THE FREQUENT FILER
The Modernization of Beneficial Ownership
In 1977, George Lucas released a movie that influenced an entire cinematic generation. Other than the release of one of the greatest movies of all time, something else meaningful happened that year. 1977 was also the last time the SEC updated its deadline for filing the initial Schedule 13G.
If that seems like a very long time ago, in a galaxy far, far away, just know that 1968 was the last time the filing deadline for Schedule 13D was updated. For context, that was the same year Apollo 8 flew around the moon for the first time.
The Change
A rule update for these forms was long past due, and the SEC recognized this. As a result, the Securities and Exchange Commission has adopted amendments to modernize the rules governing beneficial ownership reporting.
The main change in the rule is the shortening of the deadlines for the initial and amended Schedule 13D and 13G filings. Previously, if you acquired 5% of a company, you had 10 calendar days to report the transaction. Now, that time has been reduced to 5 business days.
The Reason
The SEC concluded that it shouldn’t take as long as 10 days to inform the public about an attempt to change or influence a public company.
We live in the 21st Century, an era of high-speed internet access, and a higher frequency of trading than what was going on in the 60’s and 70’s. To put it in perspective, the fax machine was considered new technology when these rules were implemented. It is extremely necessary to modernize the requirements to match the modern-day investor.
This new rule of shortening the deadline allows more transparency for investors, which is the entire reason why the SEC exists — to provide transparency for the public at the appropriate times.
Other Changes
There are a few minor changes that you should be aware of. First, the “cut-off” time for Regulation S-T for Schedules 13D and 13G has been extended from 5:30 p.m. to 10:00 p.m. Eastern Standard Time.
More time is always great, but please resist the urge to wait until the last minute to file. Trust me, it will save you a lot of headache.
Second, Schedules 13D and 13G will now require a structured, machine-readable data language. That means no more HTML files (except for exhibit filings) and, instead, a specific 13D/G XML file. This is similar to how Form 3’s and Form 4’s are filed.
This will make it easier for investors and markets to access, compile, and analyze disclosed information.
Ensuring the SEC rules are up-to-date is vital to maintaining the fairness and equity of the industry that we all serve. We need modern rules for modern problems.
For more information on the rule update please see the SEC Fact Sheet: 33-11253-fact-sheet (sec.gov)
These changes are set to take place on September 30, 2024, for revised filing deadlines and December 18, 2024, for the structured data requirement.
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David Jackson
Assistant Manager - Typeset
David Jackson has 5+ years of experience in the Financial Services industry and is currently the Assistant Manager of Typeset at EdgarAgents. He’s a die-hard Knicks fan who thinks a championship is right around the corner. He clearly also believes in miracles.
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