Maintain Incentives for Investments in Public Companies

Companies need capital to grow. Hedge fund managers and other institutional investors play a critical role, engaging in detailed research and analysis of public companies and putting their money at risk. Healthy markets depend on this type of capital investment in successful companies, and investors are appropriately incentivized to engage in this behavior through returns they may earn on their investments.

Under longstanding SEC rules, institutional investors publicly report their long positions in public companies 45 days after the end of each quarter on Form 13F. We support this 45-day reporting period, as it provides information to the public while maintaining the value that firms devote to developing their investment strategy, which is the intellectual property of funds and their managers. A shorter reporting period would allow competitors to reverse engineer and copycat these investment strategies.

Separately from Form 13F, an institutional investor that acquires more than 5% of the shares of a public company and engages in activist activity must publicly report its position within 10 days on Schedule 13D. Engaged investors provide benefits to all investors through researching undervalued companies and using meaningful equity stakes to influence management to create value for shareholders. The SEC has carefully considered this issue and has the authority to adjust the reporting time.