 17 CFR 232.305 [rule
305 of Regulation S-T].
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Two commenters on the 2020 Form 13F Proposal supported these
amendments, noting that they have identified instances of data errors
resulting from incorrect application of the Form 13F's rounding
conventions.\118\ One commenter opposed these amendments, stating that
they are not aware of data inaccuracies resulting from current rounding
conventions and that the implementation costs associated with these
amendments would outweigh any marginal benefit from these changes.\119\
Based on staff experience, we have observed instances of data errors
resulting from incorrect rounding that justify the implementation costs
of the change.\120\ As we stated in the 2020 Form 13F Proposal, we
continue to believe that these amendments would enhance the accuracy of
the data provided on Form 13F and make it easier to understand and use,
both for the Commission and for the public. Additionally we are
proposing to remove duplicative definitions and streamline certain
sections to simplify Form 13F's instructions.\121\
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\118\ See WhaleWisdom 2020 Form 13F Proposal Comment Letter,
supra footnote 99; BrilLiquid 2020 Form 13F Proposal Comment Letter,
supra footnote 99.
\119\ See IAA 2020 Form 13F Proposal Comment Letter, supra
footnote 102. The commenter did not provide an estimate of the
implementation costs associated with this proposed change.
\120\ Id.
\121\ See proposed amendments to General Instruction 3. We are
also proposing to delete Special Instruction 2 and renumber the
remainder of the Special Instructions accordingly. Additionally, we
are proposing to amend newly renumbered Special Instructions 2, 6,
7, and 10 of Form 13F. Finally, we are proposing to streamline the
discussion in the Paperwork Reduction Act Section of Form 13F.
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We request comment on our proposed technical amendments, and the
following issues:
27. Should we require filers to round all dollar values listed on
Form 13F to the nearest dollar and remove the requirement to omit
``000''? Should we, alternatively, maintain the current rounding
conventions? Should we adopt some other rounding conventions? Should we
no longer permit rounding?
28. Would our proposed technical amendments increase the accuracy
of Form 13F data? Specifically, have users of 13F data encountered
issues as a result of the current instructions requiring rounding and
omission of the last three digits? Have filers encountered costs as a
result of the current requirement?
29. Would these proposed technical amendments impose costs or
burdens on filers? Please provide estimates of such costs.
30. Are there any other amendments we should make to streamline
Form 13F or clarify its instructions? For example, should we amend the
instructions for Form 13F to clarify how the form should be completed
if a manager no longer has holdings that must be reported on Form 13F,
but is required to continue to file Form 13F for the remaining quarters
of a calendar year?
C. Compliance Date
We propose to provide a transition period after the effective date
of the amendments to give advisers, applicants, and managers sufficient
time to modify their procedures to implement the new rule requirements
with regard to submitting applications for exemption under the Advisers
Act and for filing Form ADV-NR. The proposed transition period would
also give an adequate period of time for managers and other service
providers to conduct the requisite operational changes to their systems
and to establish internal processes to comply with the new electronic
filing requirements of 13F Confidential Treatment Requests and
implement the other amendments to Form 13F. We are proposing generally
a compliance date of 6 months after the amendments' effective date.
Based on our experience, we believe
[[Page 64851]]
that the proposed compliance date would provide an appropriate amount
of time for advisers, applicants, and managers to comply with the
proposed amendments.
We seek additional comments on the following issues:
31. Is the proposed compliance date appropriate? If not, why not?
32. Is a longer or shorter period necessary for compliance with the
proposed amendments? Is a longer or shorter period necessary for
compliance with one or more of the particular amendments? If so, which
proposed amendments, and what would be an appropriate compliance date?
33. Should we implement a tiered compliance date for each filing
based on the size or other characteristics of the filer or, in the case
of 13F filers, the amount of 13(f) Securities over which the filer
exercises investment discretion? If so, what types or sizes of filers
would need a longer compliance period, and how much more time would
they need than other filers to comply?
III. Economic Analysis
A. Introduction and Primary Goals of the Proposed Regulations and Form
Amendments
The Commission is sensitive to the potential economic effects of
the proposed amendments to the rules and form that include, among other
things, making mandatory the electronic submission of applications for
orders under the Advisers Act and 13(f) Confidential Treatment
Requests, and harmonizing the requirements for electronic submission of
applications for orders under the Advisers Act and the Investment
Company Act (collectively, the ``proposed amendments''). The economic
effects include the potential benefits and costs of the proposed
amendments, as well as any effects on efficiency, competition, and
capital formation.
The Commission is making the proposed amendments to facilitate the
efficient submission of applications for orders under the Advisers Act
and requests for confidential treatment; to improve the Commission's
ability to track and process such filings; to reduce burdens and
inefficiencies associated with paper submissions; to allow for quicker
dissemination of information to the public; and to modernize the
Commission's records management processes.
With respect to the filing of applications for orders under the
Advisers Act, the proposed amendments would:
<bullet> Require electronic submission of applications for orders
under the Advisers Act;
<bullet> Designate EDGAR as the filing system for electronic
submission;
<bullet> Eliminate the requirement to file proposed notices;
<bullet> Eliminate the requirement that applications be notarized
and certain other technical requirements;
<bullet> Make temporary hardship exemptions unavailable for
applications for orders under the Advisers Act;
<bullet> Designate the Secretary of the Commission as the addressee
of any remaining paper submissions under Investment Company Act rules
0-2 and 0-4.
With respect to filing 13(f) Confidential Treatment Requests and
Form 13F, the proposed amendments would:
<bullet> Require electronic submission of 13(f) Confidential
Treatment Requests listing all 13(f) Securities and managers' objection
to public disclosure of certain holdings in accordance with the
requirements set forth in rule 24b-2 under the Exchange Act;
<bullet> Designate EDGAR as the filing system for electronic
submissions of 13(f) Confidential Treatment Requests;
<bullet> Require that filers include additional identifying
information on their Form 13F filings;
<bullet> Require all dollar values listed on Form 13F to be rounded
to the nearest dollar, remove the requirement that dollar values list
on Form 13F omit the ``000,'' and remove character limits on the cover
and summary pages of Form 13F.
In addition, we are proposing to require that Form ADV-NR, which is
currently filed in paper, be filed electronically through the IARD
system. Some of the amendments we are proposing are technical in nature
and we do not expect them to have significant economic effects.\122\
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\122\ Specifically, we do not believe that the following changes
will have significant economic effects as they are likely to result
in minimal costs or benefits with respect to the filing of
applications for orders under the Advisers Act: (1) Removal of the
reference to microfilming; (2) changing the wording related to
duplicate original copies of paper applications.
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We have sought, where possible, to quantify the economic effects of
the proposed amendments. However, the effects of the proposed
amendments depend on a number of factors, some of which we cannot
quantify, such as the value to different market participants of the
uses of information contained in the 13(f) Confidential Treatment
Requests. Therefore, some of the discussion below is qualitative in
nature.
B. Economic Baseline
The economic baseline, from which we measure the proposed
amendments' likely economic effects, reflects current regulatory
practice as it pertains to potential applicants for orders under the
Advisers Act, filers of Form ADV-NR, managers required to file Form
13F. In this section, we describe each of these baseline components.
The proposed amendments with respect to applications for orders
under the Advisers Act would affect applicants seeking such orders,
applicants who may seek similar orders in the future, clients of
applicants, investors in funds managed by applicants, and the
Commission. Applicants can include registered investment advisers,
exempt reporting advisers, and persons not registered with the
Commission, but who meet the definition of investment adviser under the
Advisers Act, among others. As of December 31, 2020, there were
approximately 13,827 registered investment advisers and 4,804 exempt
reporting advisers.\123\ In addition, as of December 31, 2020, there
were approximately 16,796 state-registered advisers and an unknown
number of foreign private advisers, who, while not registered with the
Commission, may seek to file applications for orders under the Advisers
Act.\124\
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\123\ We calculate these estimates using the last Form ADV
filing for each adviser in the 15 months prior to January 1, 2020.
This allows us to exclude advisers that are technically still
registered with the Commission but have not filed a Form ADV for
their most recent fiscal year. We use the same approach in
calculating statistics for exempt reporting advisers.
\124\ Foreign private advisers do not file Form ADV. Therefore,
the Commission does not have information on the number of foreign
private advisers.
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In accordance with Advisers Act rules, applicants seeking an order
from the Commission under the Advisers Act must submit their
applications, as well as a proposed notice, in paper and in
quintuplicate, to the Commission's mailroom for stamping and
logging.\125\ Applications are ultimately routed to the Division's
staff to manually upload into the EDGAR system, assign file numbers,
and process for internal tracking purposes. Division staff also place
the applications (including amendments, notices of applications, and
the resulting orders) on the Commission's website.\126\ These
applications for orders available online
[[Page 64852]]
may inform investors' decisions with respect to the selection or
retention of investment advisers as well as investment decisions
regarding funds managed by these advisers. In addition, applications
for orders available online provide potential precedent to be consulted
by future applicants. The table below describes the number of initial
applications for orders under the Advisers Act and Investment Company
Act by year over the last three calendar years as posted on the
Commission website.\127\ The table shows that initial applications for
orders under the Advisers Act are uncommon relative to applications for
orders under the Investment Company Act.
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\125\ See 1985 Release, supra footnote 11 (describing Commission
internal process for receiving and reviewing Advisers Act
applications).
\126\ The speed with which items are posted to the Commission's
website depends on the availability of staff resources; see also
supra section II.A.1.
\127\ In order to avoid double counting, we do not include
amended applications in our count of the number of initial
applications filed each year.
Table 1
----------------------------------------------------------------------------------------------------------------
2017 2018 2019 Total
----------------------------------------------------------------------------------------------------------------
Advisers Act Initial Applications............... 4 3 7 14
Investment Company Act Initial Applications..... 124 97 70 291
----------------------------------------------------------------------------------------------------------------
We estimate that, under the baseline, the costs of submitting an
application for an order under the Advisers Act range from $14,182 to
$221,909.\128\
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\128\ See infra note 1 of Table 3.
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The proposed amendments would affect non-resident general partners
and non-resident managing agents of investment advisers, who are
currently required to file Form ADV-NR as a paper filing submission, as
well as their investment advisers, who currently sign Form ADV-NR.\129\
The Commission received 89 Form ADV-NR filings during calendar year
2018, 53 filings during calendar year 2019, and 5 filings during
calendar year 2020. We estimate that it currently costs $69 to file
Form ADV-NR.\130\ These amendments would also affect the Commission to
the extent the amendments alter how the Commission receives and
processes Form ADV-NR filings.
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\129\ See supra section II.A.4.a.
\130\ See infra footnote 170.
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The proposed amendments with respect to 13(f) Confidential
Treatment Requests and Form 13F would affect managers who file Form
13F, the Commission, and users of Form 13F information, including
investors and other market participants. The table below describes the
number of Form 13F filings and 13(f) Confidential Treatment Requests by
calendar year and shows that, over the three year period from 2017-
2019, only 0.92% (567/61,404) of Form 13F filings included confidential
treatment requests.
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\131\ See, e.g., Gompers, Paul A., and Andrew Metrick,
Institutional Investors and Equity Prices, 116 Quarterly Journal of
Economics 229 (2001); and Shi, Zhen, The Impact of Portfolio
Disclosure on Hedge Fund Performance, 126 Journal of Financial
Economics 36, (2017).
Table 2
----------------------------------------------------------------------------------------------------------------
2017 2018 2019 Total
----------------------------------------------------------------------------------------------------------------
Form 13F filings................................ 19,184 20,356 21,864 61,404
13(f) Confidential Treatment Requests........... 186 191 190 567
----------------------------------------------------------------------------------------------------------------
[[Page 64853]]
Form 13F has provided researchers with additional means to study
the impact of institutional investors on securities markets as well as
the general value of portfolio disclosures.\131\ Members of the public
can easily access Form 13F information in a timely manner via the EDGAR
system.
Currently, managers who are not requesting confidential treatment
submit a single public Form 13F on EDGAR in a custom XML structured
data language created specifically for Form 13F. Managers are required
to round all dollar values listed on their Form 13F to the nearest one
thousand dollars, to omit the corresponding ``000'' in such dollar
values, and to limit the length of the information filers include on
the form's cover and summary pages to 80 and 132 characters,
respectively.
Managers requesting confidential treatment must submit the
following documents: \132\
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\132\ In the 2020 Form 13F Proposal, a commenter stated that
complying with the requirements to file a 13(f) Confidential
Treatment Request can be particularly time consuming and costly. See
Comment Letter of the Private Investor Coalition on File No. S7-08-
20 (Sept. 3, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7734926-223067.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7734926-223067.pdf</a> (``Private Investor Coalition 2020 Form
13F Proposal Comment Letter'').
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<bullet> A public Form 13F, filed electronically on EDGAR in a
custom XML data language, that lists the 13(f) Securities for which the
Manager is not seeking confidential treatment;
<bullet> A concurrent paper 13(f) Confidential Treatment Request
that includes: (1) The non-public Form 13F holdings information for all
13(f) Securities for which the Manager requests confidential treatment,
and (2) a written request that addresses the section 13(f) confidential
treatment requirements and provides sufficient factual support to
enable the Commission to make an informed judgment as to the merits of
the request. Some managers submitted confidential treatment requests
electronically via a secure file transfer service to mitigate delays in
receiving paper filings during the events of COVID-19.\133\
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\133\ See supra footnote 75.
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We are not able to estimate precisely the aggregate cost of filing
13F Confidential Treatment Requests for two reasons.\134\ First, the
costs associated with filing a 13(f) Confidential Treatment Request may
vary depending on the type of request, the level of complexity involved
in providing an appropriate justification for the request, and the
number of holdings subject to the request. Second, the costs may also
vary depending on the level of a manager's sophistication and
resources. For example, some managers may be able to file 13(f)
Confidential Treatment Requests in-house, while others may rely heavily
on outside counsel to assist them with their requests.
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\134\ In 2019, the Commission received a total of 190 13(f)
Confidential Treatment Requests (CTR), of which 132 were submitted
based on the ``natural person'' exception in 13(f)(4); 41 were
submitted based on risk arbitrage; and 17 were based on acquisition,
disposition, or other. One commenter (see supra footnote 132)
claimed that the annual cost of filing quarterly Forms 13F and 13(f)
CTR for a typical single family office ranges from $20,000-$40,000.
This estimate includes single family office staff time and resources
and outside advisers for the CTR filings. Since family offices do
not file holdings, the Commission staff presumes that the entire
$20,000-$40,000 to be associated with 13(f) CTR costs. Under the
assumption that the commenter's claimed CTR costs for family offices
are representative of the cost of filing for all filers, the
Commission staff estimates the total cost of filing 13(f) CTRs to be
$3.8 million-$7.6 million. For the low end of the range, this is
calculated as $3.8 million = (132 + 41 + 17) * $20,000. For the high
end of the range, this is calculated as $7.6 million = (132 + 41 +
17) * $40,000. This estimate likely understates the aggregate costs
of filing 13(f) CTRs because single family offices typically request
confidential treatment based on being ``natural persons'', whereas
other filers may need to justify their confidential treatment
requests for each holding in a given 13(f) CTR. In addition, see
infra section IV.D for discussion of estimated burdens associated
with Form 13F under the Paperwork Reduction Act, which include the
cost of filing 13(f) CTRs. Specifically, Table 5 estimates that,
under the baseline, the current initial burden is $13,733,909
($13,080,138 + $435,940 + $217,831) while it is expected to be
$19,816,569 under the proposed amendments, implying estimated costs,
for PRA purposes, of $6,082,660 = $19,816,569-$13,733,909 associated
with the proposed amendments to Form 13F.
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C. Economic Effects
This section discusses the benefits and costs of the proposed
amendments, as well as their potential effects on efficiency,
competition, and capital formation. Because some of the proposed
amendments are technical in nature, they will not have significant
economic effects. In addition, where certain benefits or costs of
electronic filing apply to multiple proposed amendments, we discuss
those benefits or costs together instead of repeating such discussion
for each proposed amendment.
1. Benefits
Applications for orders under the Advisers Act, Form ADV-NR, and
13(f) Confidential Treatment Requests are all currently filed with the
Commission as paper filings. The most significant effect of the rule
will be to require that these filings instead be submitted
electronically. Electronic submission would increase the speed and
accuracy with which Commission staff receives and initially processes
submissions, potentially improving regulatory oversight.\135\ The
current process surrounding paper submissions is manual in nature,
requiring processing by various staff as a filing is received and
subsequently routed to the appropriate staff members within the
Commission for review. In addition, electronic filings would minimize
the risks of delay in staff receiving the information via paper
submissions and increase efficiency in the staff review process by
reducing staff processing time, increasing quality assurance.
Electronic filings are also easier than paper filings for the
Commission to maintain in accordance with the Commission's record
retention requirements because they are easier to store, easier to
access, easier to search, and easier to track.\136\ Finally, electronic
filings would allow filers to more effectively and efficiently navigate
future disruptive events--like COVID-19--when staff and filers are
unable to access their physical work facilities to complete, submit and
process paper fillings.
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\135\ Under the proposed rule, the format requirement for
electronic filings on EDGAR would be dictated by the EDGAR Filer
Manual, which allows for HTML or ASCII submissions. See 2021 EDGAR
Filer Manual, supra footnote 28, at Sections 2.1 and 5.2. This
flexibility should allow filers to choose the format that best suits
their needs and minimizes their costs of complying with the rule.
The benefits and costs discussed in this Section IV with respect to
electronic filings instead of the current paper submissions are
those that we would expect to be realized from HTML or ASCII
formatted submissions on EDGAR. Both formats are widely used, and
neither requires significant special expertise for their
preparation, submission, or ingestion. Furthermore, these benefits
and costs substantially arise to the same extent regardless of
whether the filer chooses the ASCII or HTML format.
\136\ See supra footnotes 15 and 16 for a discussion of our
experience with similar transitions to electronic filings.
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Electronic submissions would directly benefit filers of
applications for orders under the Advisers Act, Form ADV-NR, and 13(f)
Confidential Treatment Requests by reducing printing and delivery
costs. To the extent such savings were passed along to investors,
investors could benefit indirectly as well. Overall, we expect that
such cost reductions and any resulting savings to investors would be
minimal.\137\
---------------------------------------------------------------------------
\137\ See infra footnotes 140, 143, and 144.
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With respect to applications for orders under the Advisers Act
specifically, because electronic submissions would be more quickly
available on the Commission's EDGAR system, the public may be able to
find and review a filing more quickly by accessing the EDGAR system
through the Commission's website or through third-party websites that
link to EDGAR. To the extent that applications for orders
[[Page 64854]]
inform investors' decisions with respect to the selection or retention
of investment advisers, investors may be able to make such decisions
more expeditiously. In addition, because applicants for orders under
the Advisers Act are expected, to the extent possible, to adhere to
applicable precedent, applicants and staff rely on recently evaluated
applications.\138\ The proposed amendments benefit future applicants
and the Commission by making such applications more quickly available.
---------------------------------------------------------------------------
\138\ See 1985 Release, supra footnote 11.
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We expect that the proposed amendments regarding applications for
orders under the Advisers Act and the Investment Company Act would have
several economic benefits specific to both categories of these
amendments. First, designating the Secretary of the Commission as the
addressee for applications in paper for an order under either act would
minimize the risks of delay in staff receiving the application via
paper submissions and increase efficiency in the staff review process
by reducing staff processing time. Second, applications under both the
Investment Company Act and the Advisers Act would be in the same
system, so users would only need to learn how to access one system to
obtain relevant information related to an exemptive application.
Additionally, the proposed amendments include certain features
designed to permit applicants to streamline the application process.
The Commission has periodically received applications from parties
seeking relief under both the Advisers Act and the Investment Company
Act who were unable to file a single application because of the current
multiple-system requirements for the differing applications.\139\ Thus,
the proposed amendments could result in benefits for applicants who are
simultaneously applying for orders under both the Advisers Act and the
Investment Company Act by allowing them to use a single electronic
format and file jointly in a single submission. We expect such savings
to be small because, while we do not have precise data on the number of
jointly filed applications, staff experience indicates that they are
rare relative to independent or non-joint applications. The proposed
amendments also make changes to harmonize requirements for submission
of applications for orders under the Advisers Act and Investment
Company Act, including the elimination of requirements that
applications be notarized and that they include proposed notices as
exhibits, which would result in direct cost savings for the applicants.
As detailed in Section IV, we estimate that the reduction in cost
represents approximately 1% of the cost of preparing an
application.\140\
---------------------------------------------------------------------------
\139\ For such applications, the applications under the
Investment Company Act were made in HTML on EDGAR, and the Advisers
Act applications were submitted in paper.
\140\ See infra footnote 161.
---------------------------------------------------------------------------
We expect that the proposed amendments to rule 13f-1 and Form 13F
would have several economic benefits specific to those amendments.
First, to the extent that electronic submission of 13(f) Confidential
Treatment Requests speeds up the initial process of getting the request
to the appropriate Commission staff members, in those instances where a
request for confidential treatment is denied, and assuming that there
is no petition for review, the corrected holdings information should be
publicly available more quickly than if the 13(f) Confidential
Treatment Request had been made in paper. This reduction in the length
of the de facto confidential treatment period of information on Form
13F could benefit users of Form 13F data and enhance investor decision
making to the extent that market observers and participants use such
data to inform their activities.
Second, the proposed amendments that require each Form 13F and Form
13F-NT filer to provide additional identifying information would allow
the Commission and other consumers of Form 13F data to identify a Form
13F filer's other regulatory filings and the interrelationships between
managers who share investment discretion over 13(f) Securities more
easily. This could identify additional sources of market information
for the public that increase their understanding of markets and enhance
their ability to make informed investment decisions.\141\
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\141\ See supra footnote 103.
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Finally, the proposed technical amendments to Form 13F that
eliminate the requirement that dollar values be rounded to the nearest
thousand and that the corresponding ``000'' be omitted and remove the
character limits on the cover and summary pages of the Form should
benefit the Commission and users of Form 13F data by reducing filer
mistakes and data inaccuracies.\142\
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\142\ See supra footnote 115.
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2. Costs
Requiring electronic submission of applications for orders under
the Advisers Act could result in costs to applicants, including those
associated with filing a Form ID for the first time in order to obtain
the access codes needed to submit an application on the Commission's
EDGAR system. As discussed in Section IV below, we expect these costs
to be minimal.\143\
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\143\ See infra footnote 152.
---------------------------------------------------------------------------
Similarly, non-resident general partners and non-resident managing
agents of investment advisers, who currently file Form ADV-NR as a
paper filing submission, might incur costs associated with switching to
filing this form electronically via the IARD system. However, given
that these filers are associated with investment advisers that already
file Form-ADV through the IARD system, we expect that these costs would
be minimal.\144\
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\144\ See infra section IV.B.1, noting that we estimate that
there would be no change to our current internal burden estimate
that Form ADV-NR requires an average of one hour to complete.
---------------------------------------------------------------------------
The proposed amendments could result in additional costs associated
with filing 13(f) Confidential Treatment Requests electronically.
However, unlike the case of applications for orders under the Advisers
Act where an applicant may have no prior experience with EDGAR and
therefore may bear some initial cost, managers, by virtue of the fact
that they are already filing Form 13F, are experienced in using the
EDGAR system. The proposed amendments would merely change the manner in
which a 13(f) Confidential Treatment Request is submitted, should a
filer choose to make such a request. While filers are likely to incur
some costs associated with the transition to an electronic process for
the submission of 13(f) Confidential Treatment Requests, we believe
these costs will be offset by the reduction in printing and delivery
costs currently associated with paper submissions.\145\
---------------------------------------------------------------------------
\145\ See infra footnote 187.
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The proposed amendments to Form 13F would also impose costs on
managers because they would have to modify their electronic filing
processes to, among other things, round dollar values on Form 13F to
the nearest dollar, to discontinue omitting the ``000'' for such
values, and to remove the character limits on the cover and summary
pages.\146\ In addition, managers may incur some costs to provide
additional identifying information, though we do not believe these
costs will be substantial because managers already have this
information available. We do not expect the costs associated with these
changes to be significant.\147\
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\146\ See supra footnote 119.
\147\ See supra footnote 134.
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[[Page 64855]]
3. Efficiency, Competition, and Capital Formation
Generally, because most of the proposed amendments simply
streamline filing processes, we do not expect these amendments to have
a significant effect on efficiency, competition, or capital formation.
Nonetheless, in this section, we discuss the effects of the proposed
amendments on efficiency, competition, and capital formation.
As discussed above, the proposed amendments regarding applications
for orders under the Advisers Act could increase the speed at which the
public has access to these applications. To the extent that
applications for orders inform investors' decisions with respect to the
selection or retention of investment advisers, more timely access to
this information could result in more efficient decisions by investors
with respect to how they select their investment advisers.
Similarly, as discussed above, the proposed technical amendments to
Form 13F requiring that dollar values be rounded to the nearest dollar,
that the ``000'' no longer be omitted, and the removal of character
limits should increase the accuracy and utility of the information
filed on Form 13F. In addition, the requirement that filers include
additional identifying information when filing Form 13F should increase
the usefulness of the information filed on Form 13F. To the extent the
more accurate and useful data available to the public informs
investment decisions, the information efficiency of the market may be
enhanced.
D. Reasonable Alternatives
In formulating the proposed amendments, we considered several
alternatives to the proposed amendments that retain the central
requirement that filings that are currently filed on paper be filed
electronically, but they differ with respect to how the filings would
be made. This section discusses these alternatives.
1. Alternative Filing System for Advisers Act Orders
The proposed amendments would require investment advisers to file
applications for orders under the Advisers Act on the Commission's
EDGAR system. Alternatively, the Commission could require investment
advisers to file applications through some other system. For example,
as noted in section III.A.1.a above, advisers who register with the
Commission do so through the IARD system rather than EDGAR. Thus,
filing through the IARD system would offer the potential benefit of
greater applicant familiarity with the filing system.
While we acknowledge that some applicants may be more familiar with
the IARD system than EDGAR, we propose to make mandatory electronic
submissions of Advisers Act applications on EDGAR for several reasons.
First, we believe the cost to advisers would be relatively low because
we are proposing to assess no filing fees associated with these
submissions through EDGAR. Many advisers also likely have experience
submitting electronic filings via EDGAR because their managers may
already be required to submit Form 13F via EDGAR, reducing the costs
associated with setting up systems and processes to comply with the
amendments. Second, filing in EDGAR would allow for applications under
the Investment Company Act and the Advisers Act to be filed jointly,
reducing filing cost.
2. Alternative Filing System for 13(f) Confidential Treatment Requests
The proposed amendments would require managers to file 13(f)
Confidential Treatment Requests on the Commission's EDGAR system.
Alternatively, the Commission could require that confidential treatment
requests be submitted electronically via a secure file transfer
service. Some managers were able to use such a service to submit their
confidential treatment requests to mitigate delays in receiving paper
filings during the events of COVID-19.\148\
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\148\ See supra footnote 132.
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Requiring submission via a secure file transfer service would have
the benefit that some managers may already be familiar with the process
of submitting filings using such a system based on their experience
over the last year. However, in light of the fact that all managers are
already familiar with the process of making filings on EDGAR, we
believe it would be less burdensome for managers to make 13(f)
Confidential Treatment Request filings on EDGAR as well.\149\
Additionally, because 13(f) Confidential Treatment Requests would be
viewable on the same system as a manager's public Form 13F filing, the
Commission would be able to review all of a manager's holdings
efficiently.\150\
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\149\ See supra footnote 84.
\150\ See supra text following footnote 82.
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3. Single Form 13F Filing With Electronic Attachment
Rather than requiring managers to file 13(f) Confidential Treatment
Requests electronically via EDGAR, we considered modifying existing
Form 13F in such a way that filers would list all reportable 13(f)
Securities on the form but indicate for which securities, if any, they
were seeking confidential treatment. Filers would indicate that they
were seeking confidential treatment for particular securities by
checking a box associated with a security and also indicating the
length of time for which they were seeking confidential treatment.
Securities for which the filer checked the box would not be visible to
public users of the EDGAR system. Filers requesting confidential
treatment would still be required to attach a confidential electronic
document in which they would indicate the type of confidential request
and provide factual support to enable the Commission to make an
informed judgment as to the merits of the request.
This alternative of a single Form 13F filing offers the benefit of
slightly reducing the burden on the filer from filing multiple lists of
securities to filing a single list and potentially decreasing the time
between when a 13(f) Confidential Treatment Request is denied or
expires and the time when an amended Form 13F is filed publicly.
However, we believe that this approach would significantly increase the
risk of confidential information inadvertently being made public,
including by filers who complete the single form incorrectly.
E. Request for Comment
The Commission requests feedback on any aspect of the above
economic analysis, including our description of the current economic
baseline, the potential costs and benefits of the proposed amendments,
their effect on efficiency, competition, and capital formation, and any
reasonable alternatives we should consider. In addition, we request
comment on the following aspect of the proposal:
34. Would filers, investors, or other members of the public realize
any benefits if we required that applications for orders under the
Advisers Act be submitted in a structured data language, such as a
custom XML-based data language, rather than in ASCII or HTML? Please
explain why or why not. If so, are there certain data fields in
particular that would provide such benefits to filers, investors, and
other interested parties if submitted in a
[[Page 64856]]
structured data language? What costs would these parties incur if we
required such applications to be submitted using a structured data
language?
IV. Paperwork Reduction Act
The proposed rule and form amendments contain ``collections of
information'' within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\151\ We are submitting the proposed collections of
information to the Office of Management and Budget (``OMB'') for review
in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The titles for
the collections of information we are proposing to amend are: (i)
``Rule 0-4 under the Investment Advisers Act of 1940, General
Requirements of Papers and Applications'' (OMB Control No. 3235-0633);
(ii) ``Form 13F, Report of Institutional Investment Managers (pursuant
to sec. 13(f) of the Securities Exchange of 1934)'' (OMB Control No.
3235-0006); and, (iii) ``Rule 0-2 and Form ADV-NR under the Investment
Advisers Act of 1940'' (OMB Control No. 3235-0240). We are not
proposing to amend the collections of information entitled (i) ``Form
ID'' (OMB Control No. 3235-0328),\152\ or (ii) ``Form ADV'' (OMB
Control No. 3235-0049). An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
unless it displays a currently valid OMB control number.
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\151\ 44 U.S.C. 3501 through 3521.
\152\ The Commission estimates that each year only one applicant
for an order under any provision of the Advisers Act would need to
file a Form ID with the Commission in order to gain access to EDGAR.
Form ID is used to request the assignment of access codes to file on
EDGAR. Any applicant that has made at least one filing with the
Commission via EDGAR since 2002 has been entered into the EDGAR
system by the Commission and would not need to file Form ID in order
to file electronically on EDGAR. However, applicants that have never
made a filing with the Commission via EDGAR would need to file Form
ID. We estimate that only one applicant for an order under any
provision of the Advisers Act would need to file a Form ID with the
Commission each year in order to gain access to EDGAR. Thus, we
believe that the proposed amendments would not impose substantive
new burdens on the overall population of respondents or affect the
current overall cost estimates for Form ID. Therefore, we believe
that the current burden and cost estimates for Form ID remain
appropriate. Accordingly, we are not revising the current burden or
cost estimates for Form ID.
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A. Amendments to Rule 0-4
Rule 0-4 under the Advisers Act prescribes general instructions for
filing papers and applications under the Advisers Act with the
Commission. The proposed amendments to rule 0-4 would require that
every application for an order under any provision of the Advisers Act,
for which a form with instructions is not specifically prescribed, and
every amendment to such application be electronically filed pursuant to
Regulation S-T.\153\ The proposed amendments to rule 0-4 would
eliminate the requirements to have verifications of applications and
statements of facts made in connection with applications notarized
\154\ and would eliminate the requirement that applications include
proposed notices as exhibits to applications.\155\ In addition, the
proposed amendments to rule 0-4 would specify that paper submissions
should be addressed to the Secretary of the Commission,\156\ remove the
reference to microfilming \157\ and clarify the wording related to
duplicate original copies of paper applications.\158\
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\153\ Proposed rule 0-4(b).
\154\ See rule 0-4(d) [17 CFR 275.0-4(d)].
\155\ See rule 0-4(g) [17 CFR 275.0-4(g)].
\156\ Proposed rule 0-4(a).
\157\ Proposed rule 0-4(b).
\158\ Proposed rule 0-4(i).
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Respondents to the collection of information are applying for
orders of the Commission exempting them from one or more provisions of
the Advisers Act. The requirements of rule 0-4 are designed to provide
Commission staff with the necessary information to assess whether
granting the orders of exemption is necessary and appropriate, in the
public interest and consistent with the protection of investors and the
intended purposes of the Act. This collection of information is
necessary in order to obtain or retain benefits. Responses will not be
kept confidential.
Applicants for orders under the Advisers Act file applications as
they deem necessary. Applicants can include registered investment
advisers, affiliated persons of registered investment advisers and
entities seeking to avoid investment adviser status, among others. The
Commission estimates that it receives seven initial applications per
year submitted under rule 0-4 of the Advisers Act.\159\ Although some
applications are submitted on behalf of multiple applicants, these
applicants in the vast majority of cases are related entities and are
treated as a single respondent for purposes of this analysis.
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\159\ See e.g., 17 CFR 275.206(4)-5(e) (providing that the
Commission may, upon application, exempt an adviser from certain of
the rule's restrictions, and providing a non-exclusive list of
factors the Commission will consider when evaluating these
applications).
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1. Burden Estimate for Rule 0-4
Most of the work of preparing an application is performed by
outside counsel and, therefore, imposes no internal hourly burden on
the respondents.\160\ We do not believe that our proposed amendments
would change the burden on applicants. Likewise, we do not believe that
our proposed amendments would change the number of such applications
that are filed annually. Therefore, because there will continue to be
no internal hourly burden we believe that the current initial and
annual hour burdens for such applications remain appropriate.
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\160\ Nevertheless, the Commission continues to estimate one
burden annual hour for administrative purposes. See Supporting
Statement for ``Rule 0-4 under the Investment Advisers Act of 1940,
General Requirements of Papers and Applications'' (OMB Control No.
3235-0633).
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We are, however, proposing to decrease the external costs
associated with the existing collection of information for rule 0-4 to
reflect the proposed amendments.\161\ The proposed amendments would
eliminate the requirement to notarize applications. The notary service
is typically provided by a secretary or similar administrative employee
of the applicant or the outside counsel preparing the application and
represents a negligible hour or cost burden to the applicant, so
elimination of the notarization requirement would reduce the cost
burden only a small amount. However, we believe that these cost savings
would be offset by the costs associated with transitioning to an
electronic submission process, such as updating policies and
procedures, recordkeeping methods and time spent learning to use the
IARD system. The proposed amendments would require that paper
submissions under rule 0-4 be addressed to the Secretary of the
Commission, remove the reference to microfilming \162\ and clarify the
wording related to duplicate original copies of paper applications.
These amendments decrease the applicant's cost burden. However, we
believe that these cost savings would also be offset by the time and
costs associated with transitioning to an electronic submission
process. The proposed amendments would also eliminate the requirement
that applicants include proposed notices as exhibits to applications. A
proposed notice is a summary of the statements in the application.
Based on staff experience, we believe that preparation of the proposed
notice by outside counsel represents approximately 1% of the cost of
preparing an application.\163\ We estimate that the total reduction in
[[Page 64857]]
the external costs would be approximately $4,091.\164\
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\161\ We most recently estimated the annual cost burden to
applicants of filing all applications to be $392,500.
\162\ Proposed rule 0-4(b).
\163\ See 2008 IC Applications Release, supra footnote 15.
\164\ The total external cost reduction of 1% would amount to
$4,091 given the estimated distribution of all applications: ($141 x
3) + ($483 x 3) + ($2,219 x 1) = $4,091. See Table 3.
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Table 3 below summarizes the proposed cost burden estimates to
applicants applying for exemptive relief under proposed rule 0-4.
Table 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current Estimated Estimated Estimated
external cost reduction in external cost Number of external cost
Types of applications burden per external cost burden per applications burden per
filing \1\ \2\ filing \3\ filing type
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adviser Act Exemptive Applications.. Well Precedented \4\ $14,182 $(141) $14,041 x 3 $42,123
Applications.
Medium Complexity 48,282 (483) 47,799 3 143,397
Applications.
High Complexity 221,909 (2,219) 219,690 1 219,690
Applications.
-------------------------------------------------------------------------------------------------------------------
Total estimated annual external cost 405,210
burden for Advisers Act Applications
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\1\ Based on conversations with applicants and attorneys, the cost for applications ranges from approximately $14,182 for preparing a well-precedented,
routine (or otherwise less involved) application, $48,282 for preparing medium complex applications and approximately $221,909 to prepare a complex or
novel application.
\2\ We estimate that preparation of the proposed notice by outside counsel represents approximately 1% of the cost of preparing an application.
\3\ We estimate that the Commission annually receives three of the well-precedented applications, three applications of medium complexity, and one high
complexity applications.
\4\ The cost outside counsel charges applicants depends on the complexity of the issues covered by the application and the time required. Based on
conversations with applicants and attorneys, the cost for applications ranges from approximately $14,182 for preparing a well-precedented, routine (or
otherwise less involved) application to approximately $221,909 to prepare a complex or novel application. $48,282 is the median between $14,182 and
$221,909. Supporting Statement for ``Rule 0-4 under the Investment Advisers Act of 1940, General Requirements of Papers and Applications'' (OMB
Control No. 3235-0633). We have adjusted these numbers to reflect changes in prices from the 2019 estimates based on the U.S. Bureau of Labor
Statistic's CPI Inflation calculator. We estimate that the Commission receives one of the most time-consuming applications annually, three
applications of medium complexity, and three of the least complex applications subject to rule 0-4. There are no ongoing expenses.
B. Amendment to Form ADV-NR
Rule 0-2 under the Advisers Act establishes procedures by which a
person may serve process, pleadings, or other papers on a non-resident
investment adviser, or on a non-resident general partner or non-
resident managing agent of an investment adviser.\165\ Under Rule 0-2,
persons who wish to serve the above-referenced parties may do so by
furnishing the Commission with one copy of the papers that are to be
served along with one copy for each named party.\166\ The Secretary
will promptly forward a copy to each named party by registered or
certified mail. If the Secretary certifies that the rule was followed,
the certification constitutes evidence of service of process under Rule
0-2. Form ADV-NR is required to be submitted by an investment adviser's
non-resident general partner and non-resident managing agent in
connection with the adviser's initial Form ADV submission or within 30
days of becoming a non-resident after the investment adviser submits
its initial Form ADV.\167\ The proposed amendments would require an
investment adviser's non-resident general partners and non-resident
managing agents to file Form ADV-NR electronically through IARD.\168\
As part of the proposed amendments, the IARD would be modified to
permit non-resident general partners and non-resident managing agents
to meet this filing requirement electronically without the need for
specialized software or hardware. In addition, IARD would not charge a
separate fee for filing the Form ADV-NR or accessing the filing system
apart from what IARD charges for filing Form ADV.
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\165\ 17 CFR 275.0-2.
\166\ 17 CFR 275.0-2.
\167\ 17 CFR 279.4, 17 CFR 297.1.
\168\ See proposed Form ADV-NR.
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The respondents to this information collection would be each non-
resident general partner or non-resident managing agent of an SEC-
registered investment adviser and each non-resident general partner or
non-resident managing agent of an exempt reporting adviser. This
collection of information is mandatory. Responses are not kept
confidential. The collection of information is necessary to provide
appropriate consent to permit the Commission and other parties to bring
actions against non-resident partners and managing agents for
violations of the federal securities laws and to enable the
commencement of legal and/or regulatory actions against investment
advisers that are doing business in the United States, but are not
residents.
1. Burden Estimate for Form ADV-NR
[[Page 64858]]
We estimate that proposed changes to the filing of ADV-NR would
require an average of one hour to complete, the same as our current
internal burden estimate. The currently approved collection of
information burden in Form ADV-NR is 53 hours, which is based on our
prior estimate of 53 annual responses at 1 hour per response. During
2018 to 2020 period, a total of 147 registered investment advisers and
exempt reporting advisers filed reports with the Commission that
included a Form ADV-NR, for an average of 49 filed reports per
year.\169\ Accordingly, we estimate that, based on the change in the
estimate of number of filers of Form ADV-NR, the annual aggregate
information collection burden for Form ADV-NR will be 49 hours, a
decrease of 4 hours under the currently approved burden of 53 hours.
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\169\ The number of Form ADV-NRs filed between 2018 and 2020
were as follows: 2020, 5 filings; 2019, 53 filings; and, 2018, 89
filings. Three year average: (5 + 53 + 89)/3 = 49.
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An adviser would likely use a combination of compliance clerks and
general clerks to complete Form ADV-NR and file it with the Commission
through IARD. The Commission staff estimates the hourly wage for
compliance clerks to be $71 per hour, including benefits,\170\ and the
hourly wage for general clerks to be $63 per hour, including
benefits.\171\ For each burden hour, compliance clerks would perform an
estimated 0.75 hours, and general clerks also would perform an
estimated 0.25 hours. The total cost per response therefore would be an
estimated $69,\172\ for a total burden cost of $3,381.\173\
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\170\ Data from the SIFMA Office Salaries in the Securities
Industry 2013 report, modified by Commission staff to account for a
1,800-hour work-year and inflation, and multiplied by 2.93 to
account for bonuses, firm size, employee benefits and overhead,
suggest that the cost for a compliance clerk is approximately $71
per hour.
\171\ Data from the SIFMA Office Salaries in the Securities
Industry 2013 report, modified by Commission staff to account for a
1,800-hour work-year and inflation, and multiplied by 2.93 to
account for bonuses, firm size, employee benefits and overhead,
suggest that the cost for a general clerk is approximately $63 per
hour.
\172\ (0.75 hours per compliance clerk x $71) + (0.25 hours per
general clerk x $63) = $69.
\173\ $69 per adviser x 49 advisers = $3,381.
Table 4--Summary of the Aggregate Annual Number of Investment Advisers, Time Burden, and Monetized Time Burden
----------------------------------------------------------------------------------------------------------------
Previously
Description Requested approved Change
----------------------------------------------------------------------------------------------------------------
Number of registered investment advisers and exempt reporting 49 53 (4)
advisers who filed Form ADV-NR.................................
Time burden (hours)............................................. 49 53 (4)
Monetized Time Burden (Dollars) \1\............................. $3,381 $3,657 $(276)
----------------------------------------------------------------------------------------------------------------
Note:
\1\ See supra footnotes 173-176 and accompanying text.
C. Form ADV and Rule 203-1
Form ADV is the investment adviser registration form and exempt
reporting adviser reporting form filed electronically with the
Commission pursuant to rules 203-1 (17 CFR 275.203-1), 204-1 (17 CFR
275.204-1) and 204-4 (17 CFR 275.204-4) under the Advisers Act by
advisers registered with the Commission or applying for registration
with the Commission or by exempt reporting advisers filing reports with
the Commission. Rule 203-1 under the Advisers Act requires every person
applying for investment adviser registration with the Commission to
file Form ADV.\174\ The paperwork burdens associated with rules 203-1,
204-1, and 204-4 are included in the approved annual burden associated
with Form ADV and thus do not entail separate collections of
information. These collections of information are found at 17 CFR
275.203-1, 275.204-1, 275.204-4 and 279.1 (Form ADV itself) and are
mandatory. Responses are not kept confidential.
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\174\ Rule 204-4 under the Advisers Act requires certain
investment advisers exempt from registration with the Commission
(``exempt reporting advisers'') to file reports with the Commission
by completing a limited number of items on Form ADV. Rule 204-1
under the Advisers Act requires each registered and exempt reporting
adviser to file amendments to Form ADV at least annually, and
requires advisers to submit electronic filings through IARD.
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We are proposing to amend the instructions to Form ADV and rule
203-1 to require an investment adviser's non-resident general partner
and non-resident managing agents to file Form ADV-NR electronically
through IARD. As discussed above, the collection of information is
necessary for us to obtain appropriate consent to permit the Commission
and other parties to bring actions against non-resident partners and
agents for violations of the federal securities laws and to enable the
commencement of legal and/or regulatory actions against investment
advisers that are doing business in the United States, but are not
residents.\175\
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\175\ See section IV.B.
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We do not believe that the proposed amendments to Form ADV or rule
203-1 would change the burden on investment advisers' application for
registration with the Commission. Likewise, we do not believe that our
proposed amendments would change the number of such registrations that
are filed annually. Therefore, we believe that the current burden and
cost estimates for Form ADV remain appropriate. Accordingly, we are not
revising the current burden or cost estimates for Form ADV.
[[Page 64859]]
D. Amendments to Form 13F
In our most recent PRA submission for Form 13F, we estimated a
total hour burden of 472,521.6 hours, with an internal cost burden of
$31,186,425.60, and with no annual external cost burden.\176\ In the
2020 Form 13F Proposal, the Commission expressed its belief that these
estimates do not appropriately reflect the information collection costs
associated with Form 13F.\177\ The Commission also noted that the
current burden estimates assume that the same number of hours and costs
are necessary to prepare and file Form 13F-HR and the abbreviated Form
13F-NT filings, even though reports on Form 13F-HR would involve
greater burdens.\178\ This results in a current overestimation of the
costs associated with filing Form 13F-NT. Therefore, the Commission
proposed to revise the current PRA burdens associated with filing Form
13F and requested comment on whether the revised estimates accurately
reflected the PRA burdens associated with filing Form 13F.\179\
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\176\ This estimate is based on the last time the rule's
information collection was submitted for PRA renewal in 2018.
\177\ See 2020 Form 13F Proposal, supra footnote 4 (explaining
that the current burden estimates for Form 13F assume that all of
the functions are carried out by a compliance clerk, whereas we
understand that additional professionals are typically involved. The
current burden estimates also do not include external costs for
third-party vendors, which we understand many managers use in
connection with their filings on Form 13F, or external legal
counsel, who may provide advice in connection with the form's
reporting requirements or actual or potential 13F Confidential
Treatment Requests).
\178\ See supra footnote 98 (explaining the difference between
Form 13F-HR and Form 13F-NT).
\179\ The Commission did not revise the burden hours previously
estimated for Form 13F compliance. Rather, the Commission revised
the internal time costs associated with complying with Form 13F by
assuming that a compliance attorney and senior programmer, in
addition to a compliance clerk, would be involved in completing and
filing Form 13F and its related amendments and requests for
confidential treatment.
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Commenters generally disagreed with our proposed estimates and
stated that we over-estimated the costs associated with complying with
the Form 13F filing obligations.\180\ Commenters stated that the
advances in technology have made the process of completing and filing
Form 13F highly automated, reducing the time and external costs to
managers in complying with this requirement.\181\ One commenter
disagreed with our assumption that a compliance attorney would need to
be involved with the determination of whether a manager meets the
filing threshold for Form 13F.\182\ However, another commenter stated
that complying with the requirements to file a 13(f) Confidential
Treatment Request can be particularly time consuming and costly.\183\
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\180\ See e.g., Comment Letter of Mack-Cali Realty Corporation
on File No. S7-08-20 (Nov. 19, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-8032834-225591.pdf">https://www.sec.gov/comments/s7-08-20/s70820-8032834-225591.pdf</a>; Comment
Letter of Becker/Glynn on File No. S7-08-20 (Aug. 19, 2020),
available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7669323-222569.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7669323-222569.pdf</a>; Comment Letter of the CFA Institute on File No. S7-08-20
(Oct. 1, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7864226-224033.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7864226-224033.pdf</a>; Comment Letter of ConocoPhillips on File
No. S7-08-20 (Sept. 29, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7860025-223864.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7860025-223864.pdf</a>; Comment Letter of the
Consumer Federation of America on File No. S7-08-20 (Sept. 16,
2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7777971-223451.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7777971-223451.pdf</a>; MFA 2020 Form 13F Proposal Comment Letter, supra
footnote 120; Comment Letter of Sun Communities Inc. on File No. S7-
08-20 (Sept. 21, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7797961-223610.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7797961-223610.pdf</a>; Comment Letter of MarketCounsel
Consulting, LLC on File No. S7-08-20 (Sept. 29, 2020), available at
<a href="https://www.sec.gov/comments/s7-08-20/s70820-7860014-223889.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7860014-223889.pdf</a>
(recommending that the Commission review its estimates through
engaging with various managers who may have different cost
structures); Wachtell Lipton 2020 Form 13F Proposal Comment Letter,
supra footnote 110; WhaleWisdom 2020 Form 13F Proposal Comment
Letter, supra footnote 99.
\181\ Id; see also Comment Letter of The Security Traders
Association of New York, Inc. on File No. S7-08-20 (Sept. 29, 2020),
available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7860080-223918.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7860080-223918.pdf</a> (also stating that the Commission's estimated hourly
costs of filing likely overestimates costs of reporting by using
standard and equal estimate of compliance, attorney, and coding
time); Comment Letter of ACN Solutions LLC on File No. S7-08-20
(Sept. 10, 2020), available at <a href="https://www.sec.gov/comments/s7-08-20/s70820-7757531-223233.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7757531-223233.pdf</a> (``ACN 2020 Form 13F Proposal Comment
Letter'') (stating that the Commission's estimates overstate the
burdens of Form 13F on firms and estimating that managers incur $500
in external costs annually); Comment Letter of Global Endowment
Management, LP on File No. S7-08-20 (Sept. 29, 2020), available at
<a href="https://www.sec.gov/comments/s7-08-20/s70820-7859976-223853.pdf">https://www.sec.gov/comments/s7-08-20/s70820-7859976-223853.pdf</a>
(estimating that the commenter spends 2 hours of internal time and
$125 of external service provider expense each quarter); see also
AIMA 2020 Form 13F Proposal Comment Letter, supra footnote 99 (also
noting that the Commission did not take into account other external
costs of complying with Form 13F, such as the licensing fees charges
for the use of CUSIP numbers).
\182\ ACN 2020 Form 13F Proposal Comment Letter, supra footnote
180.
\183\ See Private Investor Coalition 2020 Form 13F Proposal
Comment Letter, supra footnote 132 (stating that, in addition to the
costs of the Form 13F, managers entitled to confidential treatment
bear the burdens of preparing a 13(f) Confidential Treatment
Request, including the associated expenses of engaging an attorney
or other service to file a paper copy of the 13(f) Confidential
Treatment Request with the Commission each quarter).
---------------------------------------------------------------------------
We have considered the comments we received on our proposed
estimates and are revising the current PRA burdens associated with
filing Form 13F to incorporate the feedback we received from
commenters.\184\ While we continue to believe that professionals beyond
a compliance clerk are involved in complying with Form 13F, we agree
with commenters that advances in technology over time have
significantly decreased the number of hours managers spend to satisfy
their compliance obligations. Additionally, we agree with commenters
that using a blended rate for all the professionals involved may
overestimate the costs of the time spent on complying with Form
13F.\185\ After considering the comments, we also believe that the
Commission's proposed revisions to the external costs associated with
complying with Form 13F as well as the revisions to the PRA burdens
associated with Form 13F amendments that were included in the 2020 Form
13F Proposal are appropriate. Therefore, the table below summarizes our
adjustments to the current PRA estimates of complying with Form 13F
based on commenter feedback as well as the initial and ongoing annual
burden estimates associated with amendments to Form 13F related to the
requirements for managers to provide additional identifying information
and the technical amendments to Form 13F discussed above.\186\ We
believe that our proposed amendments to the process for filing 13(f)
Confidential Treatment Requests would not change the burden of filing
Form 13F Reports with the Commission.\187\
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\184\ We are proposing to revise the current burden estimates
for Form 13F-HR and Form 13F-NT.
\185\ In particular, while a compliance attorney may be involved
in determining whether a manager can, or should, file a 13(f)
Confidential Treatment Request for each Form 13F filing, it is
unlikely that a compliance attorney will spend the same amount of
time as other professionals tasked with making the Form 13F filing
itself, such as a senior programmer and compliance clerk.
\186\ See supra section II.B.2.
\187\ We believe that our proposed amendments to the process for
filing 13(f) Confidential Treatment Requests would reduce printing
and delivery expenses that managers incur to comply with Form 13F.
However, we believe that these savings would be offset by the costs
associated with transitioning to an electronic submission process
for 13(f) Confidential Treatment Requests. Therefore, for PRA
purposes, we do not believe that these proposed amendments would
change the burdens associated with complying with Form 13F. We
likewise do not believe that our proposed amendments would change
the number of Form 13F Reports or Form 13(f) Confidential Treatment
Requests that are filed annually.
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BILLING CODE 8011-01-P
[[Page 64860]]
[GRAPHIC] [TIFF OMITTED] TP19NO21.574
[[Page 64861]]
[GRAPHIC] [TIFF OMITTED] TP19NO21.575
BILLING CODE 8011-01-C
E. Request for Comments
We request comment on whether our estimates for burden hours and
external costs as described above are reasonable. Pursuant to 44 U.S.C.
3506(c)(2)(B), the Commission solicits comments in order to: (1)
Evaluate whether the proposed collection of information is necessary
for the proper performance of the functions of the Commission,
including whether the information will have practical utility; (2)
evaluate the accuracy of the Commission's estimate of the burden of the
proposed collection
[[Page 64862]]
of information; (3) determine whether there are ways to enhance the
quality, utility, and clarity of the information to be collected; and
(4) determine whether there are ways to minimize the burden of the
collection of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology.
Persons wishing to submit comments on the collection of information
requirements of the proposed amendments should direct them to the OMB
Desk Officer for the Securities and Exchange Commission,
<a href="/cdn-cgi/l/email-protection#115c53493f5e5c533f5e5843503f4254524e7574627a4e7e777778727463517e7c733f747e613f767e67"><span class="__cf_email__" data-cfemail="165b544e38595b5438595f445738455355497273657d497970707f75736456797b743873796638717960">[email protected]</span></a>, and should send a copy to
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090, with reference to File No. S7-15-21. OMB is
required to make a decision concerning the collections of information
between 30 and 60 days after publication of this release; therefore a
comment to OMB is best assured of having its full effect if OMB
receives it within 30 days after publication of this release. Requests
for materials submitted to OMB by the Commission with regard to these
collections of information should be in writing, refer to File No. S7-
15-21, and be submitted to the Securities and Exchange Commission,
Office of FOIA Services, 100 F Street NE, Washington, DC 20549-2736.
V. Regulatory Flexibility Act Certification
Pursuant to Section 605(b) of the Regulatory Flexibility Act \188\
(``RFA''), the Commission hereby certifies that the proposed amendments
to rules 11, 100, 101, 102, and 201 of Regulation S-T \189\ rule 0-4
under the Advisers Act \190\ relating to the electronic filing of
applications for orders under the Advisers Act and the Investment
Company Act; rule 203-1,\191\ Form ADV-NR and the instructions to Form
ADV under the Advisers Act \192\ relating to the electronic filing of
Form ADV-NR, would not, if adopted, have a significant economic impact
on a substantial number of small entities.\193\ The Commission
estimates that it will receive initial applications seeking relief from
various provisions of the Advisers Act from six applicants per year.
The Commission estimates that few, if any, of the six applicants would
be small entities for the purposes of the Advisers Act and the
RFA.\194\ Moreover, as discussed in Sections III and IV above, the
proposed amendments would have little, if any, economic impact.
Therefore, there would be no significant economic impact on a
substantial number of small entities.
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\188\ 5 U.S.C. 605(b).
\189\ 17 CFR 232.11, 232.100, 232.101, 232.102, and 232.201.
\190\ 17 CFR 275.0-4.
\191\ 17 CFR 274.203-1.
\192\ 17 CFR 279.4; 17 CFR 279.1.
\193\ For the purposes of the Advisers Act and the RFA, an
investment adviser generally is a small entity if it: (i) Has assets
under management having a total value of less than $25 million; (ii)
did not have total assets of $5 million or more on the last day of
its most recent fiscal year; and (iii) does not control, is not
controlled by, and is not under common control with another
investment adviser that has assets under management of $25 million
or more, or any person (other than a natural person) that had $5
million or more on the last day of its most recent fiscal year. 17
CFR 275.0-7(a).
\194\ This estimate is based on the fact that none of the 17
initial applications received over the last three calendar years as
posted on the Commission website came from small entities.
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Pursuant to Section 605(b) of the RFA,\195\ the Commission hereby
certifies that the proposed amendments to rule 0-2 under the Investment
Company Act \196\ would not, if adopted, have a significant economic
impact on a substantial number of small entities.\197\ As discussed in
Sections III and IV above, the proposed amendments would have little,
if any, economic impact. Therefore, there would be no significant
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------
\195\ See supra footnote 187.
\196\ 17 CFR 270.0-2.
\197\ For purposes of the Investment Company Act and the RFA, an
investment company is a small entity if it, together with other
investment companies in the same group of related investment
companies, has net assets of $50 million or less as of the end of
its most recent fiscal year. 17 CFR 270.0-10(a).
---------------------------------------------------------------------------
Pursuant to Section 605(b) of the RFA,\198\ the Commission hereby
certifies that the proposed amendments to rule 24b-2 under the Exchange
Act, Form 13F and rules 101(a)(1)(xxii) and 101(d) of Regulation S-T
relating to the requirement that Managers electronically file requests
for 13(f) Confidential Treatment Requests, along with other amendments
to Form 13F, would not, if adopted, have a significant economic impact
on a substantial number of small entities. The definition of the term
``small entity'' in rule 0-10 under the Exchange Act does not
explicitly reference investment advisers or other investment managers.
However, rule 0-10 provides that the Commission may ``otherwise
define'' small entities for purposes of a particular rulemaking
proceeding. For purposes of the proposed amendments relating to
managers electronically filing requests for 13(f) Confidential
Treatment Requests and the other amendments to Form 13F, the Commission
is defining small entity by using the definition of small entity under
rule 0-7(a) under the Advisers Act as more appropriate to the functions
of managers.\199\ The Commission believes that this definition would
help ensure that all persons or entities that might be institutional
investment managers under section 13(f) of the Exchange Act will be
included within a category addressed by the definition. The Commission
requests comments on the use of this definition.
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\198\ See supra footnote 187.
\199\ See supra footnote 192. Therefore, for purposes of this
rulemaking and the RFA, a manager is a small entity if it: (i) Has
assets under management having a total value of less than $25
million; (ii) did not have total assets of $5 million or more on the
last day of its most recent fiscal year; and (iii) does not control,
is not controlled by, and is not under common control with another
investment adviser that has assets under management of $25 million
or more, or any person (other than a natural person) that had total
assets of $5 million or more on the last day of its most recent
fiscal year.
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Managers are not required to submit reports on Form 13F unless they
exercise investment discretion with respect to accounts holding 13(f)
Securities having an aggregate fair market value on the last trading
day of any month of any calendar year of at least $100 million.
Therefore, no small entities for purposes of rule 0-10 under the
Exchange Act are affected by the form. Therefore, there would be no
significant economic impact on a substantial number of small entities.
The Commission requests written comments regarding these
certifications. The Commission requests that commenters describe the
nature of any impact on small businesses and provide empirical data to
support the extent of the impact.
VI. Consideration of the Impact on the Economy
[[Page 64863]]
For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996, or ``SBREFA,'' \200\ we must advise OMB whether a proposed
regulation constitutes a ``major'' rule. Under SBREFA, a rule is
considered ``major'' where, if adopted, it results in or is likely to
result in: (1) An annual effect on the economy of $100 million or more;
(2) a major increase in costs or prices for consumers or individual
industries; or (3) significant adverse effects on competition,
investment or innovation.
---------------------------------------------------------------------------
\200\ Public Law 104-121, Title II, 110 Stat. 857 (1996)
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. 601).
---------------------------------------------------------------------------
The Commission requests comment on the potential impact of the
proposed amendments on the economy on an annual basis. The Commission
requests that commenters provide empirical data and other factual
support for their views to the extent possible.
VII. Statutory Authority
The Commission is proposing the amended rules and form under the
rulemaking authority set forth in sections 3, 12, 13, 14, 15(d), 23(a),
and 35A of the Exchange Act [15 U.S.C. 78c, 78l, 78m, 78n, 78o(d),
78w(a), and 78ll]; sections 8, 30, 31, and 38 of the Investment Company
Act [15 U.S.C. 80a-8, 80a-29, 80a-30, and 80a-37]; and sections 203,
204, 206A, 210, and 211 of the Advisers Act [15 U.S.C. 80b-3, 80b-4,
80b-6a, 80b-10, and 80b-11].
List of Subjects
17 CFR Part 232
Reporting and recordkeeping requirements, Securities.
17 CFR Parts 240 and 249
Reporting and recordkeeping requirements, Securities.
17 CFR Part 270
Investment companies, Reporting and recordkeeping requirements,
Securities.
17 CFR Part 275
Investment advisers, Reporting and recordkeeping requirements,
Securities.
17 CFR Part 279
Investment advisers, Reporting and recordkeeping requirements,
Securities.
Text of Proposed Rule and Form Amendments
In accordance with the foregoing, title 17, chapter II of the Code
of Federal Regulations is proposed to be amended as follows:
PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS
0
1. The general authority citation for part 232 is revised to read as
follows:
Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, 80b-4, 80b-6a, 80b-10, 80b-11, 7201
et seq.; and 18 U.S.C. 1350, unless otherwise noted.
* * * * *
0
2. Amend Sec. 232.11 by adding the definition of ``Investment Advisers
Act'' in alphabetical order to read as follows:
Sec. 232.11 Definitions of terms used in this part.
* * * * *
Investment Advisers Act. The term Investment Advisers Act means the
Investment Advisers Act of 1940.
* * * * *
Sec. 232.100 [Amended]
0
3. Amend Sec. 232.100 paragraph (b) by removing the term
``Registrants'' and adding in its place ``Persons or entities''.
0
4. Amend Sec. 232.101 by:
0
a. Revising paragraph (a)(1)(iv);
0
b. In paragraph (a)(1)(xxi), removing the period at the end of the
paragraph and adding in its place a semicolon;
0
c. Adding paragraphs (a)(1)(xxii) and (xxiii); and
0
d. Revising paragraph (d).
The revisions and additions read as follows:
Sec. 232.101 Mandated electronic submissions and exceptions.
(a) * * *
(1) * * *
(iv) Documents filed with the Commission pursuant to sections 8,
17, 20, 23(c), 24(b), 24(e), 24(f), and 30 of the Investment Company
Act (15 U.S.C. 80a-8, 80a-17, 80a-20, 80a-23(c), 80a-24(b), 80a-24(e),
80a-24(f), and 80a-29) and any application for an order under any
section of the Investment Company Act (15 U.S.C. 80a-1 et seq.). The
filing of an application for an order under any section of the
Investment Company Act must be made on EDGAR as required by the EDGAR
Filer Manual, as defined in Sec. 232.11 (Rule 11 of Regulation S-T).
Notwithstanding Sec. 232.104 (Rule 104 of Regulation S-T), the
documents filed or furnished under this paragraph will be considered as
officially filed with or furnished to, as applicable, the Commission;
* * * * *
(xxii) Confidential treatment requests filed with the Commission
pursuant to section 13(f) of the Exchange Act (15 U.S.C. 78m(f)) and
the rules and regulations thereunder, including Form 13F (17 CFR
249.325). The filings must be made on EDGAR in the format required by
the EDGAR Filer Manual, as defined in Sec. 232.11 (Rule 11 of
Regulation S-T). Notwithstanding Sec. 232.104 (Rule 104 of Regulation
S-T), the documents filed or furnished under this paragraph will be
considered as officially filed with or furnished to, as applicable, the
Commission; and
(xxiii) Any application for an order under any section of the
Investment Advisers Act (15 U.S.C. 80b-1 et seq.). The filings must be
made on EDGAR in the format required by the EDGAR Filer Manual, as
defined in Sec. 232.11 (Rule 11 of Regulation S-T). Notwithstanding
Sec. 232.104 (Rule 104 of Regulation S-T), the documents filed or
furnished under this paragraph will be considered as officially filed
with or furnished to, as applicable, the Commission.
* * * * *
(d) All documents, including any information with respect to which
confidential treatment is requested, filed pursuant to section 13(n)
(15 U.S.C. 78m(n)) and section 13(f) (15 U.S.C. 78m(f)) of the Exchange
Act and the rules and regulations thereunder shall be filed in
electronic format.
Sec. 232.102 [Amended]
0
5. Amend Sec. 232.102 paragraph (a) by adding the phrase ``, Rule 0-6
under the Advisers Act (Sec. 275.0-6 of this chapter)'' after ``Rule
0-4 under the Investment Company Act (Sec. 270.0-4 of this chapter),''
0
6. Amend Sec. 232.201 by revising paragraph (a) introductory text to
read as follows:
Sec. 232.201 Temporary hardship exemption.
(a) If an electronic filer experiences unanticipated technical
difficulties preventing the timely preparation and submission of an
electronic filing, other than a Form 3 (Sec. 249.103 of this chapter),
a Form 4 (Sec. 249.104 of this chapter), a Form 5 (Sec. 249.105 of
this chapter), a Form ID (Sec. Sec. 239.63, 249.446, 269.7 and 274.402
of this chapter), a Form TA-1 (Sec. 249.100 of this chapter), a Form
TA-2 (Sec. 249.102 of this chapter), a Form TA-W (Sec. 249.101 of
this chapter), a Form D (Sec. 239.500 of this chapter), an application
for an order under any section of the Investment Company Act of 1940
(15 U.S.C. 80a-1 et seq.), an application for an order under any
section of the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.), an Interactive Data File (as defined in Sec. 232.11), or an
Asset Data File (as defined in Sec. 232.11), the electronic filer may
file the subject filing, under cover of Form TH
[[Page 64864]]
(Sec. Sec. 239.65, 249.447, 269.10 and 274.404 of this chapter), in
paper format no later than one business day after the date on which the
filing was to be made.
* * * * *
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
0
7. The general authority citation for part 240 continues to read as
follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4,
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20,
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq. and 8302;
7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; Pub. L.
111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, sec. 503
and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
0
8. Amend Sec. 240.24b-2 by:
0
a. Removing the preliminary note in its entirety;
0
b. Adding an introductory paragraph;
0
c. In paragraph (b) removing the phrase ``paragraphs (g) and (h)'' and
adding in its place ``paragraphs (g) through (i)''; and
0
d. Adding paragraph (i).
The additions read as follows:
Sec. 240.24b-2 Nondisclosure of information filed with the
Commission and with any exchange.
Except as otherwise provided in this rule, confidential treatment
requests shall be submitted in paper format only, whether or not the
filer is required to submit a filing in electronic format.
* * * * *
(i) An institutional investment manager shall omit the confidential
portion from the material publicly filed in electronic format pursuant
to section 13(f) of the Act (15 U.S.C. 78m(f)) and the rules and
regulations thereunder. The institutional investment manager shall
indicate in the appropriate place in the material publicly filed that
the confidential portion has been so omitted and filed separately with
the Commission. In lieu of the procedures described in paragraph (b) of
this section, an institutional investment manager shall request
confidential treatment electronically pursuant to section 13(f) of the
Act (15 U.S.C. 78m(f)) and the rules and regulations thereunder.
PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934
0
9. The general authority citation for part 249 continues to read as
follows:
Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C.
5461 et seq.; and 18 U.S.C. 1350; Sec. 953(b), Pub. L. 111-203, 124
Stat. 1904; Sec. 102(a)(3), Pub. L. 112-106, 126 Stat. 309 (2012),
Sec. 107, Pub. L. 112-106, 126 Stat. 313 (2012), Sec. 72001, Pub. L.
114-94, 129 Stat. 1312 (2015), and secs. 2 and 3 Pub. L. 116-222,
134 Stat. 1063 (2020), unless otherwise noted.
* * * * *
Note: The text of Form 13F does not, and these amendments will
not, appear in the Code of Federal Regulations.
0
10. Revise Form 13F (referenced in Sec. 249.325) to read as follows:
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PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940
0
11. The general authority citation for part 270 continues to read as
follows:
Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39,
and Pub. L. 111-203, sec. 939A, 124 Stat. 1376 (2010), unless
otherwise noted.
* * * * *
Sec. 270.0-2 [Amended]
0
12. Amend Sec. 270.0-2 by:
0
a. In paragraph (a), adding the phrase ``Secretary of the'' after ``be
delivered through the mails or otherwise to the''; and
0
b. In paragraph (b), removing the sentence ``The application must be
typed, printed, copied or prepared by any process which, in the opinion
of the commission, produces copies suitable for microfilming.''
[[Page 64876]]
PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940
0
13. The general authority citation for part 275 continues to read as
follows:
Authority: 15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(11)(H), 80b-
2(a)(17), 80b-3, 80b-4, 80b-4a, 80b-6(4), 80b-6a, and 80b-11, unless
otherwise noted.
* * * * *
0
14. Amend Sec. 275.0-4 by:
0
a. In paragraph (a)(1), adding the phrase ``Secretary of the'' after
``be delivered through the mails or otherwise to the'';
0
b. Revising paragraphs (b), (d) and (i); and
0
c. Removing and reserving paragraph (g).
The revisions read as follows:
Sec. 275.0-4 General requirements of papers and applications.
* * * * *
(b) Formal specifications respecting applications. Every
application for an order under any provision of the Act, for which a
form with instructions is not specifically prescribed, and every
amendment to such application, shall be filed electronically pursuant
to 17 CFR part 232 (Regulation S-T). Any filings made in paper,
including filings made pursuant to a hardship exemption under
Regulation S-T, shall be filed in quintuplicate. One copy shall be
signed by the applicant, but the other four copies may have facsimile
or typed signatures. Such applications shall be on paper no larger than
8\1/2\ x 11 inches in size. To the extent that the reduction of larger
documents would render them illegible, those documents may be filed on
paper larger than 8\1/2\ x 11 inches in size. The left margin should be
at least 1\1/2\ inches wide and, if the application is bound, it should
be bound on the left side. All typewritten or printed matter (including
deficits in financial statements) should be set forth in black so as to
permit photocopying.
* * * * *
(d) Verification of applications and statements of fact. Every
application for an order under any provision of the Act, for which a
form with instructions is not specifically prescribed, and every
amendment to such application, and every statement of fact formally
filed in support of, or in opposition to, any application or
declaration shall be verified by the person executing the same. An
instrument executed on behalf of a corporation shall be verified in
substantially the following form, but suitable changes may be made in
such form for other kinds of companies and for individuals:
The undersigned states that he or she has duly executed the
attached __ dated, __20__, for and on behalf of __ (Name of company);
that he or she is the __ (Title of officer) of such company; and that
all action by stockholders, directors, and other bodies necessary to
authorize the undersigned to execute and file such instrument has been
taken. The undersigned further states that he or she is familiar with
such instrument, and the contents thereof, and that the facts therein
set forth are true to the best of his or her knowledge, information and
belief.
(Signature)
* * * * *
(i) The manually signed original (or in the case of duplicate
originals, one duplicate original) of all registrations, applications,
statements, reports, or other documents filed under the Investment
Advisers Act of 1940, as amended, shall be numbered sequentially (in
addition to any internal numbering which otherwise may be present) by
handwritten, typed, printed, or other legible form of notation from the
facing page of the document through the last page of that document and
any exhibits or attachments thereto. Further, the total number of pages
contained in a numbered original shall be set forth on the first page
of the document.
0
15. Amend Sec. 275.203-1 by adding paragraph (d) to read as follows:
Sec. 275.203-1 Application for investment adviser registration.
* * * * *
(d) Form ADV-NR--(1) General Requirements. Each non-resident, as
defined in 17 CFR 275.0-2(b)(2) (Rule 0-2(b)(2)), general partner or a
non-resident managing agent, as defined in 17 CFR 275.0-2(b)(2) (Rule
0-2(b)(1)), of any investment adviser registered, or applying for
registration with, the Commission must submit Form ADV-NR (17 CFR
279.4). Form ADV-NR must be completed in connection with the adviser's
initial registration with the Commission. If a person becomes a non-
resident general partner or a non-resident managing agent after the
date the adviser files its initial registration with the Commission,
the person must file Form ADV-NR with the Commission within 30 days of
becoming a non-resident general partner or a non-resident managing
agent. If a person serves as a general partner or managing agent for
multiple advisers, they must submit a separate Form ADV-NR for each
adviser.
(2) When an amendment is required. Each non-resident general
partner or a non-resident managing agent of any investment adviser must
amend its Form ADV-NR within 30 days whenever any information contained
in the form becomes inaccurate by filing with the Commission a new Form
ADV-NR.
(3) Electronic filing. Form ADV-NR (and any amendments to Form ADV-
NR) must be filed electronically through the Investment Adviser
Registration Depository (IARD), unless a hardship exemption under 17
CFR 275.203-3 (Rule 203-3) has been granted.
(4) When filed. Each Form ADV-NR is considered filed with the
Commission upon acceptance by the IARD.
(5) Filing fees. No fee shall be assessed for filing Form ADV-NR
through IARD.
(6) Form ADV-NR is a report. Each Form ADV-NR (and any amendment to
Form ADV-NR) required to be filed under this rule is a ``report''
within the meaning of sections 204 and 207 of the Act.
PART 279--FORMS PRESCRIBED UNDER THE INVESTMENT ADVISERS ACT OF
1940
0
16. The authority citation for part 279 continues to read as follows:
Authority: The Investment Advisers Act of 1940, 15 U.S.C. 80b-
1, et seq., Pub. L. 111-203, 124 Stat. 137617.
0
17. In Form ADV (referenced in Sec. 279.1):
0
a. Amend the instructions to the form by revising the section entitled
``Who is required to file Form ADV-NR?''; and
0
b. Amend the instructions to the form by adding a section entitled
``How is Form ADV-NR filed?''.
The revision and addition read as follows:
Note: The text of Form ADV does not, and this amendment will
not, appear in the Code of Federal Regulations.
[[Page 64877]]
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0
18. Revise Sec. 279.4 to read as follows:
Sec. 279.4 Form ADV-NR, appointment of agent for service of process
by non-resident general partner and non-resident managing agent of an
investment adviser.
This form shall be filed and amended pursuant to Sec. 275.203-1 of
this chapter (Rule 203-1) as an appointment of agent for service of
process by non-resident general partners and non-resident managing
agents of an investment adviser pursuant to section 203 of the
Investment Advisers Act of 1940.
Note: The next of Form ADV-NR does not, and this amendment will
not, appear in the Code of Federal Regulations.
0
19. Form ADV-NR (referenced in Sec. 279.4) is amended by adding the
sections entitled ``Instructions to Form ADV-NR'', ``Who is required to
file Form ADV-NR?'' and ``How is Form ADV-NR filed?'' to read as
follows:
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By the Commission.
Dated: November 4, 2021.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2021-24522 Filed 11-18-21; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on November 19, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.