In a move to enhance transparency and streamline reporting processes, the Securities and Exchange Commission (SEC) has adopted amendments to Regulation 13D, impacting beneficial ownership reporting requirements.

Key Amendments and Their Implications for Registered Investment Advisers

Here’s a concise overview of the key amendments and their implications for RIA’s and market participants:

Background

• The Securities Exchange Act Sections 13(d) and 13(g), along with Regulation 13D-G, require an investor who beneficially owns more than 5 % of a covered class of equity securities to publicly file either a Schedule 13D or a Schedule 13G.

Filing Deadlines Shortened

• The SEC shortened the deadlines for submitting initial and amended beneficial ownership reports on Schedules 13D and 13G. For example, under Schedule 13D, the initial filing deadline will be within five business days after acquiring beneficial ownership of more than 5%. The former deadline was ten calendar days.

Extended Filing Deadline

• The deadline for filing Schedules 13D and 13G on a business day is extended to 10:00 PM ET.

Disclosure of Derivative Securities

• It’s clarified that individuals must disclose interests in all derivative securities, including cash-settled ones, which use an issuer’s equity security as a reference.

Guidance on Cash-Settled Derivatives

• The SEC provided guidance on when the use of cash-settled derivative securities constitutes beneficial ownership of a reference security, similar to guidance on security-based swaps treatment.

Definition of “Group

• The SEC clarified that an expressed agreement isn’t necessary for individuals to be considered a “group” for beneficial ownership disclosure requirements.

These amendments represent a significant step towards promoting transparency and efficiency in beneficial ownership reporting. By shortening filing deadlines, extending submission times, clarifying disclosure requirements for derivative securities, and broadening the definition of “group,” the SEC aims to enhance market integrity and investor protection. Market participants should stay abreast of these regulatory changes to ensure compliance and uphold the highest standards of transparency and accountability.