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SEC Reporting Obligations: Don’t Get Caught Out

Posted on Feb 19, 2025

Investment managers trading U.S.-listed securities must comply with SEC reporting obligations to avoid fines and reputational risks. The Securities and Exchange Commission (SEC) has established reporting requirements under Rule 13F and Rule 13F-2, which require institutional investment managers to disclose their holdings and short positions under specific conditions.

In this blog post, we will outline these obligations and explain how investment managers can ensure compliance.

 

What Is a U.S.-Listed Security Under SEC Rules?

The SEC defines U.S.-listed securities as securities registered and traded on national securities exchanges in the United States, such as the New York Stock Exchange (NYSE) and Nasdaq. These include:

  • Equities (common and preferred stocks)
  • Exchange-Traded Funds (ETFs)
  • Certain options and convertible securities

Securities traded over-the-counter (OTC) are generally not considered U.S.-listed unless specifically registered with the SEC.

Investment managers who exercise investment discretion over a significant value of these securities may be subject to Rule 13F and Rule 13F-2 reporting requirements.

 

SEC Rule 13F: Institutional Investment Managers’ Reporting Requirements

Rule 13F was established under the Securities Exchange Act of 1934 to enhance market transparency by requiring institutional investment managers to disclose their holdings of certain publicly traded securities. This helps regulators, investors, and market participants track the investment strategies of large institutional investors.

Key Requirements:

  1. Who Must Report?
    • Institutional investment managers who exercise investment discretion over at least $100 million in Section 13(f) securities.
    • Section 13(f) securities include U.S. exchange-traded stocks, equity options, and convertible debt securities that meet SEC-defined criteria.
  2. Form 13F Filing
    • Filing Deadline: Within 45 days of the end of each calendar quarter.
    • Content: Must include the name of securities, number of shares, and market value of holdings.
    • Public Disclosure: The information is made public to increase market transparency.
  3. Exemptions
    • Investment managers do not need to report certain securities, such as specific debt securities and derivatives.

By filing Form 13F, investment managers contribute to public knowledge about institutional investment activity, which can influence market sentiment and investor confidence.

For more details, visit the SEC’s Rule 13F page.

 

SEC Rule 13F-2: New Short Sale Disclosure Requirements

Adopted by the SEC on October 13, 2023, Rule 13F-2 introduces short-sale disclosure requirements for institutional investment managers. While initially set to apply to transactions after January 2, 2025, the SEC has granted a 12-month compliance delay, giving managers additional time to implement the necessary reporting systems. Once in effect, Rule 13F-2 will increase transparency around short-selling activity, providing investors and regulators with better visibility into market dynamics.

Key Requirements:

  1. Applicability: Institutional investment managers must file Form SHO if they have discretion over US short positions exceeding set thresholds during a calendar month.
  2. Form SHO: The form requires disclosure of month-end short positions and daily short sale activity.
  3. Deadline: Filings must be submitted within 14 days after the month end.
  4. Purpose: Within one month after the end of each calendar month, the SEC will publish the aggregate short positions and daily activity information regarding each individual equity security reported on the Form SHO.
  5. Reporting Threshold: Institutional investment managers must file the form if their monthly average gross short position exceeds $10 million or 2.5% of shares outstanding for reporting issuers. Non-reporting issuers must disclose if their gross short position reaches $500,000 or more.

 

Conclusion

Staying compliant with SEC reporting obligations is critical for maintaining investor trust and regulatory standing. With Pinnacle Fund Services’ reporting solutions, your firm can streamline data collection, meet reporting deadlines, and reduce compliance burdens.

We have developed tools to assist investment managers with:

  • Data aggregation and threshold assessments
  • Automated Form SHO population
  • Timely submission to the SEC

Contact Adam Vial at 647-794-4859 or avial@pinnaclefundservices.com for more information on how we can assist with your SEC Rule 13F and 13F-2 compliance.