76896 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

1Unless otherwise noted, when we refer to the 

Exchange Act, or any paragraph of the Exchange 

Act, we are referring to 15 U.S.C. 78a of the United 

States Code, at which the Exchange Act is codified, 

and when we refer to rules under the Exchange Act, 

or any paragraph of these rules, we are referring to 

title 17, part 240 of the Code of Federal Regulations 

[17 CFR part 240], in which these rules are 

published. 

2Unless otherwise noted, when we refer to 

Regulation S–T, or any paragraph of the rules 

thereunder, we are referring to title 17, part 232 of 

the Code of Federal Regulations [17 CFR part 232], 

in which these rules are published. 

3Unless otherwise noted, when we refer to 

Regulation 13D–G, we are referring to title 17, part 

240 of the Code of Federal Regulations [17 CFR part 

240], in which 17 CFR 240.13d–1 through 240.13f– 

1 are published. 

4See infra note 22 for a discussion of certain 

technical amendments we are adopting that the 

Commission did not previously propose. 

5See Modernization of Beneficial Ownership 

Reporting, Release Nos. 33–11030; 34–94211 (Feb. 

10, 2022) [87 FR 13846 (Mar. 10, 2022)] (‘‘Proposing 

Release’’). On Apr. 28, 2023, the Commission 

reopened the comment period for the Proposing 

Release in connection with the addition to the 

comment file of a memorandum prepared by staff 

of the Commission’s Division of Economic and Risk 

Analysis. See Reopening of Comment Period for 

Modernization of Beneficial Ownership Reporting, 

Release Nos. 33–11180; 34–97405 (Apr. 28, 2023) 

[88 FR 28440 (May 4, 2023)] (‘‘Reopening Release’’). 

That memorandum provided supplemental data 

and analysis related to certain economic effects of 

the Proposed Amendments. See Memorandum of 

the Staff of the Division of Economic and Risk 

Analysis, Supplemental data and analysis on 

certain economic effects of proposed amendments 

regarding the reporting of beneficial ownership 

(Apr. 28, 2023), available at https://www.sec.gov/ 

comments/s7-06-22/s70622-20165251-334474.pdf 

(‘‘DERA Memorandum’’). 

6See generally letters submitted in connection 

with the Proposed Amendments, available at 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 232 and 240 

[Release Nos. 33–11253; 34–98704; File No. 

S7–06–22] 

RIN 3235–AM93 

Modernization of Beneficial Ownership 

Reporting 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule; guidance. 

SUMMARY: The Securities and Exchange 

Commission (‘‘Commission’’) is 

adopting amendments to certain rules 

that govern beneficial ownership 

reporting. The amendments generally 

shorten the filing deadlines for initial 

and amended beneficial ownership 

reports filed on Schedules 13D and 13G. 

The amendments also clarify the 

disclosure requirements of Schedule 

13D with respect to derivative 

securities. We also are expanding the 

timeframe within a given business day 

by which Schedules 13D and 13G must 

be filed, and separately requiring that 

Schedule 13D and 13G filings be made 

using a structured, machine-readable 

data language. Further, we discuss how, 

under the current rules, an investor’s 

use of a cash-settled derivative security 

may result in the person being treated 

as a beneficial owner of the class of the 

reference equity security. We also are 

providing guidance on the application 

of the current legal standard found in 

section 13(d)(3) and 13(g)(3) of the 

Securities Exchange Act of 1934 to 

certain common types of shareholder 

engagement activities. Finally, we are 

making certain technical revisions. 

DATES: 

Effective dates: The amendments are 

effective on February 5, 2024. 

Compliance dates: See section II.G. 

FOR FURTHER INFORMATION CONTACT: 

Nicholas Panos, Senior Special Counsel, 

and Valian Afshar, Senior Special 

Counsel, Division of Corporation 

Finance, at (202) 551–3440, U.S. 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 20549. 

SUPPLEMENTARY INFORMATION: We are 

adopting amendments to 17 CFR 

240.13d–1 (‘‘Rule 13d–1’’), 17 CFR 

240.13d–2 (‘‘Rule 13d–2’’), 17 CFR 

240.13d–3 (‘‘Rule 13d–3’’), 17 CFR 

240.13d–5 (‘‘Rule 13d–5’’), 17 CFR 

240.13d–6 (‘‘Rule 13d–6’’), 17 CFR 

240.13d–101 (‘‘Rule 13d–101’’), and 17 

CFR 240.13d–102 (‘‘Rule 13d–102’’) 

under the Securities Exchange Act of 

1934 [15 U.S.C. 78a et seq.] (‘‘Exchange 

Act’’).1 We also are adopting 

amendments to 17 CFR 232.13 (‘‘Rule 13 

of Regulation S–T’’) and 17 CFR 232.201 

(‘‘Rule 201 of Regulation S–T’’) under 

17 CFR part 232 (‘‘Regulation S–T’’).2 In 

addition, we are rescinding 17 CFR 

240.13d–7 (‘‘Rule 13d–7’’). 

Table of Contents 

I. Introduction 

II. Discussion of the Final Amendments 

A. Amendments to Rules 13D–1 and 13D– 

2 and Rules 13 and 201 of Regulation S– 

T To Revise Filing Deadlines and Filing 

Date Assignment 

1. Rule 13d–1(a), (e), (f), and (g) 

2. Rule 13d–1(b), (c), and (d) 

3. Rule 13d–2(a) and (b) 

4. Rule 13d–2(c) and (d) 

5. Rules 13(a)(4) and 201(a) of Regulation 

S–T 

B. Proposed Amendment to Rule 13D–3 

Regarding the Use of Cash-Settled 

Derivative Securities 

1. Proposed Amendment 

2. Comments Received 

3. Commission Guidance 

C. Proposed Amendments to Rule 13D–5 

1. Proposed Rule 13d–5(b)(1)(i), (b)(2)(i), 

and (b)(1)(ii) 

2. Proposed Rule 13d–5(b)(1)(iii) and 

(b)(2)(ii) 

3. Proposed Rule 13d–5(b)(1)(iv) and 

(b)(2)(iii) 

D. Proposed Amendments to Rule 13D–6 

To Create Certain Exemptions 

1. Proposed Amendments 

2. Comments Received 

3. Final Amendments 

E. Amendment to Schedule 13D To Clarify 

Disclosure Requirements Regarding 

Derivative Securities 

1. Proposed Amendment 

2. Comments Received 

3. Final Amendment 

F. Structured Data Requirement for 

Schedules 13D and 13G 

1. Proposed Amendment 

2. Comments Received 

3. Final Amendment 

G. Compliance Dates 

III. Other Matters 

IV. Economic Analysis 

A. Overview 

B. Baseline 

1. Current Schedule 13D and 13G Filing 

Requirements 

2. Market Trends 

3. Affected Parties and Current Market 

Practices 

C. Economic Effects of the Final Rules 

1. Shortened Initial Schedule 13D Filing 

Deadline 

2. Shortened Schedule 13G Filing 

Deadlines 

3. Other Amendments 

D. Reasonable Alternatives to the Final 

Rules 

1. Alternative Filing Deadlines 

2. Tiered Approaches 

3. Modify Structured Data Requirement 

V. Paperwork Reduction Act 

A. Summary of the Collections of 

Information 

B. Summary of Comment Letters on PRA 

Estimates 

C. Burden and Cost Estimates for the Final 

Amendments 

VI. Regulatory Flexibility Act Certification 

Statutory Authority 

I. Introduction 

We are amending certain rules within 

17 CFR 240.13d–1 through 240.13f–1 

(‘‘Regulation 13D–G’’) 3 and Regulation 

S–T to modernize the beneficial 

ownership reporting requirements and 

improve their operation and efficacy. 

Some 4 of these amendments are based 

on the amendments that the 

Commission proposed in 2022 

(‘‘Proposed Amendments’’).5

Specifically, we are adopting revisions 

to the deadlines for Schedule 13D and 

Schedule 13G filings. We also are 

adopting certain related technical 

changes to Regulation S–T that the 

Commission proposed in connection 

with these amendments. Further, we are 

requiring that Schedule 13D and 13G 

filings be submitted using a structured, 

machine-readable data language. 

In response to the comments we 

received on the Proposed 

Amendments,6 however, we are making 


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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 76897 

https://www.sec.gov/comments/s7-06-22/ 

s70622.htm. Unless otherwise specified, all 

references in this release to comment letters are to 

comments submitted on the Proposed 

Amendments. Further, on June 22, 2023, the 

Commission’s Investor Advisory Committee 

(‘‘IAC’’) adopted recommendations (‘‘IAC 

Recommendations’’) with respect to the Proposed 

Amendments. See U.S. Securities and Exchange 

Commission Investor Advisory Committee, 

Recommendation of the Market Structure 

Subcommittee of the SEC Investor Advisory 

Committee on SEC Proposed Amendments to 

Regulation 13D–G, Proposed Rule 10B–1, and 

Proposed Rule 9j–1 (June 22, 2023), available at 

https://www.sec.gov/files/spotlight/iac/20230622- 

recommendation-regarding-sec-proposedamendments-regulation-13d-g-proposed-rule-10b-1- 

and.pdf. The IAC was established in Apr. 2012 

pursuant to section 911 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act [Pub. 

L. 111–203, sec. 911, 124 Stat. 1376, 1822 (2010)] 

(‘‘Dodd-Frank Act’’) to advise and make 

recommendations to the Commission on regulatory 

priorities, the regulation of securities products, 

trading strategies, fee structures, the effectiveness of 

disclosure, and initiatives to protect investor 

interests and to promote investor confidence and 

the integrity of the securities marketplace. We 

discuss the IAC Recommendations in connection 

with the comments received on the Proposed 

Amendments below. See infra sections II.A.1.b, 

II.A.2.b, II.B.2, and II.C.1.b. In addition, on Sept. 21, 

2022, the IAC held a meeting that included a panel 

discussion on the Proposed Amendments. See the 

agenda for that meeting, including the panelists that 

discussed the Proposed Amendments, at https://

www.sec.gov/spotlight/investor-advisorycommittee/iac092122-agenda.htm. 

7As used in this release (including for purposes 

of proposed Rule 13d–3(e)), the term ‘‘derivative 

security’’ has the meaning set forth in 17 CFR 

240.16a–1(c) (‘‘Rule 16a–1(c)’’). See Rule 16a–1(c) 

(defining ‘‘derivative securities’’ as including 

certain rights, such as options, warrants, convertible 

securities, stock appreciation rights, or similar 

rights ‘‘with an exercise or conversion privilege at 

a price related to an equity security, or similar 

securities with a value derived from the value of an 

equity security,’’ excluding certain enumerated 

rights, obligations, interests, and options). For 

purposes of proposed Rule 13d–3(e), the term 

‘‘derivative security’’ would not have included a 

security-based swap, as defined in section 3(a)(68) 

of the Exchange Act and the rules and regulations 

thereunder (‘‘SBS’’). As the context requires, 

references to ‘‘SBS’’ in this release includes both 

the singular (‘‘security-based swap’’) and plural 

(‘‘security-based swaps’’) form. See Proposing 

Release at 13864 & nn.110–114. 

8As used in this release, a ‘‘covered class’’ is a 

class of equity securities described in section 

13(d)(1) of the Exchange Act and Rule 13d–1(i) and 

generally means, with limited exception, a voting 

class of equity securities registered under section 12 

of the Exchange Act. 

9See infra note 22 and sections II.C.2 and II.C.3 

for a discussion of the proposed amendments to 

Rule 13d–5 that we are adopting. 

10The term ‘‘business day’’ currently is not 

defined in section 13(d) or 13(g) or any rule of 

Regulation 13D–G. Accordingly, we are amending 

17 CFR 240.13d–1(i) (‘‘Rule 13d–1(i)’’) by adopting 

a new paragraph (i)(2) that defines ‘‘business day’’ 

for purposes of Regulation 13D–G to mean any day, 

other than Saturday, Sunday, or a Federal holiday, 

from 12 a.m. to 11:59 p.m. Eastern Time. See infra 

notes 14 and 134 for further discussion of our new 

definition of ‘‘business day.’’ 

11Throughout this release, we refer to an initial 

Schedule 13D filing obligation as being incurred 

under Rule 13d–1(a) when a person ‘‘acquires 

beneficial ownership of more than 5% of a covered 

class,’’ among other similar formulations. These 

formulations refer to the requirement in Rule 13d– 

1(a), which currently states that ‘‘[a]ny person who, 

after acquiring directly or indirectly the beneficial 

ownership of any equity security of a [covered 

class], is directly or indirectly the beneficial owner 

of more than five percent of the class shall, within 

10 days after the acquisition, file with the 

Commission, a . . . Schedule 13D.’’ 

12The institutional investors qualified to report 

on Schedule 13G, in lieu of Schedule 13D and in 

reliance upon Rule 13d–1(b), include a broker or 

dealer registered under section 15 of the Exchange 

Act, a bank as defined in section 3(a)(6) of the 

Exchange Act, an insurance company as defined in 

section 3(a)(19) of the Exchange Act, an investment 

company registered under section 8 of the 

Investment Company Act of 1940, a person 

registered as an investment adviser under section 

203 of the Investment Advisers Act of 1940, a 

parent holding company or control person (if 

certain conditions are met), an employee benefit 

plan or pension fund that is subject to the 

provisions of the Employee Retirement Income 

Security Act of 1974, a savings association as 

defined in section 3(b) of the Federal Deposit 

Insurance Act, a church plan that is excluded from 

the definition of an investment company under 

section 3(c)(14) of the Investment Company Act of 

1940, non-U.S. institutions that are the functional 

equivalent of any of the institutions listed in Rule 

13d–1(b)(1)(ii)(A) through (I), so long as the nonU.S. institution is subject to a regulatory scheme 

that is substantially comparable to the regulatory 

scheme applicable to the equivalent U.S. 

institution, and related holding companies and 

groups (collectively, ‘‘Qualified Institutional 

Investors’’ or ‘‘QIIs’’). 17 CFR 240.13d–1(b)(1)(ii). In 

addition, under Rule 13d–1(b), in order to qualify 

to report on Schedule 13G in lieu of Schedule 13D, 

a QII must have acquired securities in the covered 

class in the ordinary course of business and not 

with the purpose nor with the effect of changing or 

influencing the control of the issuer, nor in 

connection with or as a participant in any 

transaction having such purpose or effect. 17 CFR 

240.13d–1(b)(1)(i). 

13The term ‘‘Exempt Investor’’ as used in this 

release refers to persons holding beneficial 

ownership of more than 5% of a covered class, but 

who have not made an acquisition of beneficial 

ownership subject to section 13(d). For example, 

persons who acquire all of their securities prior to 

the issuer registering the subject securities under 

the Exchange Act are not subject to section 13(d). 

In addition, persons who acquire no more than 2% 

of a covered class within a 12-month period are 

exempted from section 13(d) by section 13(d)(6)(B). 

In both cases, however, those persons are subject to 

section 13(g). Amendments to Beneficial Ownership 

Reporting Requirements, Release No. 34–39538 

(Jan. 12, 1998) [63 FR 2854, n.8 (Jan. 16, 1998)]; see 

also Proposing Release at 13856, n.55. 

14Any reference to ‘‘day’’ in this release means 

‘‘calendar day,’’ and those terms may be used 

interchangeably. Any reference to ‘‘business day’’ 

means ‘‘business day,’’ as we are defining that term. 

See supra note 10 and infra note 134 for discussions 

of our new definition of ‘‘business day.’’ 

15 In addition, we are retaining the requirement in 

Rule 13d–1(b)(2) that a QII file its initial Schedule 

13G on a more expedited basis if its beneficial 

ownership exceeds 10% of a covered class. 17 CFR 

240.13d–1(b)(2). We are amending that rule, 

however, to require that such an initial Schedule 

13G be filed within five business days after the end 

of the first month in which the QII’s beneficial 

ownership exceeds 10% of a covered class, 

computed as of the last day of the month, rather 

than the current requirement of 10 calendar days 

after month-end. 

16The term ‘‘Passive Investors’’ as used in this 

release refers to beneficial owners of more than 5% 

but less than 20% of a covered class who can certify 

under Item 10 of Schedule 13G that the subject 

securities were not acquired and are not held for 

the purpose or effect of changing or influencing the 

control of the issuer of such securities and were not 

acquired in connection with or as a participant in 

any transaction having such purpose or effect. 

Amendments to Beneficial Ownership Reporting 

Requirements, Release No. 34–39538 (Jan. 12, 1998) 

[63 FR 2854, n.9 (Jan. 16, 1998)]. These investors 

are ineligible to report beneficial ownership 

pursuant to Rule 13d–1(b) or (d) but are eligible to 

report beneficial ownership on Schedule 13G in 

reliance upon Rule 13d–1(c). 

certain adjustments from the proposal. 

For example, we are not adopting 

proposed 17 CFR 240.13d–3(e) (‘‘Rule 

13d–3(e)’’) to deem certain holders of 

cash-settled derivative securities 7 as 

beneficial owners of the reference 

covered class.8 Instead, we discuss how, 

under current Rule 13d–3, persons 

using these types of derivative securities 

may already be subject to regulation as 

beneficial owners. We also are not 

adopting many of the proposed 

amendments to Rules 13d–5 9 and 13d– 

6. Instead, we are issuing guidance on 

the application of the current legal 

standard found in sections 13(d)(3) and 

13(g)(3) to certain common types of 

shareholder engagement activities. 

With respect to the Schedule 13D and 

Schedule 13G filing deadlines, we are 

amending the following rules: 

• 17 CFR 240.13d–1(a) (‘‘Rule 13d– 

1(a)’’): Shortening the filing deadline for 

the initial Schedule 13D to within five 

business days 10 after the date on which 

a person acquires beneficial ownership 

of more than five percent of a covered 

class; 11

• 17 CFR 240.13d–1(e), (f), and (g) 

(‘‘Rule 13d–1(e), (f), and (g)’’): 

Shortening the filing deadline for the 

initial Schedule 13D required to be filed 

by certain persons who become 

ineligible to report on Schedule 13G in 

lieu of Schedule 13D to five business 

days after the event that causes the 

ineligibility; 

• 17 CFR 240.13d–1(b) and (d) (‘‘Rule 

13d–1(b) and (d)’’): Shortening the 

deadline for the initial Schedule 13G 

filing for Qualified Institutional 

Investors (‘‘QIIs’’) 12 and Exempt 

Investors 13 to within 45 days 14 after the 

end of the calendar quarter in which 

beneficial ownership first exceeds five 

percent of a covered class; 15

• 17 CFR 240.13d–1(c) (‘‘Rule 13d– 

1(c)’’): Shortening the deadline for 

Passive Investors 16 to file an initial 

Schedule 13G in lieu of Schedule 13D 

to within five business days after the 

date on which they acquire beneficial 

ownership of more than five percent of 

a covered class; 

• 17 CFR 240.13d–2(a) (‘‘Rule 13d– 

2(a)’’): Revising the deadline for filing 

amendments to Schedule 13D to two 

business days after the date on which a 

material change occurs; 


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17When we refer to ‘‘Eastern Time’’ in this 

release, we mean Eastern Standard Time or Eastern 

Daylight Saving Time, whichever is currently in 

effect. 18This rule applies to filing deadlines expressed 

both in calendar days and in business days. For 

example, for filing deadlines expressed in calendar 

days, if the deadline falls on a Federal holiday, a 

Saturday, or a Sunday, then the filing may be made 

on the next business day thereafter. See infra note 

268. 19See Rule 13(a)(2) of Regulation S–T. We also 

are amending 17 CFR 232.201(a) (‘‘Rule 201(a) of 

Regulation S–T’’) to make the temporary hardship 

exemption set forth in that rule—which applies to 

unanticipated technical difficulties preventing the 

timely preparation and submission of an electronic 

filing—unavailable to Schedules 13D and 13G, 

including any amendments thereto. 

• 17 CFR 240.13d–2(b) (‘‘Rule 13d– 

2(b)’’): Shortening the deadline for 

Schedule 13G amendments filed 

pursuant to that provision to 45 days 

after the end of the calendar quarter in 

which a reportable change occurs; 

• 17 CFR 240.13d–2(c) (‘‘Rule 13d– 

2(c)’’): Shortening the filing deadline for 

Schedule 13G amendments filed 

pursuant to that provision to five 

business days after the end of the month 

in which beneficial ownership first 

exceeds 10 percent of a covered class, 

and thereafter upon any deviation by 

more than five percent of the covered 

class, with these requirements applying 

if the thresholds were crossed at any 

time during a month; and 

• 17 CFR 13d–2(d) (‘‘Rule 13d–2(d)’’): 

Revising the deadline for Schedule 13G 

amendments filed pursuant to that 

provision to two business days after the 

date on which beneficial ownership 

exceeds 10 percent of a covered class, 

and thereafter upon any deviation by 

more than five percent of the covered 

class. 

In addition, we are amending Rule 

13d–2(b) to require that an amendment 

to a Schedule 13G be filed only if a 

‘‘material change’’ occurs (replacing the 

current rule text that requires an 

amendment upon the occurrence of 

‘‘any change’’ in the facts previously 

reported). Further, we are amending 17 

CFR 232.13(a) (‘‘Rule 13(a) of Regulation 

S–T’’) to permit Schedules 13D and 

13G, and any amendments thereto, that 

are submitted by direct transmission 

commencing on or before 10 p.m. 

Eastern Time 17 on a given business day 

to be deemed to have been filed on the 

same business day.18 This amendment 

should provide additional time for 

beneficial owners to prepare and submit 

their Schedule 13D or 13G filings.19 The 

following table summarizes the changes 

we are adopting with respect to 

Schedule 13D and 13G filings, as 

described more fully in section II.A: 

Issue Current Schedule 13D New Schedule 13D Current Schedule 13G New Schedule 13G 

Initial Filing Deadline ............... Within 10 days after acquiring 

beneficial ownership of more 

than 5% or losing eligibility 

to file on Schedule 13G. 

Rule 13d–1(a), (e), (f), and 

(g).

Within five business days after 

acquiring beneficial ownership of more than 5% or losing eligibility to file on 

Schedule 13G. Rule 13d– 

1(a), (e), (f), and (g).

QIIs & Exempt Investors: 45 

days after calendar year-end 

in which beneficial ownership exceeds 5%. Rule 13d– 

1(b) and (d).

QIIs: 10 days after month-end 

in which beneficial ownership exceeds 10%. Rule 

13d–1(b).

QIIs & Exempt Investors: 45 

days after calendar quarterend in which beneficial ownership exceeds 5%. Rule 

13d–1(b) and (d). 

QIIs: Five business days after 

month-end in which beneficial ownership exceeds 

10%. Rule 13d–1(b). 

Passive Investors: Within 10 

days after acquiring beneficial ownership of more than 

5%. Rule 13d–1(c).

Passive Investors: Within five 

business days after acquiring beneficial ownership of 

more than 5%. Rule 13d– 

1(c). 

Amendment Triggering Event .. Material change in the facts 

set forth in the previous 

Schedule 13D. Rule 13d– 

2(a).

Same as current Schedule 

13D: Material change in the 

facts set forth in the previous 

Schedule 13D. Rule 13d– 

2(a).

All Schedule 13G Filers: Any 

change in the information 

previously reported on 

Schedule 13G. Rule 13d– 

2(b).

QIIs & Passive Investors: Upon 

exceeding 10% beneficial 

ownership or a 5% increase 

or decrease in beneficial 

ownership. Rule 13d–2(c) 

and (d).

All Schedule 13G Filers: Material change in the information 

previously reported on 

Schedule 13G. Rule 13d– 

2(b). 

QIIs & Passive Investors: 

Same as current Schedule 

13G: Upon exceeding 10% 

beneficial ownership or a 5% 

increase or decrease in beneficial ownership. Rule 13d– 

2(c) and (d). 

Amendment Filing Deadline .... Promptly after the triggering 

event. Rule 13d–2(a).

Within two business days after 

the triggering event. Rule 

13d–2(a).

All Schedule 13G Filers: 45 

days after calendar year-end 

in which any change occurred. Rule 13d–2(b).

QIIs: 10 days after month-end 

in which beneficial ownership exceeded 10% or there 

was, as of the month-end, a 

5% increase or decrease in 

beneficial ownership. Rule 

13d–2(c).

All Schedule 13G Filers: 45 

days after calendar quarterend in which a material 

change occurred. Rule 13d– 

2(b). 

QIIs: Five business days after 

month-end in which beneficial ownership exceeds 

10% or a 5% increase or decrease in beneficial ownership. Rule 13d–2(c). 

Passive Investors: Promptly 

after exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. Rule 13d– 

2(d).

Passive Investors: Two business days after exceeding 

10% beneficial ownership or 

a 5% increase or decrease 

in beneficial ownership. Rule 

13d–2(d). 

Filing ‘‘Cut-Off’’ Time ............... 5:30 p.m. Eastern Time. Rule 

13(a)(2) of Regulation S–T.

10 p.m. Eastern Time. Rule 

13(a)(4) of Regulation S–T.

All Schedule 13G Filers: 5:30 

p.m. Eastern Time. Rule 

13(a)(2) of Regulation S–T.

All Schedule 13G Filers: 10 

p.m. Eastern Time. Rule 

13(a)(4) of Regulation S–T. 

As noted above, we are not adopting 

proposed Rule 13d–3(e). Instead, we 

discuss the circumstances in which a 

holder of a cash-settled derivative 

security, excluding SBS, may be deemed 

the beneficial owner of the reference 

covered class under Rule 13d–3. We 

also are not adopting the proposed 

exemption in 17 CFR 240.13d–6(d) 


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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 76899 

20But see infra note 22 and sections II.C.2 and 3 

for a discussion of the proposed amendments to 

Rule 13d–5 that we are adopting. 

21Under this structured data requirement, only 

the exhibits to Schedules 13D and 13G will remain 

unstructured. 

22Specifically, as proposed, we are: (1) changing 

the title of Rule 13d–5 from ‘‘Acquisition of 

securities’’ to ‘‘Acquisition of beneficial 

ownership’’; (2) revising 17 CFR 240.13d–5(a) 

(‘‘Rule 13d–5(a)’’) to conform the text to the new 

title; (3) redesignating current Rule 13d–6 as new 

17 CFR 240.13d–6(a) (‘‘Rule 13d–6(a)’’); and (4) 

redesignating current 17 CFR 240.13d–5(b)(2) 

(‘‘Rule 13d–5(b)(2)’’) as new 17 CFR 240.13d–6(b) 

(‘‘Rule 13d–6(b)’’). The Commission did not receive 

any substantive comments on these amendments, so 

we are adopting them as proposed for the reasons 

set forth in the Proposing Release. We also are 

making other technical changes not included in the 

Proposing Release, namely: (1) rescinding in its 

entirety Rule 13d–7 because Congress already 

repealed the statutory requirements under sections 

13(d)(1), (d)(2), (g)(1), and (g)(2) for beneficial 

owners to deliver a copy of a Schedule 13D or 13G, 

and any amendments thereto, to the issuer of the 

covered class and any national securities exchanges 

where such equity securities are listed, see Public 

Law 111–203, 124 Stat. 1900 929R(a)(1)(B) through 

(4)(B) (2010); (2) making conforming amendments 

to Schedules 13D and 13G to remove the notes in 

those Schedules that refer to Rule 13d–7 and its 

requirements; (3) correcting incorrect cross 

references in Item 8 of Schedule 13G; and (4) 

replacing the gender-based pronouns used in Rules 

13d–1, 13d–3, 13d–6, 13d–101, and 13d–102 with 

gender-neutral phrases and making additional 

conforming edits to the surrounding text as 

necessary. Although the Commission did not 

propose these amendments, we find good cause, in 

accordance with the Administrative Procedure Act 

(‘‘APA’’), Public Law 79–404, 60 Stat. 237 (June 11, 

1946), that, in light of their technical nature, notice 

and public comment in respect of these 

amendments is impracticable, unnecessary, or 

contrary to the public interest. 5 U.S.C. 553(b)(3)(B). 

23 15 U.S.C. 78m(d)(1). 

24 17 CFR 240.13d–1(a) (requiring that a Schedule 

13D be filed ‘‘within 10 days after the acquisition’’ 

of beneficial ownership of more than 5% of a 

covered class). 

25Section 13(d)(1) of the Exchange Act was 

enacted by the Ninetieth Congress in 1968 through 

the approval of Senate Bill 510. 

26 17 CFR 240.13d–1(b). 

27 17 CFR 240.13d–1(c). 

28The provision at 17 CFR 240.12b–2 (‘‘Rule 12b– 

2 of Regulation 12B’’) defines the term ‘‘control’’ to 

mean ‘‘the possession, direct or indirect, of the 

power to direct or cause the direction of the 

management and policies of a person, whether 

through the ownership of voting securities, by 

contract, or otherwise.’’ The provision at 17 CFR 

240.12b–1 sets forth the scope of Regulation 12B 

and provides that all rules contained in Regulation 

12B ‘‘shall govern . . . all reports filed pursuant to 

section[ ] 13.’’ 

29Whether investors are engaged in activity with 

the purpose or effect of changing or influencing 

control of an issuer, and thus holding beneficial 

ownership with a disqualifying purpose or effect, 

ordinarily is a determination that would be based 

upon the specific facts and circumstances. For that 

reason, the Commission has not provided extensive 

guidance on this issue. The Commission has 

Continued 

(‘‘Rule 13d–6(d)’’), which the 

Commission proposed to enable certain 

persons to transact in derivative 

securities in the ordinary course of 

business without concern that they had 

formed a group under section 13(d)(3) or 

13(g)(3), in part because we are not 

adopting proposed Rule 13d–3(e). 

To further clarify the disclosure 

requirements with respect to derivative 

securities, particularly cash-settled 

derivative securities, held by a person 

required to report on Schedule 13D, the 

Commission is adopting an amendment 

to Schedule 13D. Specifically, we are 

amending Item 6 of Schedule 13D, 

codified at Rule 13d–101, to remove any 

implication that a person is not required 

to disclose interests in all derivative 

securities that use a covered class as a 

reference security. This amendment is 

intended to eliminate any ambiguity 

regarding the scope of the disclosure 

obligations of Item 6 of Schedule 13D as 

to derivative securities, including with 

respect to any derivative not originating 

with, or offered or sold by, the issuer, 

such as a cash-settled option or SBS. 

As noted above, we are not adopting 

most of the proposed substantive 

amendments to Rule 13d–5.20 We also 

are not adopting proposed 17 CFR 

240.13d–6(c) (‘‘Rule 13d–6(c)’’), which 

would have specified certain 

circumstances under which two or more 

persons may coordinate and consult 

with one another and engage with an 

issuer without being subject to 

regulation as a group. Instead, we are 

issuing guidance regarding the 

appropriate legal standard for 

determining whether a group is formed. 

This guidance is intended to provide 

clarity on the circumstances under 

which a person may be deemed to have 

formed a group with another person or 

persons within the meaning of sections 

13(d)(3) and 13(g)(3). 

We are adopting the proposed 

requirement that Schedules 13D and 

13G be filed using a structured, 

machine-readable data language. We 

are, therefore, now requiring that all 

disclosures, including quantitative 

disclosures, textual narratives, and 

identification checkboxes, on Schedules 

13D and 13G be filed using an XMLbased language.21 This requirement is 

intended to make it easier for investors 

and other market participants to access, 

compile, and analyze information that is 

disclosed on Schedules 13D and 13G. 

Finally, we also are adopting certain 

technical revisions, some of which were 

not included among the Proposed 

Amendments.22

II. Discussion of the Final Amendments 

A. Amendments to Rules 13d–1 and 

13d–2 and Rules 13 and 201 of 

Regulation S–T To Revise Filing 

Deadlines and Filing Date Assignment 

We are adopting a series of 

amendments to the deadlines for filing 

initial and amended beneficial 

ownership reports on Schedules 13D 

and 13G and expanding the timeframe 

within a given business day in which 

such filings may be timely made. These 

amendments are listed in section I 

above and discussed in more detail 

below. 

1. Rule 13d–1(a), (e), (f), and (g) 

Section 13(d)(1) of the Exchange Act 

requires a disclosure statement to be 

filed ‘‘within ten days after [acquiring 

beneficial ownership of more than five 

percent of a covered class] or within 

such shorter time as the Commission 

may establish by rule.’’ 23 Consistent 

with this provision, Rule 13d–1(a) sets 

forth the 10-day filing deadline for the 

initial Schedule 13D.24 Although the 

Dodd-Frank Act amended section 

13(d)(1) to grant the Commission the 

authority to shorten the deadline for 

filing the initial Schedule 13D, the 10- 

day deadline has not been updated 

since it was enacted more than 50 years 

ago.25

Rule 13d–1(e), (f), and (g) set forth the 

initial Schedule 13D filing obligations 

for investors who are no longer eligible 

to rely upon Rule 13d–1(b) 26 or (c) 27

(which permit investors to file the more 

abbreviated Schedule 13G in lieu of the 

longer-form Schedule 13D). Rule 13d– 

1(e), (f), and (g) ensure that initial 

Schedule 13D filings uniformly are 

subject to a 10-day deadline, regardless 

of whether the beneficial owners were 

previously eligible to file a Schedule 

13G in lieu of the Schedule 13D. 

Rule 13d–1(e) applies to persons who 

have been filing a Schedule 13G in lieu 

of Schedule 13D in reliance upon either 

Rule 13d–1(b) or (c). Rule 13d–1(b) and 

(c) both provide that a person may not 

rely on those provisions if he or she 

beneficially owns the relevant equity 

securities with the purpose or effect of 

changing or influencing the control of 

the issuer.28 Institutional and noninstitutional beneficial owners who are 

unable to certify that they do not hold 

beneficial ownership for the purpose of 

or with the effect of changing or 

influencing the control of the issuer or 

in connection with any transaction that 

would have such purpose or effect, as 

described more fully under Item 10 of 

Schedule 13G, or certain institutional 

investors that also acquire or hold 

beneficial ownership outside of the 

ordinary course of business, are 

considered to have, for purposes of this 

release, a ‘‘disqualifying purpose or 

effect.’’ 29 Rule 13d–1(e)(1) requires 


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previously expressed the view that most 

solicitations in support of a proposal specifically 

calling for a change of control of the company (e.g., 

a proposal to seek a buyer for the company or a 

contested election of directors or a sale of a 

significant amount of assets or a restructuring of a 

corporation) would clearly have that purpose and 

effect. For a more expansive discussion of the 

Commission’s reasoning and factors to consider 

when making this determination, see Amendments 

to Beneficial Ownership Reporting Requirements, 

Release No. 34–39538 (Jan. 12, 1998) [63 FR 2854 

(Jan. 16, 1998)]. 

30Proposing Release at 13851. 

31 Id. 

32 Id. at 13852. 

33Proposing Release at 13850, 13852. 

34 Id. at 13854. 

35 Id. 

36Throughout the release, in describing some of 

the comments we received on the Proposed 

Amendments, we focus on those commenters that 

responded to a specific request for comment or 

question raised in the Proposing Release or 

Reopening Release, or that addressed a specific 

Proposed Amendment. We note that several 

commenters expressed general support or 

opposition for the Proposed Amendments or raised 

concerns or made recommendations that are 

unrelated to or beyond the scope of the Proposed 

Amendments; we do not, however, summarize all 

of their comments in this release. For the sake of 

brevity, we also do not cite letters that substantially 

duplicate comments made in other letters that we 

cite in this release. For example, in response to the 

Reopening Release, a number of commenters 

submitted substantially identical letters generally 

supporting some of the Proposed Amendments and 

expressing concerns or making recommendations 

with respect to other parts of the Proposed 

Amendments. See, e.g., Letter Type B, available at 

https://www.sec.gov/comments/s7-06-22/s70622- 

typeb.htm; Letter Type C, available at https://

www.sec.gov/comments/s7-06-22/s70622-typec.pdf. 

We also note that several commenters submitted 

letters with substantially similar views as those 

expressed in Letter Type B, but with the letters 

worded sufficiently differently that they could not 

be consolidated with Letter Type B. See, e.g., letter 

from Gerardo Cruz (June 27, 2023). We note the 

same with respect to Letter Type C. See, e.g., letters 

from Chad Thompson (June 29, 2023); Bert Abanes 

(June 28, 2023). See infra note 37 for a discussion 

of Letter Type A. See infra note 458 for a discussion 

of Letter Type D and Letter Type E. 

37See, e.g., letters from Committee on Federal 

Regulation of Securities of the Section of Business 

Law of the American Bar Association (Apr. 28, 

2022) (‘‘ABA’’) (expressly supporting only the 

proposed amendment to Rule 13d–1(a), but noting 

that ‘‘[t]he Committee is not unanimous in this 

view’’ and that ‘‘[t]here is support among some 

members of the Committee to further shorten the 

initial filing deadline to one or two calendar days’’ 

and that ‘‘there are other members of the Committee 

that suggest a five business day deadline is more 

appropriate’’); Brandon Rees, Deputy Director of 

Corporations and Capital Markets, AFL–CIO (Apr. 

11, 2022) (‘‘AFL–CIO’’) (expressly supporting only 

the proposed amendment to Rule 13d–1(a)); 

Americans for Financial Reform Education Fund 

(Apr. 11, 2022) (‘‘AFREF’’) (same); Americans for 

Financial Reform Education Fund, American 

Federation of Labor and Congress of Industrial 

Organizations (AFL–CIO), Communications 

Workers of America (CWA), Interfaith Center on 

Corporate Responsibility (ICCR), Public Citizen 

(June 27, 2023) (‘‘AFREF, et al.’’) (same); 

Anonymous (Feb. 19, 2022) (‘‘Anonymous 1’’); 

Anonymous (Feb. 19, 2022) (‘‘Anonymous 3’’); 

Anonymous (Feb. 20, 2022) (‘‘Anonymous 5’’); 

Anonymous (Mar. 14, 2022) (‘‘Anonymous 11’’); 

Anonymous (Mar. 14, 2022) (‘‘Anonymous 12’’); 

Anthony R., Individual Investors (Feb. 18, 2022) 

(‘‘Anthony R.’’); Better Markets (Apr. 11, 2022) 

(‘‘Better Markets I’’) (same); Better Markets (June 27, 

2023) (‘‘Better Markets II’’) (same); Maria Ghazal, 

Senior Vice President and Counsel, Business 

Roundtable (Apr. 11, 2022) (‘‘BRT’’) (same); Curtis 

Robinson (Feb. 18, 2022) (‘‘C. Robinson’’); Richard 

F. McMahon, Jr., Senior Vice President, Energy 

Supply & Finance Edison Electric Institute (Mar. 22, 

2022) (‘‘EEI’’); An Investor, Engineer (Apr. 4, 2022) 

(‘‘Engineer’’); Mark R. Allen, Executive Vice 

such persons to file their initial 

Schedule 13D within 10 days of losing 

their Schedule 13G eligibility because 

they beneficially own a covered class 

with a disqualifying purpose or effect. 

Similarly, Rule 13d–1(f) applies to 

persons who have been filing a 

Schedule 13G in lieu of Schedule 13D 

in reliance on Rule 13d–1(c). Rule 13d– 

1(c) provides that persons may not rely 

on that provision if they beneficially 

own 20 percent or more of a covered 

class. Rule 13d–1(f)(1) currently 

requires that such persons file their 

initial Schedule 13D within 10 days of 

losing their Schedule 13G eligibility 

because they beneficially own 20 

percent or more of a covered class. 

Finally, Rule 13d–1(g) applies to 

persons who have been filing a 

Schedule 13G in lieu of Schedule 13D 

in reliance upon Rule 13d–1(b). Only 

QIIs may rely on Rule 13d–1(b). Further, 

in order to rely on Rule 13d–1(b), a QII 

must beneficially own the relevant 

equity securities in the ordinary course 

of its business. Rule 13d–1(g) currently 

requires that such persons either file 

their initial Schedule 13D or amend 

their Schedule 13G to indicate that they 

are now relying on Rule 13d–1(c) 

(assuming they are eligible to rely on 

that rule) within 10 days of losing their 

Schedule 13G eligibility under Rule 

13d–1(b) because they either no longer 

are a QII or no longer beneficially own 

the relevant equity securities in the 

ordinary course of their business. 

Rule 13d–1(e), (f), and (g) operate as 

regulatory safeguards that reestablish 

the application of Rule 13d–1(a) to 

beneficial owners who previously relied 

on Rule 13d–1(b) or (c). Under Rule 

13d–1(e), (f), and (g), beneficial owners 

‘‘shall immediately become subject to’’ 

Rules 13d–1(a) and 13d–2(a), which 

provisions are reinstated anew with 

respect to those persons the moment 

they become ineligible to rely upon Rule 

13d–1(b) and (c). 

a. Proposed Amendments 

In the Proposing Release, the 

Commission proposed to amend Rule 

13d–1(a) to require a Schedule 13D to be 

filed within five days after the date on 

which a person acquires beneficial 

ownership of more than five percent of 

a covered class. The Commission stated 

that the deadline for filing an initial 

Schedule 13D should be revised in light 

of advances in technology and 

developments in the financial markets 

and noted that shortening that deadline 

would be consistent with previous 

efforts to accelerate public disclosures 

of material information to the market.30

The Commission also asserted that the 

proposed five-day deadline would 

maintain an appropriate balance 

between the requirement that material 

information be timely disseminated to 

investors and the competing interest 

that undue burdens not be imposed in 

the change of control context.31 In 

addition, the Commission stated that it 

was mindful of the need to balance the 

market’s demand for timely information 

and the administrative burden placed 

upon a filer to adequately and 

accurately prepare that information.32

Finally, the Commission noted that the 

current 10-day filing deadline 

‘‘contributes to information asymmetries 

that could harm investors’’ and stated 

that shortening that deadline could 

increase transparency and provide 

assurance ‘‘that transactions are not 

being made based on mispriced 

securities caused by a prolonged lag in 

the dissemination of market-moving 

information,’’ thereby improving 

investor confidence, market efficiency, 

and liquidity.33

In the Proposing Release, the 

Commission also proposed to amend the 

initial Schedule 13D filing deadline 

under Rule 13d–1(e)(1), (f)(1), and (g) for 

largely the same reasons that it 

proposed to amend Rule 13d–1(a). 

Specifically, the Commission proposed 

to make conforming revisions to Rule 

13d–1(e), (f), and (g) so that persons 

who initially elected to report beneficial 

ownership on Schedule 13G, in lieu of 

a Schedule 13D, but subsequently lost 

their eligibility would be treated no 

differently from persons who make a 

Schedule 13D their initial filing.34

Accordingly, the Commission proposed 

to amend Rule 13d–1(e), (f), and (g) to 

make the required Schedule 13D—or, in 

the case of Rule 13d–1(g), the 

amendment to Schedule 13G indicating 

that the filer is now relying on Rule 

13d–1(c), if applicable—due no later 

than five days after the date on which 

the person became ineligible to report 

on Schedule 13G.35

b. Comments Received 

Commenters 36 expressed a range of 

views on the proposed amendments to 

Rule 13d–1(a), (e), (f), and (g). A number 

of commenters supported shortening the 

deadline for filing an initial Schedule 

13D from 10 days to five days.37 Several 


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President, FedEx Corporation (Apr. 12, 2022) 

(‘‘FedEx’’); Freeport-McMoRan Inc./Douglas N. 

Currault II, Senior Vice President and General 

Counsel (Apr. 11, 2022) (‘‘Freeport-McMoRan’’); 

Tyler Gellasch, Executive Director, Healthy Markets 

Association (Mar. 22, 2022) (‘‘HMA I’’); Healthy 

Markets Association (Apr. 29, 2022) (‘‘HMA II’’) 

(same); Jack Pieper (Feb. 21, 2022) (‘‘J. Pieper’’); 

Joshua Soucie, Managing Director, Singularity 

Acquisitions LLC (Feb. 21, 2022) (‘‘J. Soucie’’); 

Jonah (Feb. 18, 2022) (‘‘Jonah’’); Juan, Relationship 

Banker II (Feb. 19, 2022) (‘‘Juan’’); Brandon Rees, 

Deputy Director of Corporations and Capital 

Markets, AFL–CIO (June 6, 2022) (‘‘Labor Unions’’) 

(same); Mark C. (Feb. 19, 2022) (‘‘Mark C.’’); Mike 

(Feb. 23, 2022) (‘‘Mike’’); Jeffrey S. Davis, Senior 

Vice President and Senior Deputy General Counsel, 

Nasdaq, Inc. (Apr. 12, 2022) (‘‘Nasdaq’’); National 

Investor Relations Institute (Apr. 15, 2022) (‘‘NIRI’’) 

(same); Phillip Worts (July 29, 2023) (‘‘P. Worts’’); 

Marc Steinberg, Radford Chair in Law and Professor 

of Law, Southern Methodist University (Feb. 22, 

2022) (‘‘Prof. Steinberg’’) (same); Society for 

Corporate Governance (Apr. 13, 2022) (‘‘SCG’’) 

(same); Christina Maguire, President and Chief 

Executive Officer, Society for Corporate Governance 

and Matthew D. Brusch, President and CEO, 

National Investor Relations Institute (July 7, 2023) 

(‘‘SCG & NIRI’’) (same); Tammy Baldwin, Sherrod 

Brown, Bernard Sanders, Elizabeth Warren, Tammy 

Duckworth, and Jeffrey A. Merkley, United States 

Senators (July 18, 2022) (‘‘Sen. Baldwin, et al.’’) 

(same); SIFMA Asset Management Group, William 

Thurn, Managing Director, SIFMA AMG (Apr. 11, 

2022) (‘‘SIFMA AMG’’) (same); Theodore N. Mirvis, 

Adam O. Emmerich, David A. Katz, Sabastian V. 

Niles, Jenna E. Levine, and Carmen X. W. Lu (Feb. 

10, 2022) (‘‘T. Mirvis, et al.’’); Taj Reilly (Feb. 19, 

2022) (‘‘T. Reilly’’); TIAA (Apr. 11, 2022) (‘‘TIAA’’) 

(same); Todd (Feb. 19, 2022) (‘‘Todd’’); Wachtell, 

Lipton, Rosen & Katz (Apr. 11, 2022) (‘‘WLRK I’’) 

(same); Wachtell, Lipton, Rosen & Katz (Oct. 4, 

2022) (‘‘WLRK II’’); see also Letter Type B; Letter 

Type C. We note that commenters submitted a 

substantively identical version of the letter from 

Sen. Baldwin, et al. an additional 16 times. See 

Letter Type A, available at https://www.sec.gov/ 

comments/s7-32-10/s73210-typeb.pdf. As such, 

every citation to the letter from Sen. Baldwin, et al. 

in this release should also be read as a citation to 

those additional 16 submissions of the 

substantively identical letter. 38See, e.g., letters from ABA; Anthony R.; FedEx; 

Freeport-McMoRan; Jonah; P. Worts; T. Mirvis, et 

al. 

39See, e.g., letters from ABA; AFREF, et al.; 

Anonymous 5; Anonymous 12; Better Markets I; 

FedEx; Freeport-McMoRan; Labor Unions; Nasdaq; 

P. Worts; Sen. Baldwin, et al. 

40See, e.g., letters from C. Robinson (‘‘I welcome 

all rules that require more disclosure and faster 

times to report[ ].’’); J. Soucie; P. Worts. 

41See letter from TIAA; see also letter from P. 

Worts. 

42See letter from SCG; see also letter from NIRI 

(stating that the proposal ‘‘would also ensure that 

public companies are not ambushed and are better 

prepared to respond to an activist investor who has 

accumulated a significant position over a relatively 

short period of time’’). 

43See letter from HMA I. 

44See, e.g., letters from ABA; AFREF; AFREF, et 

al.; Better Markets II; Freeport-McMoRan; Nasdaq; 

NIRI; SCG; SCG & NIRI; see also Letter Type C. One 

of these commenters stated that ‘‘if the filing 

window is shortened, institutional investors will be 

better able to manage liquidity shocks in a way that 

serves their ultimate beneficiaries, instead of 

costing them money by unknowingly selling 

undervalued shares.’’ See letter from AFREF, et al. 

45See letter from Labor Unions. 

46See letter from NIRI. 

47See letter from Better Markets I; see also letter 

from Better Markets II. 

48See, e.g., letters from ABA; AFL–CIO; Better 

Markets I; BRT; C. Robinson; FedEx; FreeportMcMoRan; HMA I; HMA II; NIRI; SCG; Sen. 

Baldwin, et al.; T. Mirvis, et al.; T. Reilly; WLRK 

I; WLRK II; see also Letter Type B. 

49See letter from WLRK II. The commenter also 

noted that ‘‘successful activism campaigns have 

been run by stockholders with relatively small 

stakes, often below or well below 5%.’’ Id. 

50See, e.g., letters from Sen. Baldwin, et al.; T. 

Mirvis, et al. 

51See letter from BRT. 

52See letter from NIRI. 

53See, e.g., letters from AFREF; Better Markets I; 

SCG; Sen. Baldwin, et al.; WLRK II. 

54See letter from WLRK II. 

commenters asserted that the proposed 

amendments would increase the 

timeliness and quality of information for 

market participants.38 A number of 

commenters asserted that the proposed 

amendments would increase 

transparency and fairness in the 

financial markets.39

Several commenters identified 

potential specific benefits of the 

proposed amendments. For example, 

some commenters asserted that the 

proposed amendments would be 

particularly beneficial for retail 

investors by providing them with 

additional information and 

transparency.40 Another commenter 

stated that the proposed amendments 

would enable investors and the market 

to ‘‘better track when beneficial owners 

take significant positions in covered 

securities for purposes of controlling or 

exerting influence over issuers, resulting 

in more informed decision-making by 

investors and more accurate valuation of 

securities by the market.’’ 41

Other commenters highlighted 

potential downsides of the current 10- 

day deadline. For example, one 

commenter described the 10-day 

deadline as costly to public companies 

and investors generally and based its 

support for the proposed amendments 

‘‘on the fundamental concept that a 

public company must have timely 

information about its owners in order to 

engage with them effectively and 

respond promptly to their concerns.’’ 42

Another commenter stated that 

‘‘[i]nvestors’ and market participants’ 

abilities to prudently manage their 

positions and exposures is materially 

undermined by the arbitrary, 

unnecessary, discriminatory delay in 

reporting.’’ 43

Several commenters suggested that 

the proposed amendments would 

reduce information asymmetry among 

market participants.44 Other 

commenters raised similar information 

asymmetry-based concerns regarding 

the 10-day filing deadline. For example, 

one commenter expressed concern that 

under the current deadline, pension 

funds are deprived of any short-term 

gains from hedge fund activism if they 

sell shares during the 10-day delay in 

disclosure of a beneficial ownership 

stake.45 Another commenter asserted 

that the current 10-day deadline 

‘‘disadvantages selling shareholders 

after the 5% threshold is reached and 

permits activist investors to ambush 

public companies, often by disclosing 

an ownership interest that far exceeds 

5% of shares outstanding.’’ 46 Further, 

one commenter suggested that the 

proposed amendments could help 

address information asymmetries that 

facilitate ‘‘stealth’’ accumulations at 

artificially low market prices, which 

purportedly transfer value from public 

investors to those activists engaged in 

seeking ownership, control, or influence 

over the target company.47

Other commenters supported the 

proposed amendments based on 

changes in technology and 

developments in the financial 

markets.48 For example, one commenter 

supported the proposal based on the 

‘‘increasing effectiveness of activist 

campaigns and their decreased cost due 

to advances in information technology 

and the rise of concentrated economic 

ownership in the United States,’’ citing 

‘‘cost-effective activism’’ due to both the 

fact that ‘‘little more than 10 to 15 

institutions are the target audience’’ and 

‘‘the Commission’s new universal proxy 

rule.’’ 49 Similarly, other commenters 

described the current Schedule 13D 

filing deadline as ‘‘outdated.’’ 50 One 

commenter agreed with the expressed 

concern in the Proposing Release that 

material information about potential 

change of control transactions is not 

being disseminated to the public in a 

manner that would be considered timely 

in today’s financial markets.51 One 

commenter cited an April 2020 survey 

it conducted of its members (composed 

of corporate officers and investor 

relations consultants) indicating that 82 

percent supported modernization of the 

Schedule 13D filing deadlines.52

Several commenters noted that many 

foreign jurisdictions require beneficial 

ownership reporting on a shorter 

deadline than currently required under 

Regulation 13D–G.53 One commenter 

disagreed with the notion expressed in 

the Proposing Release that the 

comparison of the beneficial ownership 

reporting deadline in the United States 

to foreign jurisdictions is imperfect 

because U.S. corporate law permits antitakeover provisions that are not present 

in those jurisdictions.54 To the contrary, 

that commenter asserted that some of 

those foreign jurisdictions are even less 


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55See id. The commenter also presented statistics 

indicating that, notwithstanding the stricter 

beneficial ownership reporting obligations and 

purportedly increased inhibitions on shareholder 

activism, those foreign jurisdictions have 

experienced increased shareholder activism in 

recent years. Id. Some commenters, however, 

disagreed with and questioned the utility of this 

analysis of foreign jurisdictions. See letters from 

Jose Ceballos, Council for Investor Rights and 

Corporate Accountability (Dec. 20, 2022) (‘‘CIRCA 

III’’); Richard B. Zabel, General Counsel Chief Legal 

Officer, Elliott Investment Management L.P. (Nov. 

21, 2022) (‘‘EIM III’’); see also letter from Richard 

B. Zabel, General Counsel Chief Legal Officer, 

Elliott Investment Management L.P. (June 27, 2023) 

(‘‘EIM IV’’) (reiterating the points made in the 

commenter’s letter dated Nov. 21, 2022). One of 

those commenters asserted that ‘‘regulatory 

structures, as well as cultural norms . . . mean that 

activism in non-U.S. markets is less prevalent than 

in the United States’’ which is ‘‘to the detriment of 

investors in those non-U.S. markets where, in many 

cases, there remains a lack of independent voices 

in the market able to hold boards and management 

accountable.’’ See letter from EIM III. The 

commenter also stated that, because activism is less 

prevalent in those foreign jurisdictions than in the 

U.S., ‘‘[s]ome level of increased activist engagement 

in a handful of non-U.S. markets . . . does not 

mean that the Commission should seek to emulate 

regulatory structures in those other jurisdictions.’’ 

Id. The other commenter noted that the analysis 

ignores that some of the cited foreign jurisdictions 

offer benefits to shareholders that the United States 

does not. See letter from CIRCA III. 

56See, e.g., letters from SCG; WLRK I. 

57See, e.g., letters from ABA; Anonymous 11; 

BRT; Freeport-McMoRan; J. Soucie; WLRK I. 

58See letter from WLRK I. 

59See letter from FedEx. 

60See, e.g., letters from ABA; AFREF; Better 

Markets I; Better Markets II; HMA II; Labor Unions; 

Sen. Baldwin, et al.; WLRK I. 61See letter from Better Markets I. The 

commenter stated that that many Schedule 13D 

filers currently do not avail themselves of the full 

10-day filing period, many activists are effective in 

their campaigns without reaching the 5% beneficial 

ownership reporting threshold, and the proposed 

five-day deadline would give activists enough time 

to accumulate profits before public disclosure of 

their goals, enabling them to offset the costs of their 

activism. Id.; see also letter from Better Markets II 

(reiterating the point made in its first letter and 

citing the data and analysis in the DERA 

Memorandum for support). 

62See letter from HMA II. 63See letters from Labor Unions; Sen. Baldwin, et 

al. One of those commenters noted that some of the 

most impactful ESG campaigns to date have 

occurred in Australia, where the beneficial 

ownership reporting deadline for a 5% stake is two 

business days, which ‘‘provides further evidence 

that a 10 day window is not needed to use 

shareholder activism to meaningfully change 

corporate behavior.’’ See letter from Sen. Baldwin, 

et al. The Commission is not expressing any view 

as to whether the measures described by the 

commenters referenced herein would constitute 

activities undertaken for the purpose of changing or 

influencing control of an issuer. Nothing stated in 

this release changes or supersedes the 

Commission’s prior guidance regarding whether 

certain soliciting activity has a control purpose or 

effect. See supra note 29. 

64See letter from AFL–CIO. 65See letter from WLRK I. 66See, e.g., letters from AFREF; Better Markets I; 

HMA II; Labor Unions; NIRI; SCG; Sen. Baldwin, et 

al.; WLRK I. 67See letter from AFREF. The commenter also 

noted that while hedge fund activism is associated 

with short-term increases in shareholder value, the 

evidence is much more mixed on the question of 

whether hedge fund activism results in long-term 

gains. Id.; see also letter from Better Markets I 

(stating that the benefits of shareholders seeking to 

acquire or influence corporate control and policy 

are mixed because some act out of short-term profit 

motives, not a desire to promote long-term value). 

68See letter from WLRK I. 

69See letter from SCG. The commenter also stated 

that although activists would have less time to buy 

additional shares after crossing 5% under the 

proposal, there is no shareholder protection 

rationale that would justify forcing other investors 

to subsidize activists’ efforts to build larger 

positions in issuers. Id. 

70See letter from NIRI. 

71See letter from Labor Unions. The commenter 

also asserted that the proposed amendments would 

benefit pension funds based on a study it cited that 

found that while company value tends to increase 

in the first three years after being targeted by an 

activist hedge fund, these gains tend to be reversed 

in the fourth and fifth years. Id.; see also letter from 

Sen. Baldwin, et al. (citing the same study for the 

proposition that ‘‘research . . . shows the stock 

price increase [associated with an activist’s 

Schedule 13D filing] is temporary and in fact the 

company is often in a weaker economic position 

post-activist intervention’’). But see letter from 

International Institute of Law and Finance (Nov. 1, 

2022) (‘‘Profs. Bishop and Partnoy II’’) (critiquing 

the cited study, noting, among other things, that ‘‘a 

simple analysis of the data, not undertaken in that 

study, shows that employment levels at firms 

targeted by activists decrease substantially in the 

years prior to an activist intervention, violating the 

parallel trends assumption that is required to make 

any sort of causal inference from the empirical 

design’’). 

72Public Law 90–439, 82 Stat. 454 (July 29, 1968). 

‘‘stockholder’’ and ‘‘activism’’ friendly 

than the United States, making 

corporate takeovers and activism more 

difficult, and described the corporate 

laws and corporate governance practices 

of those foreign jurisdictions as 

compared to the United States (focusing, 

in particular, on Delaware corporate 

law).55 Other commenters noted that the 

proposed amendments would be 

consistent with similar Commission 

efforts to accelerate filing deadlines.56

A number of commenters asserted 

that the proposed amendments would 

not impose significant costs or burdens 

on beneficial owners of more than five 

percent of a covered class.57 For 

example, one of those commenters 

stated that the compliance costs of the 

proposed amendments ‘‘are unlikely to 

be unduly burdensome, in a manner 

that outweighs the benefits’’ of the 

proposal given the nature of investors 

that generally file a Schedule 13D and 

the technology available to them.58

Another commenter agreed that the 

proposed amendments would be 

consistent in balancing investors’ need 

for adequate disclosures with the 

burdens placed on filers to accurately 

prepare required disclosures.59

Several commenters stated that the 

proposed amendments would not 

significantly reduce shareholder 

activism.60 For example, one 

commenter asserted that the proposed 

five-day deadline would not 

significantly impair the ability of 

activists to pursue their agendas.61

Another commenter questioned whether 

there is an empirical basis for asserting 

that the proposed amendments would 

prevent shareholder activism and 

engagement.62 Some commenters 

asserted that the proposed amendments 

would not interfere with shareholder 

activism on environmental, social, or 

governance (‘‘ESG’’) issues because 

many such activists are not Schedule 

13D filers.63 One commenter was ‘‘not 

persuaded that a 10-day delay in 

beneficial ownership disclosure after 

acquiring a 5 percent stake is needed to 

incentivize . . . [a] large investor to be 

an activist investor.’’ 64 And, one 

commenter asserted that the proposed 

amendments are ‘‘more likely to 

adversely affect short-term behaviors 

than long-term oriented activism.’’ 65

In addition, a number of commenters 

stated that shareholder activism is not 

uniformly beneficial for issuers and 

their shareholders.66 For example, one 

commenter asserted that hedge fund 

activism could be contributing to an 

emphasis on short-term gains over 

sustainable, long-term growth that 

benefits longer-term investors.67 One 

commenter noted that while a Schedule 

13D filing by an activist may often lead 

to an immediate bump in the issuer’s 

stock price, there is no compelling 

evidence that activist interventions 

deliver long-term value to 

shareholders.68 One commenter asserted 

that the current 10-day deadline may 

discourage companies from going 

public, inhibiting capital formation, 

based on the threat of activism and ‘‘the 

burden of being subject to attacks by 

activist investors, a number of whom 

have short-term agendas.’’ 69 One 

commenter stated that activist investors 

often pressure companies and their 

management to agree to their short-term 

demands that may or may not be in the 

long-term interests of shareholders, 

employees, and other stakeholders.70

Further, one commenter cited a study 

indicating that activist hedge fund 

campaigns targeting public companies 

are associated with a reduction in jobs, 

research and development spending, 

and capital expenditures, which 

arguably harms employees.71

Finally, commenters raised a variety 

of other points in support of the 

proposed amendments. For example, 

one commenter stated that the balance 

that Congress sought to strike in the 

Williams Act 72 was between activist 

investors seeking to change companies 


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73See letter from HMA II. The commenter also 

stated that there is no evidence or legitimate policy 

rationale to support a connection between the 

purported benefits of activist strategies generally on 

the one hand, and the purported need to preserve 

the ability of the small subset of investors engaged 

in them to be able to trade while in possession of 

material, non-public information to the detriment of 

other investors—for precisely 10 days. Id. 

74See letter from AFREF. The commenter stated 

that the proposed amendments could decrease the 

likelihood of issuers that are not targeted by activist 

investors taking preemptive steps (e.g., 

overspending on short-term shareholder payouts 

and forgoing investments necessary for long-term 

financial health and growth) to avoid becoming 

targets of activism. Id. The commenter also asserted 

that the proposed amendments would benefit 

shareholders and other market participants by 

facilitating sound corporate governance. Id. For 

example, the commenter stated that a shortened 

filing deadline would help investors ensure their 

asset managers are fulfilling their fiduciary duties 

and help inform the education and advocacy efforts 

of those with a stake in proxy contests, shareholder 

resolutions, and other important votes. Id. 

75See letter from Better Markets I. 

76See, e.g., letters from Adrian Day, RIA (Feb. 12, 

2022) (‘‘A. Day’’); Daniel Austin, Director, U.S. 

Policy and Regulation, Alternative Investment 

Management Association (Apr. 11, 2022) (‘‘AIMA’’); 

Ben Mason (June 26, 2023) (‘‘B. Mason’’); Bernard 

Sharfman (Mar. 22, 2022) (‘‘B. Sharfman’’) 

(expressly opposing only the proposed amendment 

to Rule 13d–1(a)); CIRCA (Apr. 11, 2022) (‘‘CIRCA 

I’’) (same); CIRCA III (same); Milan Dalal, CIRCA 

(June 27, 2023) (‘‘CIRCA IV’’) (same); Charles F. 

Pohl, Chairman, Dodge & Cox (Apr. 12, 2022) 

(‘‘Dodge & Cox’’); Edwin Fraser (Apr. 11, 2022) (‘‘E. 

Fraser’’) (same); Susan Olson, General Counsel and 

Sarah Bessin, Associate General Counsel, 

Investment Company Institute (Apr. 7, 2022) (‘‘ICI 

I’’); Irenic Capital Management LP (Apr. 11, 2022) 

(‘‘ICM’’) (same); Marcus Frampton (Mar. 16, 2022) 

(‘‘M. Frampton’’) (same); Managed Funds 

Association (Apr. 11, 2022) (‘‘MFA’’) (same); 

National Venture Capital Association (Apr. 11, 

2022) (‘‘NVCA’’) (same); Perkins Coie LLP (Apr. 12, 

2022) (‘‘Perkins Coie’’); Jeffrey N. Gordon, Professor 

of Law, Columbia Law School (June 20, 2022) 

(‘‘Prof. Gordon’’) (same); Robert Eccles and 

Shivaram Rajgopal (Mar. 31, 2022) (‘‘Profs. Eccles 

and Rajgopal’’) (same); Alan Schwartz, Sterling 

Professor, Yale Law School and the Yale School of 

Management and Steven Shavell, Samuel R. 

Rosenthal Professor of Law and Economics, Harvard 

Law School Director, John M. Olin Center for Law, 

Economics & Business, Harvard University (Apr. 12, 

2022) (‘‘Profs. Schwartz and Shavell I’’) (same); 

Alan Schwartz, Sterling Professor, Yale Law School 

and the Yale School of Management and Steven 

Shavell, Samuel R. Rosenthal Professor of Law and 

Economics, Harvard Law School Director, John M. 

Olin Center for Law, Economics & Business, 

Harvard University (May 15, 2022) (‘‘Profs. 

Schwartz and Shavell II’’) (same); Edward P. 

Swanson, Texas A&M University, Glen M. Young, 

Texas State University, and Christopher G. Yust, 

Texas A&M University (Feb. 19, 2022) (‘‘Profs. 

Swanson, Young, and Yust’’) (same); Rolf Parta 

(Apr. 7, 2022) (‘‘R. Parta’’) (same); Allison K. 

Thacker, President and Chief Investment Officer, 

Rice Management Company, Treasurer, William 

Marsh Rice University (Mar. 21, 2022) (‘‘Rice 

Management’’) (same); Jennifer Nadborny, Simpson 

Thacher Bartlett LLP (Apr. 11, 2022) (‘‘STB’’) 

(same); Donna Anderson, Marc Wyatt, and Bob 

Grohowski, T. Rowe Price (Apr. 11, 2022) (‘‘TRP’’) 

(same). 

77See, e.g., letters from AIMA; CIRCA I; CIRCA 

III; CIRCA IV; Dodge & Cox; ICM; MFA; Prof. 

Gordon; Profs. Eccles and Rajgopal; Profs. Schwartz 

and Shavell I: Profs. Schwartz and Shavell II; Profs. 

Swanson, Young, and Yust; Rice Management; TRP. 

78See letter from ICM. 

79See letter from AIMA. 

80See letter from Profs. Schwartz and Shavell II 

(emphasis in original); see also letter from Profs. 

Schwartz and Shavell I. 

81See letter from Profs. Swanson, Young, and 

Yust. The comment letter also stated that if the 

proposed accelerated initial Schedule 13D filing 

deadline reduces activists’ ability to profit from 

price discovery, the proposed amendments could 

reduce market efficiency. Id. 

82See letter from CIRCA I. In a separate letter, this 

commenter also disagreed with those supporting 

commenters that expressed concern about the 

negative effects that activists may have on targeted 

companies and cited data indicating that activist 

interventions benefit all shareholders in both the 

short- and long-term. See letter from CIRCA III. 

83See letter from Prof. Gordon; see also letter 

from ICM (predicting a reduction in shareholder 

activism and related benefits for other shareholders 

and stating that the predicted ‘‘harms . . . will be 

most pronounced at micro-, small-, and midcapitalization issuers . . . where the majority of 

active shareholder engagement occurs’’). 

84See, e.g., letters from AIMA; CIRCA I; CIRCA 

III; CIRCA IV; Dodge & Cox; ICM; Prof. Gordon; 

Profs. Swanson, Young, and Yust; TRP. In addition, 

one commenter did not oppose the proposal but 

expressed concern about the information 

asymmetry-based justification. See letter from 

Elliott Investment Management L.P. (Apr. 11, 2022) 

(‘‘EIM I’’). That commenter stated, among other 

things, that ‘‘the suggestion that an activist’s 

awareness of her confidential intention to build a 

position in a public company should prohibit her 

from trading is both illogical and inconsistent with 

established law’’ and contrasted the proposal with 

the ‘‘recently proposed short sale reporting 

rulemaking’’ in which ‘‘the Commission . . . 

expressly provided an alternative that protects the 

confidentiality of short sellers and their strategies, 

in recognition that disclosure would vitiate the 

value of their research.’’ Id. (citing Short Position 

and Short Activity Reporting by Institutional 

Investment Managers, Release No. 34–94313 (Feb. 

25, 2022) [87 FR 14950 (Mar. 16, 2022)] (‘‘Short 

Position Reporting Proposal’’)); see also letter from 

Richard B. Zabel, General Counsel & Chief Legal 

Officer, Elliott Investment Management L.P. (Sept. 

18, 2023). 

and those companies’ management—not 

between an activist investor and a 

company’s other investors.73 One 

commenter stated that the proposed 

amendments could moderate the 

sudden, abrupt changes in corporate 

governance that often occur in issuers 

targeted by activist investors.74 And, 

one commenter noted that the proposed 

amendments fall ‘‘squarely’’ within the 

Commission’s legal authority under 

section 929R of the Dodd-Frank Act and 

align with the Williams Act’s intent 

because Congress chose a 10-day 

deadline to accommodate the practical 

challenges associated with preparing 

and filing a Schedule 13D.75

A number of commenters opposed 

shortening the initial Schedule 13D 

filing deadline to five days.76 Several 

commenters expressed concern that the 

proposed amendments would 

disincentivize shareholder activism by 

reducing the amount of time that such 

shareholders have to accumulate 

positions in an issuer before filing a 

Schedule 13D, thereby depriving issuers 

and their shareholders of the positive 

benefits of such activism.77 For 

example, one commenter stated that ‘‘if 

active shareholders are unable to 

establish an economically efficient predisclosure ownership stake, public 

company shareholders (and the 

economy more broadly) will be less 

likely to benefit from the improved 

stock price performance that often 

attends the monitoring and engagement 

activities pursued by engaged 

shareholders, given that such 

shareholders would have difficulty 

justifying certain engagements with 

issuers.’’ 78 Similarly, another 

commenter asserted that the proposal 

would ‘‘mak[e] it more costly for 

blockholders to build a sufficient 

position to effect change’’ and ‘‘reduce 

the profitability of, and therefore the 

incentive to pursue, activist strategies,’’ 

which would ‘‘reduce management’s 

accountability to shareholders and 

corporate governance generally.’’ 79 And 

another commenter stated that 

‘‘although the SEC requires an activist 

buyer to disclose information that the 

buyer has acquired, the SEC fails to ask 

whether the buyer would acquire the 

information initially’’ and suggested 

that, under the proposed deadline, ‘‘the 

buyer would often be unlikely to make 

the original investment in 

information.’’ 80

In addition, one commenter expressed 

concern that the proposed amendments 

would disproportionately disincentivize 

shareholder activism that is targeted 

towards reforms other than a sale of the 

issuer.81 Another commenter asserted 

that the proposed amendments would 

inhibit an activist investor’s ability to 

make overtures to an issuer’s 

management prior to public disclosure 

and to consult with other shareholders 

to ensure that shareholders’ opinions 

and proposals are considered when 

approaching management.82 And, one 

commenter stated that the proposed 

amendments would particularly 

disincentivize activism at medium- and 

small-cap companies because a larger 

economic position is needed to offset 

the activists’ costs.83

Several commenters took issue with 

the information asymmetry concerns 

that the Commission expressed as a 

justification for the proposed 

amendments.84 For example, one 

commenter cited data indicating that 

shareholders who sell during the period 

after an activist accumulates more than 

five percent beneficial ownership but 

before the activist files its Schedule 13D 


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85See letter from Profs. Swanson, Young, and 

Yust. 86See, e.g., letters from CIRCA I; ICM; Prof. 

Gordon. These commenters also asserted that the 

Commission has long recognized the legitimacy of 

this asymmetry, including by allowing confidential 

treatment in Form 13F filings and in other contexts. 

Id. 87See, e.g., letters from CIRCA I; ICM; Prof. 

Gordon. 88See, e.g., letters from AIMA; ICM. Similarly, 

one commenter noted the absence of data indicating 

that shareholders are harmed by the timing of when 

they sell a security under the current Schedule 13D 

reporting regime and posited that shareholders 

selling during the 10-day period are generally 

sophisticated, non-retail investors seeking liquidity 

based on an investment strategy which is unrelated 

(and indifferent) to disclosure indicating whether 

an activist has a stake in the company. See letter 

from CIRCA III. 

89See letters from AIMA; TRP. 90See letter from ICM (citing Rondeau v. Mosinee 

Paper Corp., 422 U.S. 49 (1975)); see also letters 

from B. Sharfman (‘‘[T]he U.S. Supreme Court has 

repeatedly and unambiguously stated that the ‘sole 

purpose’ of the Williams Act was for the protection 

of investors who are confronted with a cash tender 

offer.’’ (citing Piper et al. v. Chris-Craft Industries, 

Inc., 430 U.S. 1 (1977)); EIM IV (citing Rondeau, 

422 U.S. 49, for the same proposition, but not 

expressly opposing the proposal). 

91See, e.g., letters from AIMA; CIRCA IV; Dodge 

& Cox; ICI I; ICM; Robert E. Bishop, Fellow, UC 

Berkeley School of Law Center for Law and 

Business, Frank Partnoy, Adrian A. Kragen 

Professor of Law, UC Berkeley School of Law (Apr. 

11, 2022) (‘‘Profs. Bishop and Partnoy I’’); STB; see 

also letter from Investment Adviser Association 

(Apr. 11, 2022) (‘‘IAA’’) (neither clearly supporting 

nor opposing the proposed amendments, but 

expressing certain concerns and making certain 

recommendations regarding the proposed 

amendments). 

92See, e.g., letters from AIMA; ICI I; ICM; STB. 

93See letter from ICI I. 

94See letter from IAA. The commenter cited legal 

developments since 1968, including various antitakeover mechanisms and the adoption of section 

13(f) and Form 13F, as well as certain technological 

developments that provide public companies with 

the benefit of nearly-contemporaneous insight into 

their shareholder base and that have facilitated 

management entrenchment as offsetting factors to 

any technological advancements during that time 

period that would increase the ease of making a 

Schedule 13D filing. Id. 

95See letter from Profs. Bishop and Partnoy I. The 

commenter further said that ‘‘given the 

development of poison pills, public company 

boards are no longer monitored by hostile 

takeovers, so activism is the remaining recourse.’’ 

Id. 

96See letter from B. Sharfman. 

97See letter from STB. The commenter noted that 

many Schedule 13D filers are former Exempt 

Investors who became disqualified to file on 

Schedule 13G because they acquired more than 2% 

beneficial ownership in a 12-month period. Id. The 

commenter also noted that many Schedule 13D 

filers are investors who seek a minority position 

and potentially a board seat (given their desire to 

more actively monitor their sizeable investment), 

but seek to work cooperatively with the issuer, with 

the goal of building shareholder value for all 

investors, and possess no intent to replace a 

majority of the board of directors, launch a tender 

offer, or make an offer to take the company private. 

Id. 

98See letters from CIRCA IV; ICM. 

99See letters from A. Day; E. Fraser. 

100See letter from NVCA. 

101See letter from Perkins Coie; see also letter 

from Jennifer W. Han, Executive Vice President, 

Chief Counsel & Head of Global Regulatory Affairs, 

Managed Funds Association and National 

Association of Private Fund Managers (July 24, 

2023) (‘‘MFA & NAPFM’’) (describing potential 

costs associated with the Proposed Amendments, 

but not expressly opposing the Proposed 

Amendments). 

102See letter from STB. For example, the 

commenter suggested that in order to avoid making 

a ‘‘late’’ filing with the Commission, beneficial 

owners may shift to boilerplate disclosures in their 

Schedule 13D filings, which can be prepared more 

quickly but are less useful to investors and 

regulators. Id. 

still generally benefit from that activist’s 

accumulation because the stock price 

generally increases prior to the 

Schedule 13D filing.85 Some 

commenters stated that the information 

asymmetry described in the Proposing 

Release is no different from the general 

asymmetry that exists in the market 

when any investor—activist or 

otherwise—determines to invest the 

time and resources to develop and then 

implement an investment thesis.86

Similarly, some commenters asserted 

that information asymmetry is a 

quintessential element of the U.S. 

capital markets where investors are, and 

should be, entitled to profit from their 

analysis, hard work, and risk taking.87

Other commenters stated that selling 

shareholders are not forced to sell their 

shares and do so voluntarily, either 

seeking liquidity or because they have 

doubts about the issuer’s prospects, and 

noted that such shareholders have the 

same access as the Schedule 13D filer to 

disclosures from both the issuer and 

insiders.88 Some commenters asserted 

that the Commission ignored the fact 

that although some investors may miss 

out on selling at an appreciated price 

once the Schedule 13D is filed, a larger 

number of investors generally will 

benefit from the efforts of an activist.89

Finally, one commenter asserted that 

the Williams Act was not intended to 

address information asymmetry-based 

concerns or the interests of shareholders 

who elect to sell prior to the disclosure 

of an initial Schedule 13D and cited to 

the legislative history and a U.S. 

Supreme Court decision to support such 

assertion.90

A number of commenters also 

disagreed with the Commission’s 

technological advancement- and 

financial market development-based 

justifications for the proposed 

acceleration of the beneficial ownership 

reporting deadlines.91 For example, 

some commenters asserted that neither 

Congress nor the Commission 

previously suggested that technological 

ability to file is or should be the primary 

basis to determine the appropriate filing 

deadlines for Schedules 13D and 13G.92

One commenter asserted that the 

Commission has not made significant 

technological advances over the years to 

its own systems that market participants 

rely on to prepare Schedules 13D and 

13G, making it challenging and costly 

for investors to gather the information 

about beneficial ownership they need to 

file Schedules 13D and 13G.93 One 

commenter asserted that technological 

advances do not support shortening the 

filing deadline as proposed because 

despite advances in technology, the 

filing process still has numerous 

operational components that take time 

to complete.94 Another commenter 

stated that recent trends indicate that 

activist investors are having a moderate 

and declining impact in the United 

States and, therefore, the Commission 

should ‘‘encourage new forms of 

activism, not suppress them.’’ 95

Several commenters expressed 

concerns that the proposed amendments 

do not align with the purpose or 

objectives of the Williams Act. For 

example, one commenter asserted that 

the proposed amendments ‘‘would 

necessarily be considered to be beyond 

[the Commission’s] statutory authority 

and an ‘abuse of discretion,’ if not 

‘arbitrary and capricious’ under the 

APA’’ because the proposed rule does 

not connect the proposed reduction in 

filing time with what the commenter 

described as the ‘‘sole purpose’’ of the 

Williams Act under Supreme Court 

precedent, namely the protection of 

shareholders confronted with a cash 

tender offer.96 Another commenter 

stated that not all of the investors who 

file on Schedule 13D are activist 

investors engaging in the types of 

activities the Williams Act seeks to 

regulate.97 Other commenters expressed 

concern that the proposed amendments 

would disrupt the balance that the 

Williams Act sought to strike.98

Some opposing commenters detailed 

the potential compliance burdens that 

the proposed amendments could 

impose. For example, some commenters 

expressed concern that the proposed 

five-day deadline would be unduly 

burdensome for smaller and noninstitutional beneficial owners.99 Other 

commenters asserted that the proposed 

amendments would present compliance 

challenges 100 and create significant 

reporting and monitoring burdens.101

One commenter expressed concern that 

the proposed amendments could 

negatively impact the ability of 

investors and their advisors to draft 

meaningful disclosures and engage in 

thoughtful analysis.102

Other commenters raised various 

other concerns regarding the proposed 


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103See, e.g., letters from AIMA; CIRCA I; CIRCA 

III; Dodge & Cox; ICM; M. Frampton; MFA; Rice 

Management; TRP. 

104See letter from AIMA. According to the 

commenter, ‘‘[m]ost investors will have a total 

aggregate investment in mind,’’ and ‘‘[w]hen the 

investor reaches this level and exceeds the 5% 

threshold, she files her Schedule 13D,’’ but ‘‘[t]his 

standard market practice in no way suggests that all 

other holders who are continuing to accumulate 

shares should be required to file earlier.’’ Id. 

105See letter from Profs. Swanson, Young, and 

Yust. 

106See letter from ICI I. 

107See letter from Rice Management. 

108See letters from ICM; R. Parta. 

109See letter from AIMA. 

110 Id. The commenter also stated that although 

some beneficial owners file a Schedule 13D before 

the end of the 10-day deadline, this does not 

support shortening the deadline because the 

decision as to when to file is based on each 

investor’s target accumulation level. Id. 

111See letter from Profs. Schwartz and Shavell I. 

112See letter from Corey (Feb. 19, 2022) 

(‘‘Corey’’). 

113See letter from Prof. Steinberg. 

114See letter from WLRK I. The commenter 

asserted that the proposed five-day deadline will 

still substantially fail to serve the purpose of the 

Williams Act to require the timely release of 

information to the investing public with respect to 

the accumulation of substantial ownership of an 

issuer’s voting securities. Id. According to the 

comment, this will ‘‘provide hedge funds and 

activist shareholders ample time to accrue 

significant stakes in an issuer and ‘‘improperly 

exploit, and profit from, information asymmetries at 

the expense of other public investors.’’ Id. The 

commenter also stated that the moratorium is 

necessary to address information asymmetries and 

ensure the markets have time to assess impact of 

Schedule 13D filing and likened it to the 10- 

business day cooling off period applicable to 

Passive Investors switching from Schedule 13G 

filers to Schedule 13D filers. Id. 

115See, e.g., letters from NIRI; SCG; SCG & NIRI; 

see also Letter Type C; letter from PL Salvati (Aug. 

9, 2023) (‘‘PL Salvati’’) (neither clearly supporting 

nor opposing the proposal, but recommending a 

two-business day deadline). 

116See letter from T. Reilly. 

117See, e.g., letters from AFREF; FreeportMcMoRan; HMA I. 

118See letter from Prof. Gordon. 

119See letter from A. Day. 

120See letters from ICM; STB. 

121See letter from ICM. 

122See letter from STB. 

amendments. For example, a number of 

commenters expressed concerns that the 

proposed amendments would increase 

management entrenchment and reduce 

shareholder engagement and corporate 

accountability.103 One commenter 

stated that although ‘‘some purchasers 

may file within fewer than the required 

10 days for Schedule 13D,’’ that ‘‘does 

not justify accelerating the reporting 

timeline.’’ 104 One commenter also 

noted that the proposed accelerated 

initial Schedule 13D filing deadline 

could result in activist investors relying 

more heavily on derivatives, such as 

total return swaps and call options.105

One commenter asserted that the 

Commission has not provided a 

compelling justification for the 

proposed amendments or provided 

evidence to support its concerns 

regarding information asymmetries and 

reporting gaps that would warrant the 

proposed acceleration of the beneficial 

ownership reporting deadlines.106 One 

commenter expressed concern that the 

proposed amendments would induce a 

front-running effect that would distort 

market pricing and increase market 

volatility.107 Other commenters asserted 

that investors already have access to all 

of the volume and price data for 

publicly traded companies that they 

need to take appropriate action and, 

therefore, do not need additional 

information regarding holdings by 

significant beneficial owners.108

In addition, one commenter expressed 

concern that the Commission has not 

cited a market event or failure related to 

the existing beneficial ownership regime 

to support the proposed 

amendments.109 That commenter 

distinguished the proposed 

amendments from other congressional 

efforts to accelerate public disclosures 

based on the fact that the proposed 

amendments apply to unrelated, thirdparty investors rather than issuers or 

insiders.110 Finally, one commenter 

asserted that the proposed amendments 

conflict with contract law in the United 

States, which generally refrains from 

imposing disclosure obligations on 

buyers of property.111

Some of the commenters that 

generally supported the proposed 

amendments also made various 

recommendations to the Commission. 

For example, one commenter 

recommended that the Commission 

require that an initial Schedule 13D be 

filed by the end of the day on which a 

person acquires beneficial ownership of 

more than five percent of a covered 

class.112 Another recommended that the 

Commission require that an initial 

Schedule 13D be filed within one 

calendar day of a person acquiring three 

percent, rather than more than five 

percent, of a covered class and that a 

person be prohibited from acquiring 

more than three percent until one 

business day after filing a Schedule 

13D.113 Similarly, one commenter 

recommended that the Commission 

require that an initial Schedule 13D be 

filed within one business day after 

crossing the five percent threshold and 

institute a moratorium on the 

acquisition of beneficial ownership of 

additional equity securities of an issuer 

by any acquirer required to file a 

Schedule 13D that would be in effect 

from the acquisition of a five percent 

beneficial ownership stake until two 

business days after filing the Schedule 

13D.114

Other supporting commenters 

recommended that the Commission 

require that an initial Schedule 13D be 

filed within two business days, 

consistent with the filing deadline for a 

Form 4.115 One supporting commenter 

recommended that the Commission 

require that an initial Schedule 13D be 

filed within three days rather than five 

days.116 Other supporting commenters 

recommended that the Commission 

consider further shortening the 

beneficial ownership reporting 

deadlines without specifying an 

alternative filing deadline.117

In addition, some of the commenters 

that generally opposed the proposed 

amendments made various 

recommendations to the Commission. 

For example, one recommended that 

rather than shortening the Schedule 13D 

filing deadline, the Commission should 

impose a prohibition on tipping by an 

activist as soon as it reaches the five 

percent threshold until it files a 

Schedule 13D.118 Another 

recommended that the Commission 

include an assets under managementbased threshold for the proposed 

accelerated Schedule 13D filing 

deadlines.119

Other opposing commenters 

recommended that the Commission 

consider a ‘‘tiered approach’’ to Rule 

13d–1(a).120 For example, one 

commenter suggested a tiered approach 

designed to vary the reporting deadline 

for an initial Schedule 13D based on the 

issuer’s market capitalization without 

any limitation on acquisitions during 

the period between the time that the 

investor acquires more than five percent 

of a covered class and the time that the 

initial Schedule 13D is filed.121 Another 

opposing commenter recommended that 

the Commission require those who cross 

certain thresholds (e.g., 10 percent) or 

accumulate certain amounts after 

crossing five percent (e.g., an additional 

three percent) to file on the more 

accelerated timeline, but allowing 

investors who trigger Schedule 13D 

filings for more technical reasons and 

who are not accumulating stock in 

connection with a potential activist 

engagement (e.g., proxy contests or 

intended take-private activity) to 

continue filing under the current 

regime.122

Some opposing commenters 

recommended that if the Commission 

revises the initial Schedule 13D filing 

deadline, it should adopt a different 

deadline than proposed. For example, 

one commenter recommended that the 


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123See letter from E. Fraser. The commenter also 

recommended that the Commission consider a 

provision for when a shareholder’s position goes 

over the 5% threshold because of ordinary 

corporate actions that result in the number of 

outstanding shares to drop such that the 

shareholder unwittingly holds over the 5% of 

outstanding shares and recommended that the 

Commission consider increasing the threshold from 

greater than 5% beneficial ownership to 10%. Id. 

124See letter from MFA. 125See, e.g., letters from Dodge & Cox; ICI I; 

SIFMA AMG; STB; see also IAC Recommendations 

(recommending that the Commission adopt a fivebusiness day deadline, rather than a five-calendar 

day deadline, for an initial Schedule 13D filing). 126See letters from Dodge & Cox; ICI I. 127See letter from STB; see also IAC 

Recommendations. 128See, e.g., letters from Jason Dunlop, Software 

Developer for the FAA (Feb. 19, 2022) (‘‘J. 

Dunlop’’); John Kennedy, Tax Paying American 

Citizen (Feb. 22, 2022) (‘‘J. Kennedy’’); Phillip, 

Retail Investor (Feb. 19, 2022) (‘‘Phillip’’). These 

commenters suggested that all beneficial ownership 

reports should be filed within one day. See also 

letter from Juan B. (Aug. 14, 2023) (‘‘Juan B.’’) 

(recommending that the initial Schedule 13D and 

13G filing deadlines under Rule 13d–1(a), (b), and 

(d) be shortened to one day). 

129See letter from Charles Jacobs, USCG (Feb. 20, 

2022) (‘‘C. Jacobs’’). 

130See letters from IAA; Profs. Bishop and 

Partnoy II; Robert Bishop, Associate Professor, Duke 

Law School, and Frank Partnoy, Adrian A. Kragen 

Professor of Law, UC Berkeley School of Law, 

Berkeley Haas (Affiliated Faculty) (June 27, 2023) 

(‘‘Profs. Bishop and Partnoy III’’). One of these 

commenters asserted that five calendar days would 

be extremely challenging for filers to obtain and 

verify all the information needed to ensure the 

accuracy and completeness of an initial Schedule 

13D filing. See letter from IAA. 

131See, e.g., letters from Chris McEntee, Retail 

Investor (Mar. 14, 2022) (‘‘C. McEntee’’); David 

Choate (Aug. 2, 2023) (‘‘D. Choate’’). These 

commenters suggested that all beneficial ownership 

reports should have a same-day filing deadline. 

132See, e.g., letters from IAA; Profs. Bishop and 

Partnoy III. One of these commenters recommended 

that the Commission use business days to give filers 

sufficient time to analyze and prepare Schedules 

13D and 13G and make it more likely that the 

Commission, issuers, and the marketplace will 

receive beneficial ownership information that is 

accurate and complete and asserted that the use of 

business days instead of calendar days when 

establishing the filing deadlines will not have a 

detrimental impact on the proposed benefits of 

shorter deadlines. See letter from IAA. Another of 

these commenters expressed the belief that ‘‘there 

is now a broad consensus that the final rule should 

be framed in terms of business (or trading) days.’’ 

See letter from Profs. Bishop and Partnoy III. 

133See letter from Committee on Securities Law 

of the Business Law Section of the Maryland State 

Bar Association (Apr. 11, 2022) (‘‘MSBA’’). 

134The term ‘‘business day’’ is not defined in 

section 13(d) or 13(g) or any rule of Regulation 

13D–G. Accordingly, in the Proposing Release, the 

Commission proposed to define ‘‘business day’’ for 

purposes of Regulation 13D–G to mean any day, 

other than Saturday, Sunday, or a Federal holiday, 

from 6 a.m. to 10 p.m. Eastern Time. Proposing 

Release at 13847, n.5. One commenter addressed 

this proposal, expressing concern that the proposed 

definition of ‘‘business day’’ could raise confusion 

as to on which business day a material change 

occurred if the event took place outside of the hours 

set forth in that definition (i.e., 6 a.m. to 10 p.m. 

Eastern Time). See letter from EIM I. Accordingly, 

the commenter recommended that the ‘‘business 

day’’ definition comprise the full 24-hour period of 

any given day based on the customary definition of 

the term. Id. To avoid the concern expressed by this 

commenter, we are adopting the commenter’s 

recommendation. As such, the term ‘‘business day’’ 

for purposes of Regulation 13D–G will be defined 

to mean any day, other than Saturday, Sunday, or 

a Federal holiday, from 12:00 a.m. to 11:59 p.m. 

Eastern Time. We believe this will avoid any 

confusion as to the date on which a beneficial 

ownership report is due if, for example, a person 

incurs a filing obligation before 6 a.m. or after 10 

p.m. on a day that is not a Saturday, Sunday, or 

Federal holiday. It is important to note, however, 

as stated at the outset of Regulation 13D–G, that 

Regulation S–T governs the preparation and 

submissions of filings in electronic format and 

should be read in conjunction with the rules 

contained within Regulation 13D–G, including 

Rules 13d–1 and 13d–2. Thus, even though the 

definition of ‘‘business day’’ encompasses an entire 

day, a Schedule 13D or 13G must be submitted by 

direct transmission to the Commission in 

accordance with the times set forth in Rule 13(a) of 

Regulation S–T in order to be deemed to have been 

filed on that day. See infra section II.A.5 for a more 

detailed discussion of Rule 13(a) of Regulation S– 

T, including the amendments we are adopting to 

extend the filing ‘‘cut-off’’ time for Schedules 13D 

and 13G. 

135Under section 21 of the Exchange Act, the 

Commission has the authority to investigate and 

enforce violations of section 13(d)(1) and Rule 13d– 

1(a) and may seek to impose various remedies for 

late filings, such as injunctive relief, cease-anddesist orders or civil monetary penalties. 

Importantly, no state of mind requirement exists for 

violations of section 13(d)(1) and corresponding 

Rule 13d–1(a). See SEC v. Levy, 706 F. Supp. 61, 

63–69 (D.D.C. 1989) (holding a defendant liable 

notwithstanding the defendant’s assertion that his 

attorney ‘‘misinformed defendant about his 

obligation to disclose’’ information on Schedule 

13D because scienter is not an element of such 

violations); see also SEC v. Savoy Indus., Inc., 587 

F.2d 1149, 1167 (D.C. Cir. 1978) (‘‘Indeed, the plain 

language of section 13(d)(1) gives no hint that 

intentional conduct need be found, but rather, 

appears to place a simple and affirmative duty of 

reporting on certain persons. The legislative history 

confirms that Congress was concerned with 

providing disclosure to investors, and not merely 

with protecting them from fraudulent conduct.’’); 

Oppenheimer & Co., Inc., 47 SEC 286, 1980 WL 

26901, at *1–2 (May 19, 1980) (‘‘We have 

previously held that the failure to make a required 

report, even though inadvertent, constitutes a 

willful violation.’’). To the extent a person willfully 

fails to comply with section 13(d), a beneficial 

owner also has exposure to criminal liability under 

section 32(a) of the Exchange Act. 

136We also are revising Rule 13d–1(a) to state that 

the initial Schedule 13D must be filed within five 

business days ‘‘after the date of such acquisition’’ 

rather than the current formulation of ‘‘after such 

acquisition.’’ This modification, which the 

Commission proposed, is intended to clarify that, 

for purposes of determining the filing deadline, the 

first day in the five-business day count towards 

reaching the deadline is the day after the date on 

which beneficial ownership of more than 5% is 

acquired (rather than the date of such acquisition). 

We also are adopting similar changes to Rule 13d– 

1(c) and (f)(1), as those rules currently contain 

language similar to the ‘‘after such acquisition’’ 

formulation currently in Rule 13d–1(a). We do not 

believe that a similar change is required for Rule 

13d–1(e) and (g), as those rules use different 

formulations. See 17 CFR 240.13d–1(e)(1) and (g) 

(currently requiring an initial Schedule 13D be filed 

‘‘within 10 days’’ of the filing trigger date). 

Commission consider extending the 

filing deadline (e.g., to 15 or 30 days) 

rather than accelerating it.123 One 

commenter recommended that the 

Commission require an initial Schedule 

13D be filed within eight days rather 

than the proposed five days.124 Other 

commenters recommended that the 

Commission require an initial Schedule 

13D be filed in five business days rather 

than five calendar days.125 Some of 

those commenters suggested that a fivebusiness day deadline would be more 

appropriate in light of the steps required 

to prepare and file an accurate Schedule 

13D,126 and one commenter noted that 

most analogous securities laws 

governing reporting of material changes 

(e.g., Form 8–K and Exchange Act 

section 16 filings) require filings within 

time periods designated in business 

days rather than calendar days.127

Finally, some commenters that 

neither clearly supported nor opposed 

the proposed amendments made 

recommendations to the Commission. 

Several commenters recommended an 

alternative filing deadline than 

proposed, with some suggesting that the 

Commission require an initial Schedule 

13D be filed within one day,128 within 

two days,129 five business days,130 or on 

the same day as the event triggering the 

filing obligation.131 Some commenters 

expressed a general preference for a 

deadline expressed in ‘‘business days’’ 

rather than ‘‘calendar days.’’ 132 And, 

one commenter recommended that to 

the extent the Commission is concerned 

about Schedule 13D filers acquiring 

additional shares after crossing the five 

percent threshold without public 

disclosure, it should prohibit trading 

after crossing the five percent threshold 

rather than accelerating the filing 

deadlines.133

c. Final Amendments 

We are amending Rule 13d–1(a), (e), 

(f), and (g) to shorten the initial 

Schedule 13D filing deadline. We are 

adopting a five-business day 134

deadline, however, rather than the 

proposed five-calendar day deadline 

based on the input we received from 

commenters. 

As noted above, Rule 13d–1(a) 

currently requires an initial Schedule 

13D to be filed within 10 days after the 

date on which a person acquires 

beneficial ownership of more than five 

percent of a covered class.135 We are 

amending Rule 13d–1(a) to require a 

Schedule 13D to be filed within five 

business days after the date 136 of such 

acquisition. Similarly, as discussed 

above, Rule 13d–1(e), (f), and (g) 

currently require an initial Schedule 

13D to be filed within 10 days after the 

date on which a person loses its 

Schedule 13G eligibility. We are 


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137See infra section II.A.5 for a discussion of our 

amendment to Rule 13(a)(4) of Regulation S–T, 

which extends the filing ‘‘cut-off’’ time for 

Schedules 13D and 13G from 5:30 p.m. Eastern 

Time to 10 p.m. Eastern Time. 

138See, e.g., letters from Better Markets I (noting 

‘‘technological advancements over the last 54 years 

[that] have reduced the need for a 10-day reporting 

period,’’ including ‘‘vastly more efficient data 

compilation methods’’); SCG (noting that ‘‘[e]very 

fund manager with the resources to amass a 5% 

stake in a company should have sufficient recordkeeping technology to determine’’ the amount of 

their beneficial ownership in a rapid manner); Leo 

E. Strine, Jr., Who Bleeds When the Wolves Bite? A 

Flesh-and-Blood Perspective on Hedge Fund 

Activism and Our Strange Corporate Governance 

System, 126 Yale L.J. 1870, 1895, 1960–61 (2017) 

(describing the ‘‘disclosure regime under Section 13 

of the Securities Exchange Act’’ as ‘‘antiquated’’ 

and stating that ‘‘[i]t seems entirely clear to me that 

the idea of Section 13 was that an investor should 

come public as soon as reasonably possible after 

hitting the 5% threshold and that the reporting 

deadline was due to what it took to type up, proof, 

and deliver to Washington the required filing in 

1968, when word processors and electronic filing 

with a button push did not exist’’). 

139 In mandating that all Schedules 13D and 13G 

be filed electronically, the Commission reasoned 

that such a transition was necessary to facilitate 

‘‘more rapid dissemination of, and easier access to, 

financial and other material information . . . than 

under our current paper filing system’’ and cited to 

‘‘increased efficiencies in the filing process, which 

will significantly reduce the filing time required 

under traditional methods of paper delivery.’’ See 

Rulemaking for EDGAR System, Release No. 34– 

35113 (Dec. 19, 1994) [59 FR 67752 (Dec. 30, 1994)]; 

Mandated EDGAR Filing for Foreign Issuers, 

Release No. 34–45922 (May 14, 2002) [67 FR 36678 

(May 24, 2002)]; see also Adam O. Emmerich et al., 

Fair Markets and Fair Disclosure: Some Thoughts 

on the Law and Economics of Blockholder 

Disclosure, and the Use and Abuse of Shareholder 

Power, 3 Harv. Bus. L. Rev. 135, 143 (2013) (noting 

that the 10-day Schedule 13D filing deadline 

reflected ‘‘commercial and technological realities 

that existed in 1968, [which] would have included 

the time required to mail the Schedule 13D to the 

SEC’s office’’); letter from Wachtell, Lipton, Rosen 

& Katz to Elizabeth M. Murphy, Sec’y, U.S. Sec. & 

Exch. Comm’n (Mar. 7, 2011) (‘‘Wachtell Petition’’) 

at 1–7, available at https://www.sec.gov/rules/ 

petitions/2011/petn4-624.pdf (petitioning the 

Commission to propose amendments to the 

beneficial ownership reporting rules to, among 

other things, shorten the Schedule 13D filing 

deadline from 10 days to one business day based, 

in part, on ‘‘[c]hanges in technology, acquisition 

mechanics and trading practices [that] have given 

investors the ability to make these types of reports 

with very little advance preparation time’’ and the 

fact that ‘‘the markets rely on the expectation that 

material information wil1 be disseminated 

promptly and widely, in no small part due to the 

impact of the internet and online information 

exchange’’). 140See, e.g., letter from SCG. This commenter 

noted, for example, that ‘‘investment managers [in 

1968] didn’t have access to email, instant 

messaging, fax machines, market data terminals, 

computer-assisted trading technology, or alternative 

‘dark pool’ trading venues that help facilitate the 

accumulation of significant positions.’’ Id. The 

commenter also noted that ‘‘[d]aily trading volumes 

on U.S. exchanges, which averaged 22 million 

shares in 1968, have grown by more than 1,000 

times.’’ Id. 

141Shortening the Securities Transaction 

Settlement Cycle, Release No. 34–96930 (Feb. 15, 

2023) [88 FR 13872, 13873 (Mar. 6, 2023)]. 

142 Id. at 13873, 13916. 

143See letter from SCG (‘‘Fifty-four years ago, 

there was no standard period for settling securities 

trades; today the settlement cycle is two business 

days and the Commission recently proposed 

shortening that period further to ‘T+1’ (one business 

day) by 2024 to reduce risks to investors.’’). See also 

infra text accompanying note 677 for further 

discussion of some ways in which investors may be 

able to acquire a significant equity stake more 

quickly in today’s financial markets. 

144Public Law 111–203, 124 Stat. 1900 

929R(a)(1)(A) (2010). 

145For example, the Sarbanes-Oxley Act of 2002 

(‘‘Sarbanes-Oxley Act’’) amended section 16(a) of 

the Exchange Act to require that change of 

beneficial ownership reports under section 16(a) of 

the Exchange Act be filed by officers, directors and 

beneficial owners of more than 10% of a covered 

class ‘‘before the end of the second business day 

following the day on which the subject transaction 

has been executed.’’ On Aug. 27, 2002, the 

Commission adopted amendments to implement 

the accelerated deadline for Form 4 filings, 

shortening the deadline from 10 days after the close 

of each calendar month to two business days after 

a filing obligation is triggered. See Ownership 

Reports and Trading by Officers, Directors and 

Principal Security Holders, Release No. 34–46421 

(Aug. 27, 2002) [67 FR 56461 (Sept. 3, 2002)]. On 

Mar. 16, 2004, the Commission amended Form 8– 

K to generally require that such filings be made 

within four business days of a triggering event. In 

adopting the accelerated timeline, the Commission 

explained the amended requirement ‘‘should 

enhance investor confidence in the financial 

markets.’’ Additional Form 8–K Disclosure 

Requirements and Acceleration of Filing Date, 

Release No. 34–49424 (Mar. 16, 2004) [69 FR 15593 

at 15611 (Mar. 25, 2004)]. The Commission further 

explained that ‘‘[t]he requirement of enhanced, 

timely disclosure should raise investors’ 

expectations regarding the amount and timing of 

information that reporting companies must make 

available to the public’’ and that ‘‘[c]onfidence in 

the expectation of such enhanced disclosure should 

provide more certainty to those investors that they 

are making investment decisions in a more 

transparent market, which should reduce market 

volatility as a result of uncertainty of the 

availability of accurate timely information about 

public companies.’’ Id. 

146Acceleration of Periodic Report Filing Dates 

and Disclosure Concerning website Access to 

Reports, Release No. 34–46464 (Sept. 5, 2002) [67 

FR 58479 (Sept. 16, 2002)]. We recognize that these 

accelerated deadlines applied to periodic filings 

made by issuers, whereas sections 13(d) and (g) 

relate to filings made by investors. See supra note 

Continued 

amending those rules to require such 

Schedule 13D to be filed within five 

business days after such date. 

For purposes of determining the filing 

deadline under these amendments, the 

Commission must receive the filing by 

the fifth business day after the date on 

which the initial Schedule 13D filing 

obligation arises—i.e., the date on 

which a person acquires beneficial 

ownership of more than five percent of 

a covered class under Rule 13d–1(a) or 

the date on which a person loses 

eligibility to file on Schedule 13G under 

Rule 13d–1(e), (f), and (g)—in order for 

the filing to be considered timely. 

Pursuant to our amendment to Rule 

13(a)(4) of Regulation S–T, discussed in 

section II.A.5 below, the filing will have 

to be submitted by direct transmission 

commencing on or before 10 p.m. 

Eastern Time on the due date.137

We believe the current 10-day filing 

deadline for an initial Schedule 13D 

filing should be revised to ensure 

investors receive material information 

in a manner that is considered timely in 

light of advancements in technology and 

developments in the financial markets 

that have occurred since that deadline 

was enacted in 1968. Those 

technological advancements include, for 

example, market professionals’ use of 

information technologies to compile the 

necessary data and prepare a filing,138

as well as their ability to submit filings 

electronically through the Commission’s 

Electronic Data Gathering, Analysis, and 

Retrieval (‘‘EDGAR’’) system.139 In 

addition, the use of modern information 

technology and other developments in 

the financial markets may facilitate an 

investor’s accumulation of a large equity 

stake more quickly than at the time 

Congress enacted the Williams Act.140

Before 1993, ‘‘the prevailing practice’’ 

was to ‘‘settl[e] securities transactions 

within five business days of trade 

date.’’ 141 Since then, the Commission 

has shortened the settlement cycle three 

times, most recently adopting rule 

amendments this year that require 

settlement of most transactions in 

securities within one business day after 

the trade date (with which compliance 

will be required by May 28, 2024).142

Because a shortened settlement cycle 

enables investors to access the proceeds 

of their transactions more quickly, 

investors also may be able to acquire a 

significant equity stake more quickly 

than when settling their transactions 

within five business days of trade 

date.143 Congress, in the Dodd-Frank 

Act, expressly empowered the 

Commission to shorten the deadline for 

filing the initial Schedule 13D.144

Because of those advances in technology 

and developments in the financial 

markets, we are now exercising that 

authority to shorten the initial Schedule 

13D filing deadline. 

We note that our shortening of the 

initial filing deadline for Schedule 13D 

is consistent with previous 

congressional and Commission efforts to 

accelerate public disclosures of material 

information to the market.145 For 

example, in 2002, when the 

Commission accelerated the deadlines 

for issuers to submit their periodic 

reports, it reasoned that ‘‘[s]ignificant 

technological advances over the last 

three decades have both increased the 

market’s demand for more timely 

corporate disclosure and the ability of 

companies to capture, process and 

disseminate this information.’’ 146


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110 and accompanying text. We also recognize that 

the acceleration of these deadlines was prompted, 

in part, by section 409 of the Sarbanes-Oxley Act, 

which ‘‘added Section 13(l) of the Exchange Act 

. . . [to] require[ ] disclosure on a rapid and current 

basis of such additional information concerning 

material changes in the financial condition or 

operations of the issuer,’’ id. at n.15 and 

accompanying text (emphasis added), whereas no 

such ‘‘rapid and current’’ language exists in 

sections 13(d) and 13(g). Nonetheless, the 

technological advances that have increased both the 

market’s demand for more timely disclosure and the 

ability of issuers to file more rapidly are equally 

applicable to the information disclosed on Schedule 

13D and available to investors making Schedule 

13D filings. For example, Congress recognized the 

market’s demand for more timely disclosure of nonissuer filings by accelerating the deadline for 

section 16 filings in the Sarbanes-Oxley Act. See 

supra note 145. As such, we believe that these 

technological advances and market practices also 

support accelerating the initial Schedule 13D filing 

deadline. 

147Acceleration of Periodic Report Filing Dates 

and Disclosure Concerning Website Access to 

Reports, Release No. 34–46464 (Sept. 5, 2002) [67 

FR 58479, 58483 (Sept. 16, 2002)]; see also H.R. 

Rep. 90–550 (1967) (‘‘The persons seeking control, 

however, have information about themselves and 

about their plans which, if known to investors, 

might substantially change the assumptions on 

which the market price is based. The bill is 

designed to make relevant facts known so that 

shareholders have a fair opportunity to make their 

decision.’’). 

148See supra notes 48–52 and accompanying text. 

149See supra notes 42–43 and accompanying text. 

150See supra notes 38–41 and accompanying text. 

151See infra section IV.C.1.a.ii. 

152See supra note 92 and accompanying text. 

153See, e.g., Full Disclosure of Corporate Equity 

Ownership and in Corporate Takeover Bids: 

Hearing on S. 510 Before the Subcomm. on 

Securities of the S. Comm. on Banking and 

Currency, 90th Cong. 136 (1967) (statement of 

Stanley Kaplan, Professor, University of Chicago) 

(stating that ‘‘[r]equiring the filing . . . within 

seven days after acquisition of 10% of equity 

securities seems to provide an unduly short time for 

preparation of a document of that magnitude and 

significance’’ and noting that ‘‘[i]t will take longer 

to prepare and check such a document properly’’). 

154See supra notes 138–139 and accompanying 

text. 

155See Full Disclosure of Corporate Equity 

Ownership and in Corporate Takeover Bids: 

Hearing on S. 510 Before the Subcomm. On 

Securities of the S. Comm. On Banking and 

Currency, 90th Cong. 25 (1967) (statement of 

Manuel F. Cohen, Chairman, Securities and 

Exchange Commission) (‘‘We think that this bill 

would improve our ability to elicit . . . information 

[regarding changes of control] . . . in a timely way, 

that is necessary for appropriate investor 

information and judgment.’’); see also id. at 70 

(statement of Donald J. Calvin, Vice President, New 

York Stock Exchange) (noting that Senator Harrison 

A. Williams, Jr. stated that ‘‘[t]he primary objective 

of this bill . . . is to provide full and timely 

disclosure to stockholders’’ and stating that 

‘‘[d]isclosure to stockholders of events which may 

affect investment decisions is and has been for 

many years a primary object of exchange policy’’ 

and that ‘‘[w]e consider timely disclosure . . . vital 

to the fair operation of a securities market’’). 

156See supra note 140 and accompanying text. 

157We recognize that several commenters 

disagreed that technological advancements and 

other developments in the financial markets justify 

shortening the initial Schedule 13D deadline as 

proposed. See supra notes 91–95 and 

accompanying text. For example, some commenters 

noted that despite advances in technology, the 

filing process still has numerous operational 

components that take time to complete. See letter 

from IAA; see also letter from STB (stating that 

‘‘calculation of beneficial ownership remains an 

extremely manual process, can involve significant 

judgment and relies on third party information’’). 

Others described some ways in which it may be 

more difficult to accumulate a significant equity 

stake in today’s financial markets. See infra notes 

678–679 and accompanying text. As an initial 

matter, we expect that the change from the 

proposed five-calendar day deadline to a fivebusiness day deadline should mitigate these 

concerns. See infra note 165 and accompanying 

text. In addition, for the reasons discussed infra 

notes 166–168 and accompanying text, we believe 

that our analyses of the current timing of Schedule 

13D filings and accumulations of significant equity 

stakes demonstrate that Schedule 13D filers are 

capable, utilizing modern technology and in light 

of the characteristics of today’s financial markets, 

of complying with the amended five-business day 

deadline. This is especially so given the 

sophistication and size of many Schedule 13D 

filers. See supra note 58 and accompanying text. 

Finally, some commenters expressed concerns 

about filers’ ability to meet the proposed deadline 

(as well as the other Schedule 13D and 13G filing 

deadlines) given the amount of time it may take to 

obtain EDGAR filer codes. See, e.g., letters from 

MSBA; STB. To ensure they obtain their EDGAR 

filer codes in a timely manner, we generally expect 

filers to begin the process of applying for their 

EDGAR filer codes before they have incurred a 

filing obligation (e.g., as they begin to acquire 

shares with a control intent but before crossing the 

5% threshold). Filers should note that the 

Commission’s staff reviews all Form ID 

applications, and filers should allow sufficient time 

for that review. Further, the Commission’s staff 

works diligently to process Form IDs promptly 

upon receipt of an application. 

158See supra notes 77–83 and accompanying text. 

159See supra notes 77–83, 103 and accompanying 

text. 

Similarly, the Commission has long 

recognized the benefits of more 

expedient reporting, stating, for 

example, that ‘‘a lengthy delay before 

. . . information becomes available 

makes the information less valuable to 

investors.’’ 147

Despite those efforts to accelerate 

various other reporting deadlines, the 

initial Schedule 13D filing deadline has 

remained unchanged since its 

enactment in 1968. As a number of 

commenters pointed out, there have 

been significant changes in technology 

and developments in the financial 

markets in the intervening years that 

have rendered the 10-day deadline 

‘‘outdated.’’ 148 Commenters also 

highlighted some costs that the current 

10-day deadline may be imposing on 

market participants (i.e., by delaying the 

disclosure of potentially material 

information) 149 and identified some 

potential benefits of shortening that 

deadline, including increased timeliness 

of information and improved 

transparency and fairness in the 

financial markets.150 We agree with 

those commenters that shortening the 

initial Schedule 13D filing deadline will 

increase the timeliness of the disclosure 

of material information, thereby 

improving market transparency, 

facilitating better-informed decisionmaking by investors, and enhancing the 

efficiency of resource allocation (i.e., the 

direction of capital and other resources 

to their most productive uses) across the 

economy.151

We recognize that several commenters 

opposed the proposed amendments to 

Rule 13d–1(a), (e), (f), and (g). Some 

commenters asserted that neither 

Congress nor the Commission 

previously suggested that technological 

ability to file should be the primary 

basis to determine the appropriate 

initial Schedule 13D filing deadline.152

There is some indication, however, that 

when enacting the 10-day deadline, 

Congress considered the amount of time 

a beneficial owner would need to 

prepare and submit a filing.153 As noted 

above, there have been significant 

technological advancements since 1968 

that have made it easier to prepare and 

file a Schedule 13D more quickly.154

There also is some indication that 

Congress enacted section 13(d), in part, 

to provide shareholders with material 

information regarding potential changes 

in control in a timely manner to 

facilitate their investment decisions.155

Because changes in technology and 

developments in the financial markets 

since 1968 have facilitated investors’ 

abilities to rapidly accumulate 

beneficial ownership,156 we believe it is 

appropriate to shorten the initial 

Schedule 13D deadline so that the rate 

at which shareholders become aware of 

such accumulations keeps pace.157

Many commenters also expressed 

concern that shortening the initial 

Schedule 13D filing deadline could, 

among other things, disincentivize 

shareholder activism by reducing the 

amount of time such shareholders have 

to accumulate positions in an issuer’s 

covered class before filing a Schedule 

13D.158 According to those commenters, 

this reduction of time could deprive 

issuers and their shareholders of the 

positive benefits of such activism, 

thereby increasing management 

entrenchment and reducing shareholder 

engagement and corporate 

accountability.159

Although we primarily are concerned 

with ensuring that investors receive 

material information in a timely 

manner, we agree that we should remain 

conscious of the competing interest that 

undue burdens not be imposed on 

shareholders engaging in change of 


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160See Full Disclosure of Corporate Equity 

Ownership and in Corporate Takeover Bids: 

Hearing on S. 510 Before the Subcomm. on 

Securities of the S. Comm. on Banking and 

Currency, 90th Cong. 1 (1967) (statement of Manuel 

F. Cohen, Chairman, Securities and Exchange 

Commission) (‘‘It must be emphasized again that in 

establishing requirements which will make this 

important information available to stockholders, we 

must be careful not to tip the scales to favor either 

incumbent management or those who would seek 

to oust them. We believe that the provisions of the 

present bill . . . reflect an appropriate balance 

among competing interests which, at the same time, 

will fulfill the need of public stockholders to be 

fully informed about the control and potential 

control of the company in which they have 

invested.’’); H.R. Rep. No. 1711, at 4 (1968) (‘‘The 

bill avoids tipping the balance of regulation either 

in favor of management or in favor of the person 

making the takeover bid. It is designed to require 

full and fair disclosure for the benefit of investors 

while at the same time providing the offeror and 

management equal opportunity to fairly present 

their case.’’); 113 Cong. Rec. 24, 664 (1967) (noting 

that ‘‘takeover bids should not be discouraged, 

since they often serve a useful purpose by providing 

a check on entrenched but inefficient 

management’’) (statement of Sen. Harrison A. 

Williams, Jr.). 

161Proposing Release at 13851. The Commission 

noted academic research indicating that large 

blockholders may improve the share price and the 

corporate governance of the companies in which 

they invest and that all of a company’s shareholders 

enjoy these benefits. Proposing Release at 13851, 

n.30. The Commission further recognized that 

shortening the initial Schedule 13D filing deadline 

could reduce the profitability of such investments, 

making large blockholders less inclined to make 

those investments or engage with the companies in 

ways that produce such benefits. Id. This is 

consistent with the concerns that many opposing 

commenters expressed. See supra notes 77–83 and 

accompanying text; see also infra section IV.C.1.b.i. 

162 Id. 

163See supra notes 57–65 and accompanying text. 

164See supra notes 125, 130 and accompanying 

text. 

165The five-business day deadline, as compared 

to the proposed five-calendar day deadline, 

generally will give beneficial owners additional 

time before their Schedule 13D filing is due if the 

filing period encompasses days that are not 

business days (i.e., Saturday, Sunday, or a Federal 

holiday). As an illustrative example, if a person 

acquires beneficial ownership of more than 5% of 

a covered class on a Wednesday, then under the 

five-business day deadline, the initial Schedule 13D 

is not due until the following Wednesday (assuming 

there are no Federal holidays during that period), 

giving the filer a total of seven days to prepare and 

submit the Schedule 13D. However, under the 

proposed five-day deadline, if a person acquires 

beneficial ownership of more than 5% of a covered 

class on a Wednesday, then the initial Schedule 

13D will be due on the following Monday 

(assuming that Monday is not a Federal holiday), 

giving the filer a total of five days to prepare and 

submit the Schedule 13D. For purposes of 

performing this comparison of the five-business day 

deadline to the proposed five-day deadline, it is 

important to keep in mind that if the last day of a 

filing deadline expressed in ‘‘days’’ falls on a 

Saturday, Sunday, or Federal holiday, then such 

filing may be made on the next business day 

thereafter. 17 CFR 240.0–3 (‘‘[I]f the last day on 

which [a filing] can be accepted as timely filed falls 

on a Saturday, Sunday or holiday, such [filing] may 

be [made] on the first business day following.’’). 

166See infra section IV.B.3.a.i (‘‘Approximately 

29 percent of the initial Schedule 13D filings [in 

2022], representing about 41 percent of all of the 

initial Schedule 13D filings that were filed by the 

current filing deadline, were filed within the 

amended five-business day deadline.’’). 

167See supra note 58 and accompanying text. 

168See infra section IV.C.1.b.i, Table 6 (noting 

that for approximately 208 of the 215 campaigns 

conducted annually, at least 90% of the equity stake 

is accumulated within the amended five-business 

day deadline); see also letter from Better Markets II 

(citing the same analysis conducted in the DERA 

Memorandum for the proposed five-day deadline 

and stating that the analysis ‘‘indicate[s] that 

shortening the deadline should not significantly 

impede activist campaigns’’). 

169See infra note 847 and accompanying text. 

170See infra section IV.C.1.b.i, Table 6 (noting 

that for the 7 campaigns conducted annually for 

which less than 90% of the total equity stake was 

accumulated by the amended five-business day 

deadline, and the 1 campaign conducted annually 

for which less than 75% of the total equity stake 

was accumulated by the amended five-business day 

deadline, the average percentages of the filer’s 

unrealized gains on reported equity stake, as of the 

day after filing date, attributable to shares 

accumulated after amended deadline were 9.1% 

and 22.6%, respectively); see also letter from Better 

Markets II (citing the same analysis conducted in 

the DERA Memorandum for the proposed five-day 

deadline and stating that ‘‘for filers who acquired 

less than 100% of their reported stake by the 

proposed deadline, only 6.8% of their unrealized 

gains on average were attributable to shares 

accumulated after the proposed deadline’’). 

control transactions.160 In the Proposing 

Release, the Commission ‘‘recognize[d] 

the chilling effect that a shortening of 

the initial Schedule 13D filing deadline 

could have on a shareholder’s ability 

. . . to effect changes at companies’’ if 

the shortened deadline increases the 

costs and reduces the incentives for 

shareholders attempting to effect a 

change of control.161 Yet, the 

Commission further stated that it did 

not believe ‘‘that a shortening of the 

deadline would unduly disrupt that 

balance,’’ noting that ‘‘many Schedule 

13D filers currently do not avail 

themselves of the full 10-day filing 

period.’’ 162 A number of commenters 

similarly asserted that the proposed 

five-day deadline would not 

significantly impede shareholder 

activism or impose significant costs or 

burdens on beneficial owners of more 

than five percent of a covered class.163

Notwithstanding this support for the 

proposed five-calendar day deadline, we 

have decided to instead adopt a fivebusiness day deadline. This change 

from the proposal comports with a 

recommendation that a number of 

commenters, including several that 

opposed the proposed amendments, 

made to the Commission.164 Further, 

this shift to a ‘‘business days’’-based 

deadline also will help to address a 

variety of concerns that commenters 

expressed about the burdens associated 

with the proposed five-day deadline. 

Specifically, five business days (as 

compared to five calendar days) gives 

beneficial owners additional time to 

accumulate positions in an issuer before 

filing a Schedule 13D and to prepare 

and file an accurate Schedule 13D.165

As with the proposed five-calendar day 

deadline, we also note that many 

Schedule 13D filings currently are made 

within the amended five-business day 

deadline.166 This demonstrates that at 

least some Schedule 13D filers are likely 

to be unaffected by the shortened 

deadline. And, many Schedule 13D 

filers are sophisticated, large investors 

that have access to technology and 

resources that should allow them to 

prepare and file a Schedule 13D within 

five business days.167 As such, we do 

not anticipate a five-business day 

deadline will be unduly disruptive for 

Schedule 13D filers. 

With respect to shareholder activism 

in particular, we note that for the vast 

majority of campaigns, the shareholder 

currently accumulates at least 90 

percent of its equity stake, with many 

accumulating 100 percent of their equity 

stake, within the amended five-business 

day deadline.168 This demonstrates that 

most shareholder activists may not be 

affected by the shortened deadline. In 

addition, for those campaigns that 

would be affected by the amended fivebusiness day deadline, we expect the 

activists will adapt to the shortened 

deadline and continue to pursue the 

campaigns.169 For example, for those 

campaigns in which the shareholder has 

accumulated less than 90 percent of its 

equity stake within the amended fivebusiness day deadline, we note that the 

unrealized gains attributable to the 

shares accumulated after the amended 

deadline generally represent a 

significantly smaller portion of the 

shareholder’s total unrealized gains 

(when compared to the shares 

accumulated prior to the amended 

deadline).170

Finally, we note that profits from 

shareholder activism may not be 

derived solely from the increase in share 

price associated with the public 

disclosure of an activist’s more than five 

percent beneficial ownership stake. 

Specifically, shareholder activists may 

continue to experience abnormal 

positive returns from activism even after 

filing their initial Schedule 13D. Thus, 

to the extent a shareholder activist seeks 

to profit from increases in share price 

after the public disclosure of its more 

than five percent beneficial ownership 

stake, we would not expect a reduction 

in the profits associated with such 

disclosure to be determinative as to 

whether a shareholder engages in an 

activist campaign. 

The amended five-business day 

deadline reflects our attempt to ensure 


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171See supra note 37 and accompanying text. 

172See, e.g., letters from C. McEntee 

(recommending a same-day initial Schedule 13D 

filing deadline); D. Choate (same); Corey (same); 

Prof. Steinberg (recommending, among other things, 

a one-day initial Schedule 13D filing deadline); J. 

Dunlop (recommending a one-day initial Schedule 

13D filing deadline); J. Kennedy (same); Juan B. 

(same); Phillip (same); WLRK I (recommending, 

among other things, a one-business day initial 

Schedule 13D filing deadline); C. Jacobs 

(recommending a two-day initial Schedule 13D 

filing deadline); NIRI (recommending a twobusiness day initial Schedule 13D filing deadline); 

PL Salvati (same); SCG (same); SCG & NIRI (same); 

T. Reilly (recommending a three-day initial 

Schedule 13D filing deadline). 

173See supra note 150; see also letter from STB 

(noting that most analogous securities laws 

governing reporting of material changes (e.g., Form 

8–K and section 16 filings) require filings within 

time periods designated in business days rather 

than calendar days). We further believe it is 

advisable to express all Schedule 13D filing 

deadlines (i.e., for both initial filings and 

amendments) in ‘‘business days.’’ We expect that 

the consistent use of ‘‘business days’’—as opposed 

to using ‘‘days’’ or inconsistently using both ‘‘days’’ 

and ‘‘business days’’ to express the filing 

deadlines—will ease Schedule 13D filers’ 

administrative burdens. We also anticipate that this 

uniform approach across the filing deadlines will 

make it easier for Schedule 13D filers to comply 

with those deadlines. In addition, as amended, all 

of the Schedule 13G deadlines that are less than 45 

days also will be expressed in ‘‘business days,’’ 

consistent with one commenter’s recommendation. 

See letter from IAA (recommending that the 

Commission express deadlines consistently in 

either calendar days or business days across all of 

the Schedule 13D and 13G initial and amendment 

filing deadlines, where the deadlines are less than 

45 days to promote compliance by making it 

simpler and less confusing to keep track of the 

various deadlines). 

174For example, Australia requires disclosure of 

any position of 5% or more within two business 

days if any transaction affects or is likely to affect 

control or potential control of the issuer. See 

Corporations Act 2001 (Cth) sec. 671B (Austl.). The 

United Kingdom imposes a two-trading-day 

deadline for disclosure of acquisitions in excess of 

3% of an issuer’s securities. See Disclosure Rules 

and Transparency Rules, Ch. 5 (U.K.). Germany 

requires a report ‘‘immediately,’’ but in no event 

later than four days after crossing the acquisition 

threshold. See Securities Trading Act, Sept. 9, 1998, 

BGBL. I at 2708, as amended, pt. 5 (Ger.). Hong 

Kong securities laws require a report within three 

business days of the acquisition of a ‘‘notifiable 

interest’’ under the law. See Part XV of the 

Securities and Futures Ordinance (promulgated by 

the Securities and Futures Commission, effective 

Apr. 1, 2003) (H.K.). We note that commenters 

disagreed as to the utility of referencing foreign 

jurisdictions’ beneficial ownership reporting 

deadlines for purposes of determining the 

appropriate initial Schedule 13D filing deadline. 

See supra note 55 and accompanying text. 

Nonetheless, we believe that this comparative 

analysis suggests that a shortened deadline is 

workable based on the experiences of these foreign 

jurisdictions. 

175See infra section IV.C.1.b. 

176See infra section IV.C.a. 

177See supra notes 84–90 and accompanying text. 

178See letter from EIM I. Further, that commenter 

contrasted the proposal with the Short Position 

Reporting Proposal and stated that ‘‘[t]he 

Commission does not explain why the research and 

analysis of a short seller is entitled to protection 

and does not constitute material non-public 

information about the company it is shorting, while 

the research and analysis of an activist is somehow 

characterized differently.’’ Id.; see also supra note 

84. The commenter’s comparison of our shortening 

of the initial Schedule 13D deadline to the Short 

Position Reporting Proposal is inapt. We are 

shortening the Schedule 13D deadline in order to 

ensure that investors receive material information 

regarding potential changes in control in a timely 

manner to facilitate their investment decisions. This 

is consistent with the purpose of section 13(d), and 

necessarily requires public disclosure, including of 

the Schedule 13D filer’s identity. See supra note 

155 and accompanying text; Exchange Act section 

13(d)(1)(A) (requiring a Schedule 13D filer to 

disclose, among other things, its ‘‘background and 

identity’’). The Short Position Reporting Proposal 

addresses a different regulatory scheme, and the 

reasons for those proposed amendments are 

discussed in that release. See Short Position 

Reporting Proposal. In addition, contrary to the 

commenter’s suggestion that the Commission is 

disregarding the value of an activist’s research and 

analysis, the amended five-business day deadline 

represents our attempt to maintain an appropriate 

balance between the requirement that material 

information be timely disseminated to investors and 

the competing interest that undue burdens not be 

imposed in the change of control context. 179See infra sections IV.C.1.a.iii and iv. 

180See Proposing Release at 13850 & n.19, 13881 

& n.214. 

181See infra note 753 and accompanying text for 

a discussion of the term ‘‘informed bystanders,’’ as 

used in this release. 

182See infra section IV.C.1.a.iii. 

investors receive material information 

in a timely manner while, at the same 

time, maintaining the appropriate 

balance between issuers of securities 

and the shareholders who seek to exert 

influence or control over issuers, 

especially when compared with the 

proposed five-calendar day deadline, 

which many commenters supported,171

and the even shorter deadlines many 

commenters recommended.172 We 

believe a five-business day deadline is 

sufficiently prompt and represents a 

more modern approach that reflects the 

technological advancements and other 

developments in the financial markets 

in the more than 50 years since the 10- 

day deadline was enacted. A fivebusiness day deadline, as compared to 

the current 10-day deadline, also would 

more closely align the initial Schedule 

13D filing deadline with the reporting 

deadline on Form 8–K for issuers 

(generally, four business days) and Form 

4 for officers, directors, and beneficial 

owners of more than 10 percent of a 

covered class (two business days), both 

in terms of the length of the deadline 

and the use of ‘‘business days,’’ rather 

than ‘‘days,’’ to express the deadline.173

This alignment should help to ensure 

that investors consistently receive 

prompt disclosures of material 

information, irrespective of the source. 

A five-business day deadline for the 

initial Schedule 13D also is more 

consistent in both length and form with 

the filing deadlines for similar 

beneficial ownership reports in foreign 

jurisdictions.174

Overall, because we expect that the 

vast majority of activist campaigns, and 

the value they create, will continue 

unabated under the amended rules,175

we conclude that the significant benefits 

of the amendments outlined here and 

below 176 justify their costs. 

Some commenters expressed other 

objections to the proposed amendments. 

For example, several commenters 

disagreed with the information 

asymmetry-based concerns in the 

Proposing Release as a basis for the 

proposed amendments.177 We recognize 

that there are information asymmetries 

involved in any market transaction and 

agree that not all information 

asymmetries warrant a regulatory 

response. For example, one commenter 

stated that the information asymmetries 

described in the Proposing Release ‘‘are 

simply the beneficial result of research 

and initiative by investors and the sign 

of properly functioning markets’’ and 

expressed concern that ‘‘[i]f activists 

have no economic incentive to pursue 

activism, other shareholders will not 

experience the increase in value that 

would have otherwise resulted from the 

activist’s conduct.’’ 178 We acknowledge 

that benefits may stem from the 

information asymmetry between a 

Schedule 13D filer and the market, and 

we recognize that the informational 

advantage of Schedule 13D filers results, 

in general, from their own expenditures 

on research and analysis or from their 

efforts and expenditures to pursue 

changes at the issuers in which they 

accumulate these shareholdings.179 As 

such, although the Proposing Release 

referred to information asymmetries 

between Schedule 13D filers and selling 

shareholders and expressed concern 

that those information asymmetries 

‘‘could harm investors,’’ 180 we do not 

focus on the reduction of these 

asymmetries as a justification for 

shortening the initial Schedule 13D 

deadline, as discussed in sections 

IV.C.1.a.iii and iv below. 

Some other information asymmetries 

may, however, raise concerns that 

warrant a regulatory response. 

Specifically, the research and analysis 

prepared by the staff of the Division of 

Economic and Risk Analysis indicate 

that shortening the initial Schedule 13D 

deadline to five business days could 

meaningfully reduce information 

asymmetries between ‘‘informed 

bystanders’’ 181 and other, less-informed 

investors who sell their shares during 

the period after which an initial 

Schedule 13D filing obligation has been 

incurred but before the filing is made.182

The informational advantage those 


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183See id. 

184See supra notes 90, 96 and accompanying text 

(describing comment letters citing Piper et al. v. 

Chris-Craft Industries, Inc. 430 U.S. 1 (1977) and 

Rondeau v. Mosinee Paper Corp., 422 U.S. 49 

(1975)). 

185 442 U.S. at 59 (noting, in relevant part, that 

the shareholder ‘‘has now filed a proper Schedule 

13D, and there has been no suggestion that he will 

fail to comply with the Act’s requirement of 

reporting any material changes in the information 

contained therein’’ notwithstanding the fact that the 

shareholder ‘‘has not attempted to obtain control of 

respondent, either by a cash tender offer or any 

other device’’). 

186S. Rep. No. 90–550 to Accompany S. 510, 

(Aug. 29, 1967); see also Full Disclosure of 

Corporate Equity Ownership and in Corporate 

Takeover Bids: Hearing on S. 510 Before the 

Subcomm. on Securities of the S. Comm. on 

Banking and Currency, 90th Cong. 16 (1967) 

(statement of Manuel F. Cohen, Chairman, 

Securities and Exchange Commission) (stating that 

‘‘[t]he bill before you deals with stock acquisitions 

in three specific contexts’’ including ‘‘the 

acquisition by means of a cash tender offer’’ and 

‘‘other acquisitions by any person or group’’). 

187See supra note 96 and accompanying text. 

188See supra notes 106, 109 and accompanying 

text. 

189 15 U.S.C. 78m(d)(1) (requiring a Schedule 13D 

to be filed ‘‘within ten days . . . or within such 

shorter time as the Commission may establish by 

rule’’). 

190Report of the Securities and Exchange 

Commission on Beneficial Ownership Reporting 

Requirements pursuant to section 13(h) of the 

Securities Exchange Act of 1934 (June 27, 1980). 

Following a review of the effectiveness of section 

13(d) conducted more than four decades ago, the 

Commission evaluated the then ‘‘increasingly 

prevalent practice of [large blockholders] acquiring 

additional securities of [a covered] class during the 

10-day period after the acquisition which results in 

the beneficial ownership of more than 5 percent 

and before the disclosure statement is required to 

be, and normally is, filed. . . .’’ Securities and 

Exchange Commission Report on Tender Offer 

Laws, printed for the Use of the S. Comm. on 

Banking, Housing and Urban Affairs (Comm. Print 

1980). The Commission provided multiple 

illustrative examples in which ‘‘the existing 

notification system often does not provide 

shareholders with relevant information in a timely 

manner.’’ Id. 

191See supra notes 181–183 and accompanying 

text. 

192 Domestic and Foreign Investment Improved 

Disclosure Act of 1977, Public Law 95–214, sec. 

203, 91. Stat. 1494. 

193S. Rep. No. 114, at 13 (1977). 

194S. Rep. No. 95–114, at 13 (1977), as reprinted 

in 1977 U.S.C.C.A.N. 4098, 4111. 

195 Filing and Disclosure Requirements Relating 

to Beneficial Ownership, Release No. 34–14692 

(Apr. 21, 1978) [43 FR 18484 (Apr. 28, 1978)] 

(‘‘Filing and Disclosure Release’’). 

196 Id. at 18486; see also S. Rep. No. 114, at 14 

(1977). 

197First adopted as Rule 13d–5 in 1977 and 

subsequently redesignated as Rule 13d–1(b)(1) in 

1978, the predecessor to current Rule 13d–1(b)(2) 

established that an institution eligible to report on 

Schedule 13G had until 45 days after the end of the 

calendar year to report beneficial ownership to the 

extent the percentage beneficially owned exceeded 

5% as of the end of the calendar year. See Filing 

and Disclosure Release at 18486 (explaining that 

Continued 

‘‘informed bystanders’’ have over the 

selling shareholders in these 

transactions and the associated wealth 

transfers may be perceived by some 

market participants to be unfair. Thus, 

to the extent that a shortened initial 

Schedule 13D filing deadline would 

reduce these wealth transfers, thereby 

addressing this perceived unfairness, 

this change could enhance trust in the 

securities markets and promote capital 

formation.183

We also note that some commenters 

questioned the appropriateness and 

legality of the proposed amendments in 

light of certain U.S. Supreme Court 

cases that the commenters cited for the 

proposition that the ‘‘sole purpose’’ of 

the Williams Act is to protect 

shareholders confronted with a cash 

tender offer.184 In both cases, the Court 

made the cited statements in the limited 

context of determining causes of action 

or remedies that are available for 

purported violations of certain 

provisions of the Williams Act. Neither 

decision suggests that the provisions 

and protections of the Williams Act are 

available only when a cash tender offer 

is involved; in fact, the Court in 

Rondeau v. Mosinee Paper Corp. 

referred to the defendant-shareholder’s 

belated compliance with section 13(d), 

notwithstanding the absence of a 

pending or threatened cash tender 

offer.185 We also note statements in the 

legislative history indicating that 

Congress intended that the Williams Act 

would apply to any ‘‘acqui[sition] of a 

substantial block of equity securities 

. . . by a cash tender offer . . . or 

through open market or privately 

negotiated purchases.’’ 186 We do not 

believe, therefore, that our shortening of 

the initial Schedule 13D deadline must 

be tied to risks shareholders face in 

connection with cash tender offers. 

Finally, some opposing commenters 

expressed other doubts regarding the 

Commission’s authority to shorten the 

initial Schedule 13D deadline as 

proposed 187 and asserted that the 

Commission did not identify a market 

event or failure that would justify the 

proposed amendments.188 As noted 

above, however, section 13(d)(1) of the 

Exchange Act clearly grants the 

Commission authority to shorten the 

initial Schedule 13D filing deadline.189

In addition, the Commission has long 

recognized that acquisitions made after 

a person acquires beneficial ownership 

of more than five percent of a covered 

class but before the person files an 

initial Schedule 13D constitute a 

‘‘disclosure gap [that] may deprive 

security holders of a fair opportunity to 

adjust their evaluation of the securities 

of a company with respect to [a] 

potential change in control.’’ 190 We 

believe that the current length of that 

disclosure gap, together with the 

information asymmetry 191 that it may 

facilitate and the advancements in 

technology and developments in the 

financial markets since Congress 

enacted the Williams Act, provide 

grounds to shorten the initial Schedule 

13D filing deadline from 10 days to five 

business days. 

2. Rule 13d–1(b), (c), and (d) 

Congress enacted section 13(g) in 

1977 192 to address the absence of 

beneficial ownership reporting by 

persons who had accumulated large 

amounts of stock in a public issuer but 

were not required to file a beneficial 

ownership report under section 

13(d).193 Section 13(g) was intended to 

‘‘supplement the current statutory 

scheme by providing legislative 

authority for certain additional 

disclosure requirements that in some 

cases could not be imposed 

administratively.’’ 194 Beneficial owners 

who currently report on Schedule 13G 

pursuant to section 13(g) and 

corresponding Rule 13d–1(d) are not 

subject to section 13(d) because they 

either made an exempt acquisition or an 

acquisition otherwise not covered by the 

statute. Section 13(d), in contrast to 

section 13(g), applies only to beneficial 

owners who make non-exempt 

acquisitions of more than five percent of 

a covered class. Section 13(g) was 

intended to close this gap. 

In response to the enactment of 

section 13(g), the Commission adopted 

Schedule 13G to serve two purposes: (1) 

provide an optional short form 

disclosure statement for certain persons 

subject to section 13(d); and (2) provide 

a mandatory disclosure statement for 

persons subject to section 13(g).195

Together with section 13(d), section 

13(g) was intended to provide a 

‘‘comprehensive disclosure system of 

corporate ownership’’ applicable to all 

persons who are the beneficial owners 

of more than five percent of a covered 

class.196 Rule 13d–1(b), (c), and (d) 

provide the filing deadlines for the 

initial Schedule 13G. Which deadline a 

person is subject to for its initial 

Schedule 13G filing depends on 

whether the person is a QII, Exempt 

Investor, or Passive Investor. 

A QII relying upon Rule 13d–1(b) 

currently is obligated under Rule 13d– 

1(b)(2) to file a Schedule 13G ‘‘within 45 

days after the end of the calendar year 

in which the person became obligated’’ 

to report beneficial ownership, but only 

if such QII beneficially owns more than 

five percent of a covered class at the end 

of a calendar year.197 If the QII 


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‘‘the first proviso in new Rule 13d–1(b) has been 

added to make clear that the obligation to file a 

Schedule 13G . . . need be determined only on the 

last day of the calendar year’’ and that ‘‘filing [a] 

Schedule 13G to disclose a beneficial ownership 

interest of more than five but not more than ten 

percent will be required forty-five days after the end 

of the calendar year’’); see also Adoption of 

Beneficial Ownership Disclosure Requirements, 

Release No. 34–13291 (Feb. 24, 1977) [42 FR 12342 

(Mar. 3, 1977)] (describing the Commission’s 

adoption of new Rule 13d–5 and related new Form 

13D–5, which permitted brokers, dealers, banks, 

investment companies, investment advisers, and 

employee benefit plans to utilize an abbreviated 

disclosure notice). 

198 17 CFR 240.13d–1(d). 

199The Commission has explained that certain 

‘‘persons who are not required to file under Rule 

13d–1(a) . . . would be required to file a Schedule 

13G pursuant to the amendments herein proposed.’’ 

Filing and Disclosure Release at 18502. Such 

persons may include ‘‘persons who acquired not 

more than two percent of a class of securities within 

a twelve month period, who are exempt from Rule 

13d–1(a) by Section 13(d)(6)(B).’’ Id. The 

Commission also stated that ‘‘Regulation 13D–G 

. . . would require any person ‘otherwise’ not 

required to report pursuant to Section 13(d), but 

who is a beneficial owner of more than five percent 

of a specified class of equity securities to report on 

Schedule 13G.’’ Id. 

200Filing and Disclosure Release at 18486 (stating 

that ‘‘the enactment of section 13(g) has rendered 

moot the issue of whether obtaining’’ disclosure 

from institutional investors in the ordinary course 

of their business and without any control intent 

‘‘under section 13(d)(5) is within the primary 

purpose of section 13(d)’’). The Commission also 

emphasized ‘‘the importance of disclosing to the 

public the location of rapidly accumulated blocks 

of stock, even though they have been acquired not 

with the purpose or with the effect of changing or 

influencing control’’ as a predicate for its position. 

Id. 

201Proposing Release at 13856. 

202 Id. 

203 Id. 

204 Id. 

205 Id. at 13855. 

206 Id. 

207 Id. at 13855–56. 

208 Id. at 13856. 

209 Id. 

beneficially owns more than 10 percent 

of a covered class as of the last day of 

any month, then the initial Schedule 

13G must be filed within 10 days after 

the end of that month. A QII relying on 

Rule 13d–1(b), therefore, may have 

beneficial ownership in excess of five 

percent throughout the calendar year 

without incurring a filing obligation 

unless the QII beneficially owns more 

than 10 percent of a covered class at the 

end of any month during that year. 

Rule 13d–1(d),198 as with Rule 13d– 

1(b), imposes an initial Schedule 13G 

filing deadline of 45 days after the end 

of the calendar year, but only for 

investors who have become beneficial 

owners without having made an 

acquisition recognized under section 

13(d)(1). Given that these investors did 

not make the requisite acquisition that 

would have subjected them to section 

13(d), the Commission has previously 

referred to this type of beneficial owner 

as an ‘‘Exempt Investor.’’ Unlike the 

QIIs and Passive Investors—discussed 

below, in the context of Rule 13d–1(c)— 

who file a Schedule 13G in lieu of 

Schedule 13D and at all times remain 

subject to section 13(d), Exempt 

Investors are subject to section 13(g) at 

the time their initial filing obligation 

arises. Exempt Investors reporting 

pursuant to Rule 13d–1(d) today may 

include persons such as founders of 

companies and early investors in an 

issuer’s class of equity securities who 

made their acquisition before the class 

was registered under section 12 of the 

Exchange Act.199 These beneficial 

owners may continue to influence or 

control the issuer. Accordingly, the 

Commission has emphasized that the 

disclosures required under section 13(g) 

are obtained in connection with the 

overall regulatory purposes served by 

section 13(d).200

Finally, a beneficial owner electing to 

report on Schedule 13G in lieu of 

Schedule 13D in reliance on Rule 13d– 

1(c) as a Passive Investor must file a 

Schedule 13G within 10 days after 

acquiring beneficial ownership of more 

than five percent of a covered class. A 

person is eligible to file as a Passive 

Investor only if such person is not 

seeking to acquire or influence control 

of an issuer and beneficially owns less 

than 20 percent of a covered class. 

Persons unable or unwilling to certify 

under Item 10 of Schedule 13G that they 

do not have a disqualifying purpose or 

effect because, for example, the 

possibility exists that they may seek to 

exercise or influence control, are 

ineligible to file a Schedule 13G and 

must instead file a Schedule 13D. 

a. Proposed Amendments 

The Commission proposed to amend 

Rule 13d–1(b) and (d) to shorten the 

filing deadline for the initial Schedule 

13G to be filed by QIIs and Exempt 

Investors to five business days after the 

end of the month in which beneficial 

ownership exceeds five percent of a 

covered class. The Commission 

expected that the proposed acceleration 

of these deadlines would result in more 

timely disclosures while minimizing 

any potential additional burdens.201 The 

Commission also believed that these 

investors should already have wellestablished compliance systems in place 

to monitor Schedule 13G ownership 

levels to determine whether filing 

obligations have been triggered.202

Given the proposal to shorten the 

initial reporting deadline to five 

business days after the end of the 

month, the Commission also recognized 

that the current provision of Rule 13d– 

1(b)(2) that operates to accelerate that 

initial filing deadline if beneficial 

ownership exceeds 10 percent at the 

end of any month would be unnecessary 

in light of Rule 13d–2(c)’s overlapping 

Schedule 13G amendment 

requirement.203 Accordingly, the 

Commission proposed to further amend 

Rule 13d–1(b)(2) to delete the language 

that imposes an initial reporting 

obligation on QIIs after exceeding 10 

percent of a covered class. 

The Commission also proposed to 

amend the filing deadline in Rule 13d– 

1(c) to five days after the date the person 

becomes obligated to file an initial 

Schedule 13G. The Commission 

believed that it would be appropriate to 

amend the initial Schedule 13G filing 

deadline in Rule 13d–1(c) to match the 

proposed initial Schedule 13D filing 

deadline in Rule 13d–1(a) in order to 

maintain the historical consistency 

between the deadlines in Rule 13d–1(c) 

and (a) and to facilitate the overall goal 

of increasing transparency in beneficial 

ownership.204

In proposing these amendments, the 

Commission stated that the current 

initial Schedule 13G filing deadlines’ 

length and manner of applicability to 

QIIs and Exempt Investors together 

could, in certain circumstances, 

frustrate the purposes of sections 13(d) 

and 13(g).205 For example, the 

Commission noted investors reporting 

pursuant to current Rule 13d–1(b) and 

(d) may avoid beneficial ownership 

reporting by selling down their 

positions before the end of the calendar 

year, and, in the case of QIIs, selling 

down before the end of a month if 

ownership exceeds 10 percent.206 The 

proposed amendments to the filing 

deadlines for initial Schedule 13G 

filings by QIIs and Exempt Investors, 

therefore, were intended to improve 

transparency and avoid any gaps in 

reporting.207

In addition, the Commission noted 

that when Rule 13d–1(c) was adopted in 

1998, Passive Investors may not have 

had reasonable access to advanced 

technologies to make more immediate 

filings possible.208 Consistent with its 

justification for proposing to shorten the 

initial Schedule 13D filing deadline 

under Rule 13d–1(a), the Commission 

asserted that Passive Investors today not 

only have gained valuable experience 

complying with these reporting 

provisions, but also have ready access to 

the necessary filing technology.209 As 

such, the Commission proposed 

amending Rule 13d–1(c) in light of 

those technological advancements and 


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210See, e.g., letters from AFL–CIO (supporting 

only the proposed amendment to Rule 13d–1(c)); 

AFREF (same); AFREF, et al. (same); Anonymous 3; 

Anonymous 5; Anonymous 11; Anonymous 12; 

Anthony R.; C. Robinson; John F. Phinney Jr, CEO 

& Founder, Convergence Inc. (June 15, 2023) 

(‘‘Convergence’’) (supporting only the proposed 

amendment to Rule 13d–1(b)); EEI; Engineer; 

FedEx; Freeport-McMoRan; Andrew Patrick White, 

Founder CEO of FundApps (Feb. 28, 2022) 

(‘‘FundApps’’) (same); HMA I; J. Pieper; J. Soucie; 

Jonah; Juan; Mark C.; Mike; Nasdaq; P. Worts; T. 

Mirvis, et al.; Todd. 

211See supra notes 38–40, 43–44 and 

accompanying text. 

212See letter from AFREF. For example, the 

commenter asserted that a shortened filing deadline 

would help investors ensure their asset managers 

are fulfilling their fiduciary duties and help inform 

the education and advocacy efforts of those with a 

stake in proxy contests, shareholder resolutions, 

and other important votes. Id. 

213See, e.g., letters from AFL–CIO; C. Robinson; 

FedEx; Freeport-McMoRan; T. Mirvis, et al. 

214See, e.g., letters from AFREF; Convergence; 

FundApps. 

215See letter from T. Mirvis, et al. 

216See, e.g., letters from Anonymous 11; 

Freeport-McMoRan; J. Soucie. 

217See letter from FedEx. 

218See, e.g., letters from A. Day; ABA; AIMA; B. 

Mason; Dodge & Cox; E. Fraser (opposing only the 

proposed amendment to Rule 13d–1(c)); IAA 

(opposing only the proposed amendments to Rule 

13d–1(b) and (d)); ICI I; MFA (same); MSBA 

(supporting only the proposed amendments to Rule 

13d–1(c) and (d)); Perkins Coie; Kenneth E. 

Bentsen, Jr, CEO and President, Securities Industry 

and Financial Markets Association (Apr. 11, 2022) 

(‘‘SIFMA’’) (opposing only the proposed 

amendments to Rule 13d–1(b) and (c)); Kyle 

Brandon, Managing Director, Head of Derivatives 

Policy, SIFMA (June 27, 2023) (‘‘SIFMA & SIFMA 

AMG’’) (same); State Street Corporation (Apr. 11, 

2022) (‘‘SSC’’) (opposing only the proposed 

amendment to Rule 13d–1(b)); STB; TIAA 

(opposing only the proposed amendment to Rule 

13d–1(b)); TRP. 

219See, e.g., letters from ABA; Dodge & Cox; IAA; 

ICI I; MSBA; STB; TIAA. 

220See letter from ICI I. The commenter also 

stated that the Commission has not made significant 

technological advances over the years to its own 

systems that market participants rely on to prepare 

Schedules 13D and 13G, making it challenging and 

costly for investors to gather the information about 

beneficial ownership they need to file Schedules 

13D and 13G. Id. 

221See letter from MSBA. The commenter also 

noted that Passive and Exempt Investors generally 

do not have specialized technology that would 

make it practical for them to file a Schedule 13G 

on the proposed accelerated bases. 

222See letter from TIAA. The commenter also 

asserted that the Proposing Release did not provide 

data showing that QIIs have as a standard matter 

adopted the type of technological improvements 

that would make it easier for them to prepare these 

filings on such a short timeline. Id. 

223See letter from IAA (noting that ‘‘an 

investment advisory firm’s reporting process could 

involve receiving spreadsheets from multiple 

affiliates, consolidating those spreadsheets into one 

report, reviewing the consolidated report for errors 

and discrepancies, following up to correct issues, 

calculating beneficial ownership, preparing 

Schedule 13D or 13G’’ and may also require them 

to obtain ‘‘review by outside counsel . . . [and] 

signatures (including from group members if 

needed)’’). 

224See letters from STB; TIAA. For example, one 

of these commenters noted that notwithstanding 

any technological advancements, a month-endbased reporting deadline for Schedule 13G would 

be difficult to meet because analysis of Rule 13d– 

3 beneficial ownership depends on the most 

recently published outstanding share number from 

an issuer and, therefore, an investor cannot reliably 

determine whether it is a 5% beneficial owner of 

any particular stock as of a month-end reference 

date until the last day of such month and there is 

no consistent monthly disclosure requirement for 

an issuer’s outstanding shares. See letter from STB. 

225See letter from ABA. 

226See, e.g., letters from ICI I; SIFMA; TIAA. 

Those commenters also asserted that the 

Commission’s unsubstantiated concerns about QIIs 

selling down positions before the end of a reporting 

period to avoid a Schedule 13G filing does not 

provide an appropriate basis for the proposed 

amendment to Rule 13d–1(b). Id. 

227See letters from ABA; SIFMA; STB. 

its proposed amendment to the 

analogous filing deadline in Rule 13d– 

1(a). 

b. Comments Received 

Commenters submitted a variety of 

views on the proposed amendments to 

Rule 13d–1(b), (c), and (d). Several 

commenters supported the proposed 

amendments.210 Some of those 

commenters supported accelerating the 

initial Schedule 13G filing deadlines for 

many of the same reasons they 

supported accelerating the initial 

Schedule 13D filing deadline.211

Another commenter asserted that the 

proposed amendments would benefit 

shareholders and other market 

participants by facilitating sound 

corporate governance.212

Several commenters supported the 

proposed amendments based on 

changes in technology and 

developments in the financial 

markets.213 A number of commenters 

noted that some foreign jurisdictions 

require beneficial ownership reporting 

on a shorter deadline than currently 

required under Regulation 13D–G.214

One commenter viewed the current 

Schedule 13G filing deadlines as 

outdated.215 Other commenters asserted 

that the proposed amendments would 

not impose significant costs to 

beneficial owners of more than five 

percent of a covered class.216 And, 

another commenter stated that the 

proposed amendments would be 

consistent in balancing the need for 

adequate disclosures with burdens 

placed on filers to accurately prepare 

required disclosures.217

Several commenters opposed the 

proposed amendments.218 Some of 

those commenters disagreed with the 

Commission’s technological 

advancement-based justifications for the 

proposed acceleration of the beneficial 

ownership reporting deadlines.219 For 

example, one commenter asserted that 

the Commission has never suggested 

that technological ability to file is or 

should be the primary basis to 

determine the appropriate filing 

deadlines for Schedules 13D and 

13G.220 Another commenter stated that 

electronic filing of a Schedule 13G can 

take longer than physical mailing 

because of the time and effort required 

to obtain EDGAR filing codes as 

compared to simply making an 

overnight mailing or hand delivery of a 

paper filing.221 Another commenter 

questioned why the existence of new 

filing technologies justify subjecting 

QIIs to Schedule 13G filing 

requirements so much shorter than the 

ones currently in place.222

Some opposing commenters 

acknowledged the technological 

advances identified in the Proposing 

Release but disagreed that they justify 

the proposed amendments. For 

example, one commenter stated that 

technological advances do not support 

significantly reducing filing deadlines 

as proposed because, despite advances 

in technology, the filing process still has 

numerous operational components that 

take time to complete.223 Similarly, 

some commenters stated that 

notwithstanding any technological 

advancements, a month-end-based 

reporting deadline for Schedule 13G 

would be difficult to meet because 

much of the process is still manual and 

cannot be done reliably via any current 

technology, including exercising the 

judgment required to determine whether 

a person is a beneficial owner under the 

various provisions of Rule 13d–3.224

Another commenter stated that, despite 

technological advancements, it is often 

difficult for QIIs to gather aggregate 

information quickly, confirm such 

information for accuracy, draft 

disclosure documents and receive 

approval for filing purposes, especially 

given that QIIs often beneficially own 

positions in many issuers and those 

positions change frequently.225

Opposing commenters also criticized 

some of the Commission’s other 

justifications for, or the purported 

benefits of, the proposed amendments. 

For example, some commenters stated 

that the Commission has not provided 

evidence to support its concerns 

regarding reporting gaps and 

information asymmetries that would 

warrant the proposed acceleration of the 

reporting deadlines.226 Others asserted 

that the Commission has not articulated 

how the proposed amendments will 

promote transparency into matters of 

corporate control and questioned the 

necessity of the proposed amendments 

in that respect.227 Some of those 


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228See letters from ABA; STB. For example, those 

commenters noted that QIIs and Passive Investors 

already are obligated to amend their Schedule 13G 

promptly upon crossing a 10% beneficial 

ownership threshold and are obligated to file an 

initial Schedule 13D if their control intent changes. 

Id. 

229See letters from SIFMA; STB. For example, 

those commenters noted that Exempt Investors are 

largely investors who have held the shares since 

prior to the issuer’s IPO and, as such, their original 

ownership is already materially disclosed in the 

IPO prospectus. Id. In addition, those commenters 

noted that to the extent an Exempt Investor’s 

beneficial ownership either exceeds 10% or exceeds 

their pre-IPO beneficial ownership level, it will be 

required to make section 16 filings or make an 

initial Schedule 13D filing. Id. 

230See letter from ICI I. 

231See letters from ABA; MSBA. For example, 

those commenters noted that a Schedule 13G filed 

by a Passive Investor does not include information 

about potential changes in control and that Passive 

Investors must certify that they do not have a 

control intent. Id. Those commenters also noted 

that the proposed amendments to Rule 13d–5 

include a ‘‘tipper-tippee’’ provision with respect to 

the filing of a Schedule 13D but not with respect 

to the filing of a Schedule 13G, see letter from 

MSBA, and stated that accelerating the filing 

deadline for Exempt Investors will provide no 

additional information to the market given that the 

vast majority of Exempt Investors become Exempt 

Investors following the effectiveness of a 

registration statement which contains all of the 

information, if not more, that would be included in 

a Schedule 13G. See letter from ABA. 

232See letters from ABA; MFA. 

233See, e.g., letters from ABA; IAA; ICI I; Perkins 

Coie; SSC; STB; see also letter from MFA & 

NAPFM. 

234See letters from IAA; ICI I. 

235See letter from STB. The commenter also 

asserted that the proposed five-business day period 

after month-end is not enough time for outside 

counsel to gather the requisite information from 

their clients and prepare a Schedule 13G filing and 

expressed concern that investors may not be able 

to obtain EDGAR filing codes in time to meet the 

proposed deadlines, noting that the Commission 

recently has been taking three to five business days 

(and even longer during busy periods) to generally 

provide such codes. Id. 

236See letter from SSC; see also letter from IAA. 

237See letter from Perkins Coie. 

238See, e.g., letters from ABA; ICI I; SIFMA. 

239See letters from ICI I; SIFMA. 

240See letter from SIFMA. 

241See letter from MSBA. For example, the 

commenter explained that obtaining EDGAR filing 

codes by making a Form ID filing requires the 

assistance of counsel and that such filing usually 

takes 7 days to be processed by the Commission, 

by which time the proposed deadline will have 

passed given that many Passive Investors are 

unaware of their Schedule 13G filing obligations 

until after they have crossed the 5% threshold. Id. 

The commenter also asserted that even if a Passive 

Investor is aware of its Schedule 13G filing 

obligation before it has crossed the 5% threshold, 

it is unlikely to take steps to prepare for such 

obligation before actually crossing the threshold. Id. 

In addition, the commenter noted that many 

Schedule 13G filings have multiple filing persons, 

which requires even more time in the preparation 

of the filing and the engagement of counsel to help 

prepare the filing. Id. 

242 Id. 

243See, e.g., letters from A. Day; E. Fraser; MFA. 

244See letter from MFA. 

245See letters from ICI I; MFA. 

246See letters from IAA; ICI I. 

247See letter from Perkins Coie. 

commenters expressed the view that the 

Commission’s existing rules provide 

sufficient transparency into matters of 

corporate control with respect to QIIs 

and Passive Investors,228 as well as 

Exempt Investors.229 In addition, one 

commenter asserted that the 

Commission has not persuasively 

explained why it is appropriate to 

accelerate the beneficial ownership 

reporting deadlines as proposed.230

Some commenters stated that the 

information filed on Schedule 13G by 

Passive and Exempt Investors is 

unlikely to be material information that 

is market-moving.231 Other commenters 

asserted that the proposed amendments 

would provide little benefit to the 

market given that institutional 

investment managers’ trading activity is 

already subject to significant scrutiny by 

the Commission and the public through 

the filing of Form 13F.232

Several commenters also expressed 

concern regarding administrative 

burdens associated with the proposed 

amendments to Rule 13d–1(b) and 

(d).233 Some commenters noted that 

beneficial owners often file a Schedule 

13G for multiple different issuers, 

which ‘‘strains’’ their filing resources at 

the end of the reporting period.234 One 

commenter stated that a month-endbased reporting deadline applicable 

would burden the external resources 

(including outside counsel, filing 

agents, and the EDGAR system) needed 

to prepare and make these filings given 

that all QIIs and Exempt Investors 

would be performing the Schedule 13G 

filing analysis during the same fivebusiness day period.235 One commenter 

expressed concern that the proposed 

amendment to Rule 13d–1(b) could 

create practical difficulties for QIIs, 

including insufficient time to validate 

the data to be included in a 

consolidated filing for a large 

institutional investor with multiple 

entities.236 And, one commenter 

expressed concern that institutional 

investors and other unregistered entities 

may lack the infrastructure and 

personnel to comply with the revised 

filing deadlines and described yearround monitoring of beneficial 

ownership reporting obligations and the 

filing deadlines that would be required 

under the proposed amendments as 

burdensome.237

Other commenters expressed similar 

concerns that the proposed amendment 

to Rule 13d–1(b) would increase QIIs’ 

filing burdens significantly, without 

material benefit to investors.238 Some of 

those commenters disagreed with the 

Commission’s statement that QIIs 

already have systems in place to 

monitor their beneficial ownership 

levels and asserted that the proposed 

amendment would require significant 

changes to their operational systems and 

processes.239 One commenter disagreed 

with the Commission’s statement that 

the proposed amendments only would 

require QIIs to monitor the beneficial 

ownership levels on a monthly basis, 

suggesting instead that the proposed 

amendments would require daily 

monitoring.240 Another commenter 

expressed concern that, as a practical 

matter, the proposed five-day deadline 

under Rule 13d–1(c) would be 

impossible to comply with in most 

cases.241 The same commenter also 

stated that Exempt Investors that are not 

affiliated with the issuer are unlikely to 

become aware of their potential 

beneficial ownership reporting 

obligations in a timely manner and, 

therefore, may be unlikely to be able to 

comply with the proposed deadline 

under Rule 13d–1(d) given the practical 

challenges associated with making a 

Schedule 13G filing.242

Some commenters expressed concern 

that the proposed deadlines would be 

unduly burdensome for smaller and 

non-institutional beneficial owners,243

with one commenter stating that by 

increasing overhead costs and 

expanding an already complex 

regulatory regime, the Commission’s 

accelerated timeline will render it 

particularly difficult for smaller 

managers, who cannot readily bear the 

costs and administrative burden of 

monthly filings.244 Some commenters 

also asserted that the proposed 

amendment to Rule 13d–1(b) raises 

significant concerns regarding harm to 

investment advisers and funds and 

would impose substantial unnecessary 

costs on their clients.245 Similarly, some 

commenters stated that the proposed 

amendment to Rule 13d–1(b) and (d) 

would create a significant risk of 

prematurely disclosing sensitive 

portfolio holdings information to the 

market, which may result in frontrunning, copycatting, and other abusive 

trading practices that harm advisers and 

their clients, including funds and their 

investors.246 And, more generally, one 

commenter expressed concern that the 

proposed amendments would create 

significant reporting and monitoring 

burdens for all Schedule 13G filers.247

Opposing commenters also 

highlighted some other potential risks 

associated with the proposed deadlines. 

For example, one commenter expressed 

concern that reporting within such a 

short time period under the proposed 


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248See letter from ICI I. 

249See letter from ABA. 

250See letter from STB; see also supra note 102. 

251See letter from TRP. Specifically, the 

commenter posited that there would be additional 

trading and volatility in certain issuers just after the 

reporting deadline each month, as institutional 

investors begin the process of accumulating or 

reducing positions, followed by reduced liquidity 

leading up to the reporting deadline, as they 

concluded that trading. Id. 

252See letters from ABA; ICI I. 

253See id. 

254See letters from Dodge & Cox; ICI I; SIFMA. 

255See infra note 280 for a discussion of Form 

13F and its filing deadlines. 

256See letters from IAA; MFA; see also IAC 

Recommendations (recommending that the 

Commission shorten the initial filing deadlines for 

QIIs and Exempt Investors to 45 days after the end 

of a calendar quarter). One of the commenters stated 

that a quarterly deadline would increase 

transparency for market participants as compared 

with the current annual deadline and noted that 

institutional investment managers are already 

reviewing and assessing their holdings on a 

quarterly basis in order to prepare Form 13F filings 

and are more equipped to submit accurate Schedule 

13G filings with the same frequency. See letter from 

IAA. The commenter also asserted that aligning the 

deadlines for initial Schedule 13G filings with Form 

13F filings would strike the right balance between 

the Commission’s concerns about information 

asymmetry in the marketplace, and advisers’ 

concerns about operational strains and competitive 

disadvantages that would come with publicly 

exposing their positions more frequently. Id. 

257See letter from SSC. 

258See letter from TRP. 

259See letter from ABA. 

260See letter from MSBA. 

261See letter from STB. The commenter also 

suggested that if the Commission’s goal is market 

transparency more generally, and not a targeted 

concern related to matters of corporate control, the 

Commission should consider whether more 

appropriate tools exist to disclose 5% beneficial 

ownership or material changes to such positions in 

a more concise and efficient manner, using Form 

13F as an example. Id. 

262See letter from MFA. 

263See letter from E. Fraser. The commenter also 

recommended that the Commission consider a 

provision for when a shareholder’s position goes 

over the 5% threshold because of ordinary 

corporate actions that result in the number of 

outstanding shares to drop such that the 

shareholder unwittingly has a holding over the 5% 

of outstanding shares and suggested recommended 

that the Commission consider increase the 

threshold from greater than 5% beneficial 

ownership to 10%. Id. 

264See letters from AFREF; Freeport-McMoRan; 

HMA I. 

265 Id. 

266See letter from J. Dunlop. 

267See letters from ABA; Dodge & Cox; IAA; ICI 

I. Some of these commenters suggested that a fivebusiness day deadline would be more appropriate 

in light of the steps required to prepare and file an 

accurate Schedule 13G. See letters from Dodge & 

Cox, IAA; ICI I; see also supra note 130. 

amendment to Rule 13d–1(b) would 

increase the risk reported information 

would subsequently need to be revised 

through amendments to Schedule 13G, 

potentially confusing the market.248 One 

commenter asserted that the proposed 

amendments would increase the 

number of unintentionally inaccurate 

filings.249 One commenter expressed 

concern that the proposed amendments 

could negatively impact the ability of 

investors and their advisors to draft 

meaningful disclosures and engage in 

thoughtful analysis.250 Another 

commenter stated that the proposed 

amendments could be more broadly 

disruptive to trading.251

Finally, several opposing commenters 

expressed concern that the proposed 

amendments do not reflect the 

differences between Schedule 13D and 

13G filers (particularly QIIs) based on 

the legislative and administrative 

history of sections 13(d) and (g) of the 

Exchange Act.252 And, other 

commenters expressed concern that the 

proposed amendment to Rule 13d–1(b) 

would be unprecedented and 

inappropriate, unnecessary to 

accomplish the Commission’s regulatory 

objectives, and inconsistent with the 

intent and administrative history of the 

rules under sections 13(d) and 13(g).253

The opposing commenters also 

provided some recommendations 

regarding the proposed amendments. A 

number of those commenters suggested 

a quarter-end-based initial Schedule 

13G filing deadline for QIIs and Exempt 

Investors rather than a month-end-based 

deadline. For example, some 

commenters recommended that QIIs be 

required to file their initial Schedule 

13G within 45 days after the end of a 

calendar quarter as of which the QII 

beneficially owns more than five 

percent of a covered class to align with 

the filing timeframe under section 13(f) 

and better reflect the distinction the 

Commission has historically made 

between QIIs and other institutional 

investors.254 Similarly, some 

commenters recommended that the 

Commission require that both QIIs and 

Exempt Investors file their initial 

Schedule 13G 45 days after the end of 

a calendar quarter, consistent with the 

Form 13F 255 filing deadline.256 One 

commenter recommended that QIIs be 

required to file their initial Schedule 

13G within 15 business days after the 

end of a calendar quarter as of which 

the QII beneficially owns more than five 

percent of a covered class.257 Another 

commenter recommended that QIIs be 

required to file their initial Schedule 

13G on a quarterly basis with at least a 

30-day period before the filing 

deadline.258

Opposing commenters also made 

alternative suggestions regarding the 

proposed amendments. For example, 

one commenter recommended that QIIs 

and Exempt Investors be required to file 

their initial Schedule 13G within 10 

days after the end of the month in 

which its beneficial ownership exceeds 

five percent as of month-end.259

Another commenter recommended that 

to the extent the Commission is 

concerned about Schedule 13G filers 

acquiring additional shares after 

crossing the five percent threshold 

without public disclosure, it should 

prohibit trading after crossing the five 

percent threshold rather than 

accelerating the filing deadlines.260 One 

commenter suggested that if the 

Commission seeks to apply the 

proposed amendments to a broad set of 

investors whose activities are largely 

unrelated to matters of corporate 

control, or where such matters may be 

implicated but are already subject to 

disclosure requirements under the 

existing disclosure regime, it should 

conduct further study and analysis to 

better understand what percentage of 

such investors ever are implicated in 

actual change in control scenarios—to 

determine the percentage of activist 

matters where earlier and more frequent 

disclosure of such investors’ holding 

would have been materially beneficial 

to investors.261 Another commenter 

recommended that rather than adopting 

the proposed amendments, the 

Commission should add a column to 

Form 13F requiring filers to explicitly 

note, for each listed class of securities, 

whether the filer has acquired over five 

percent beneficial ownership during the 

reporting period.262 And, one 

commenter recommended that the 

Commission consider extending the 

filing deadline for Passive Investors 

(e.g., to 15 or 30 days) rather than 

accelerating it.263

In addition, some supporting 

commenters recommended that the 

Commission consider further shortening 

the initial Schedule 13G filing 

deadlines.264 Those commenters, 

however, did not specify alternative 

deadlines that the Commission should 

adopt.265

Finally, some commenters that 

neither clearly supported nor opposed 

the proposed amendments made 

recommendations to the Commission. 

One commenter expressed the view that 

there should not be filing differences 

between institutional investors and 

Passive Investors and suggested that 

certain institutional investors should 

have more stringent filing requirements 

than Passive Investors.266 Several other 

commenters recommended that the 

Commission require Passive Investors to 

file an initial Schedule 13G in five 

business days rather than five calendar 

days.267


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268 If the deadline falls on a Federal holiday, a 

Saturday, or a Sunday, then the filing may be made 

on the next business day thereafter. 17 CFR 240.0– 

3 (‘‘[I]f the last day on which [a filing] can be 

accepted as timely filed falls on a Saturday, Sunday 

or holiday, such [filing] may be [made] on the first 

business day following.’’). 

269See Proposing Release at 13856 (‘‘Given the 

proposal to shorten the initial reporting deadline [in 

Rule 13d–1(b)] to five business days after the end 

of the month, the current provision of Rule 13d– 

1(b)(2) that operates to accelerate that initial filing 

deadline if beneficial ownership exceeds 10% at the 

end of any month would be unnecessary . . . .’’). 

270See supra notes 197, 199 and accompanying 

text. 

271See supra notes 138–144 and accompanying 

text for some examples of those advancements and 

developments. 

272See, e.g., Kristin Giglia, Note, A Little Letter, 

a Big Difference: An Empirical Inquiry into Possible 

Misuse of Schedule 13G/13D Filings, 116 Colum. L. 

Rev. 105, 115–16 (2015) (explaining that the 

availability of Schedule 13G may allow investors to 

‘‘intentionally structure their acquisition strategies 

to exploit the gaps created by the current reporting 

regime, to their own short-term benefit and to the 

overall detriment of market transparency and 

investor confidence’’ (internal quotations omitted)). 

QIIs in particular may be able to amass sizeable 

amounts of beneficial ownership without reporting 

such positions. Rule 13d–1(b)(2) provides in 

relevant part that ‘‘it shall not be necessary to file 

a Schedule 13G unless the percentage of [a covered 

class] beneficially owned as of the end of the 

calendar year is more than five percent.’’ 17 CFR 

240.13d–1(b)(2). As such, a QII may beneficially 

own in excess of 5% of a covered class for the entire 

year, sell down its position to 5% or below on the 

last day of the calendar year and bypass having to 

report at all under the current regulatory framework 

assuming that its beneficial ownership continues to 

be held in the ordinary course of business, without 

a disqualifying purpose or effect, and does not 

exceed 10% of a covered class. 

273We note that some commenters asserted that 

the Commission did not substantiate its concerns 

regarding reporting gaps and QIIs selling down 

positions before the end of a reporting period to 

avoid a Schedule 13G filing. See supra note 226 and 

accompanying text. Given the potential materiality 

of the information disclosed on Schedule 13G and 

its importance to the market, however, we believe 

it is appropriate to take action to reduce the risk of 

such reporting gaps, even absent evidence 

indicating that the practice of selling down 

positions to avoid a Schedule 13G filing currently 

is widespread. See Proposing Release at 13882, 

n.221 (noting the importance to the market of 

information regarding beneficial ownership, 

regardless of whether it is disclosed on Schedule 

13D or 13G, based on evidence that the initial filing 

of Schedule 13G, like that of Schedule 13D, 

generates a positive stock price reaction, albeit 

smaller in magnitude). We also recognize that 

because the new filing deadline will be tied to a 

QII’s beneficial ownership as of calendar quarterend, QIIs may still be able to avoid a reporting 

obligation if they sell down their positions before 

the end of a quarter. We believe, however, that risk 

is lower under a quarter-end-based deadline than a 

year-end-based deadline because of the increased 

transaction costs, as well as disruptions with 

respect to a long-term investment strategy, that 

would be associated with selling down and 

building up positions multiple times throughout a 

year. 

274Proposing Release at 13856 (noting that ‘‘QIIs 

currently need to monitor beneficial ownership 

levels at least on a monthly basis in case their 

holdings exceed more than 10% at the end of the 

month’’ and that ‘‘Exempt Investors already need to 

monitor the level of their beneficial ownership 

continuously or periodically to ensure that the 

amount of their beneficial ownership does not 

unintentionally exceed 2% in a 12-month period’’). 

275See supra note 216 and accompanying text 

(describing and citing comment letters that asserted 

that the proposed amendments would not impose 

significant burdens on Schedule 13G filers). 

276See supra notes 233–247 and accompanying 

text. 

277See supra notes 219–225 and accompanying 

text. 

278See supra notes 254–258 and accompanying 

text. 

279See letters from Dodge & Cox (recommending 

a filing deadline of 45 days after quarter-end); IAA 

c. Final Amendments 

We are amending Rule 13d–1(b) and 

(d) to shorten the initial Schedule 13G 

filing deadlines under those rules, with 

some modifications from the proposals 

in response to commenter concerns. 

Specifically, we are adopting an initial 

Schedule 13G filing deadline of 45 

days 268 after calendar quarter-end for 

QIIs and Exempt Investors. In addition, 

consistent with our amendment to the 

initial Schedule 13D deadline, we are 

amending Rule 13d–1(c) to require that 

Passive Investors file their initial 

Schedule 13G within five business days 

after the date on which the Passive 

Investor acquired beneficial ownership 

of more than five percent of a covered 

class. 

As noted above, Rule 13d–1(b) and (d) 

currently require QIIs and Exempt 

Investors, respectively, to file an initial 

Schedule 13G within 45 days after 

calendar year-end if, as of the end of 

that year, they beneficially own more 

than five percent of a covered class. We 

are amending Rule 13d–1(b) and (d) to 

require that QIIs and Exempt Investors 

file their initial Schedule 13G within 45 

days after calendar quarter-end if, as of 

the end of that quarter, their beneficial 

ownership exceeds five percent of a 

covered class (rather than five business 

days after the end of the month in 

which beneficial ownership exceeds 

five percent, as proposed). Further, 

because we are adopting the new 45 

days after quarter-end deadline rather 

than the proposed five business days 

after month-end deadline, we are not 

adopting the proposed amendment to 

delete the language in Rule 13d–1(b)(2) 

that imposes an accelerated initial 

reporting obligation.269 Instead, we are 

amending that rule to require that such 

an initial Schedule 13G be filed within 

five business days (instead of the 

current requirement of 10 days) after the 

end of the first month in which the QII’s 

beneficial ownership exceeds 10 percent 

of a covered class, computed as of the 

last day of the month. 

The Commission adopted the current 

initial Schedule 13G filing deadlines of 

45 days after year-end in Rule 13d–1(b) 

and (d) in the late 1970s.270 In light of 

the technological advancements and 

developments in the financial markets 

in the more than 40 intervening 

years,271 we believe it is appropriate to 

shorten those deadlines to ensure 

beneficial ownership information 

disclosed in an initial Schedule 13G is 

reported in a manner that is considered 

timely by modern standards. We also 

expect that shortening those deadlines 

from year-end to quarter-end will 

reduce the risk that QIIs and Exempt 

Investors sell down their positions 

before the end of the year and avoid 

reporting altogether,272 which should 

help to ensure large accumulations of 

beneficial ownership are reported in a 

timely manner, ultimately improving 

market transparency.273

In the Proposing Release, the 

Commission stated its expectation that 

the proposed initial Schedule 13G 

deadlines under Rule 13d–1(b) and (d) 

(i.e., five business days after the end of 

the month in which beneficial 

ownership exceeds five percent of a 

covered class) would result in minimal 

additional burdens on filers because 

QIIs and Exempt Investors ‘‘already 

have well-established compliance 

systems in place to monitor Schedule 

13G ownership levels to determine 

whether filing obligations have been 

triggered.’’ 274 Although some 

commenters agreed with this 

expectation,275 several comments 

disagreed and asserted that the 

proposed deadlines would be unduly 

burdensome for QIIs and Exempt 

Investors (especially those that are 

smaller and non-institutional investors) 

given the number of tasks and amount 

of resources required to prepare a filing 

in such a limited amount of time 276 and 

that such burdens are not sufficiently 

mitigated by any technological 

advancements to justify adopting the 

proposed deadlines.277

Based on commenters’ observations 

regarding the potentially significant 

burdens that the proposed deadlines 

would impose on QIIs and Exempt 

Investors, we have decided to take a 

different approach from the proposal 

and instead amend Rule 13d–1(b) and 

(d) to require an initial Schedule 13G be 

filed within 45 days after calendar 

quarter-end. This change to a quarterend-based deadline, rather than the 

proposed month-end-based deadline, is 

consistent with the recommendations 

that a number of commenters made to 

the Commission.278 We note that those 

commenters recommended various 

different numbers of days after quarterend for the deadline.279 Taking into 


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(same); ICI I (same); MFA (same); SIFMA (same); 

TRP (recommending a filing deadline of at least 30 

days after quarter-end); SSC (recommending a filing 

deadline of 15 business days after quarter-end). 280Form 13F is the reporting form filed by 

institutional investment managers pursuant to 

section 13(f) of the Exchange Act. Under section 

13(f)(1), institutional investment managers that use 

the U.S. mail (or other means or instrumentality of 

interstate commerce) in the course of their business 

and that exercise investment discretion over $100 

million or more in section 13(f) securities must file 

Form 13F. Such institutional investment managers 

must submit four Form 13F filings, with the first 

filing due within 45 days after the end of the fourth 

quarter of the calendar year (i.e., the quarter ending 

Dec. 31 of the same calendar year that the $100 

million filing threshold is reached) and the three 

additional filings due 45 days after the end of the 

subsequent three calendar quarters (i.e., the 

calendar quarters that end on Mar. 31, June 30, and 

Sept. 30). See 17 CFR 240.13f–1(a)(1); see also U.S. 

Securities & Exchange Commission, Division of 

Investment Management, Frequently Asked 

Questions About Form 13F, available at https://

www.sec.gov/divisions/investment/13ffaq. 

281See infra section IV.B.3.b, Table 4 (presenting 

statistics regarding the number of Schedule 13G 

filers that also filed Form 13F in 2022, noting that 

84% of QIIs and 10% of Exempt Investors also filed 

Form 13F). 

282See letter from IAA (recommending that the 

Commission express deadlines consistently in 

either calendar days or business days across all of 

the Schedule 13D and 13G initial and amendment 

filing deadlines, where the deadlines are less than 

45 days to promote compliance by making it 

simpler and less confusing to keep track of the 

various deadlines). 

283 In addition, the amended deadline may result 

in the same amount of time to file as under the 

current rules, depending on the quarter in which 

the filing obligation is triggered. That is, if a QII or 

Exempt Investor becomes the beneficial owner of 

more than 5% of a covered class on or after Oct. 

1 (the beginning of the fourth calendar quarter) and 

remains above the 5% threshold as of Dec. 31 (both 

calendar year-end and the end of the fourth 

calendar quarter), then they would have the same 

amount of time to prepare and submit their initial 

Schedule 13G filing under both the current and 

amended Rule 13d–1(b) and (d). 

284See supra notes 248–250 and accompanying 

text. 

285See supra note 246 and accompanying text; 

see also infra section IV.C.2.b. 

286See, e.g., letter from IAA (‘‘A quarterly 

deadline significantly increases transparency for 

market participants as compared with the current 

annual deadline.’’). 

287See supra note 136 for a discussion of a 

revision we are making to Rule 13d–1(c) to clarify 

that the five-business day deadline is determined 

beginning on the day after the date on which a 

person acquires beneficial ownership of more than 

5% of a covered class. 

288See, for example, infra section IV.B.3.b, Table 

4, which indicates that 31% of Passive Investors 

that filed a Schedule 13G in 2022 also filed a Form 

13F (which would only be required if, among other 

things, they exercise investment discretion over 

$100 million or more in section 13(f) securities). 

289See supra note 241 and accompanying text. 

290See Kristin Giglia, Note, A Little Letter, a Big 

Difference: An Empirical Inquiry into Possible 

Misuse of Schedule 13G/13D Filings, 116 Colum. L. 

Rev. 105, 119 (2015) (‘‘Activists can fly under the 

radar, planning to effect large changes to the issuer 

and even acquiring up to twenty percent ownership 

interest at a relatively low price, all while 

maintaining that their intent is still ‘passive.’ ’’). 

291 Id. at n.160 (noting that QIIs and Exempt 

Investors are less likely than Passive Investors ‘‘to 

switch to a [Schedule] 13D filing’’). 

292Amendments to Beneficial Ownership 

Reporting Requirements, Release No. 34–39538 (Jan. 

12, 1998) [63 FR 2854, 2854 (Jan. 16, 1998)] (stating 

that ‘‘the Commission is imposing some safeguards’’ 

Continued 

account those various 

recommendations, believe that 45 days 

is the appropriate length of time because 

it aligns with the filing deadline for 

Form 13F,280 and many institutional 

investment managers who file a 

Schedule 13G are already reviewing and 

assessing their holdings on a quarterly 

basis in order to prepare Form 13F 

filings.281 In addition, although most of 

the other amended Schedule 13D and 

13G filing deadlines will be expressed 

in ‘‘business days,’’ we believe the 

potential compliance benefits of 

aligning the initial Schedule 13G filing 

deadlines for QIIs and Exempt Investors 

with the Form 13F filing deadline 

justify using calendar days rather than 

business days.282

Even for those QIIs and Exempt 

Investors that are not Form 13F filers, 

the 45-day period after calendar quarterend deadline will be familiar given that 

they currently must file their initial 

Schedule 13G within 45 days after 

calendar year-end.283 As such, we 

believe that many of those beneficial 

owners are well-positioned to submit 

their Schedule 13G filings within 45 

days after calendar quarter-end. This 

deadline, therefore, is likely to be less 

burdensome and should require fewer 

changes to QIIs’ and Exempt Investors’ 

existing compliance operations than the 

proposed month-end-based deadline. 

We also expect that the extended filing 

deadline (i.e., 45 days rather than the 

proposed five business days) will 

address some commenters’ concerns 

that the more compressed time period 

under the proposed deadlines could 

have negatively impacted the accuracy 

and usefulness of initial Schedule 13G 

filings.284

Further, a 45-day, quarter-end-based 

deadline (instead of the proposed fivebusiness day, month-end-based 

deadline) should help mitigate concerns 

that some opposing commenters 

expressed regarding the risk of QIIs and 

Exempt Investors prematurely 

disclosing sensitive portfolio holdings 

information to the market (i.e., ‘‘frontrunning’’ and ‘‘free-riding’’),285

especially given that many of those 

Schedule 13G filers already are 

obligated to disclose their holdings via 

Form 13F on a quarterly basis. We also 

believe that, as compared with the 

current year-end-based deadline, a 

quarter-end-based deadline will 

increase transparency for market 

participants and better reflects the 

technological advancements and 

developments in the financial markets 

since the Commission adopted Rule 

13d–1(b) and (d).286 Thus, we believe 

that this deadline will address the goals 

that prompted the Commission’s 

reassessment of those rules in the 

Proposing Release while, at the same 

time, avoiding inordinately burdening 

Schedule 13G filers. 

In addition, as discussed above, Rule 

13d–1(c) currently requires Passive 

Investors to file an initial Schedule 13G 

within 10 days of acquiring beneficial 

ownership of more than five percent of 

a covered class. As with our final 

amendment to Rule 13d–1(a), we are 

amending Rule 13d–1(c) to require that 

Passive Investors file their initial 

Schedule 13G within five business days 

after 287 acquiring beneficial ownership 

of more than five percent of a covered 

class. We believe it is appropriate to 

amend the initial Schedule 13G filing 

deadline in Rule 13d–1(c) to match the 

initial Schedule 13D filing deadline in 

Rule 13d–1(a) in order to maintain the 

historical regulatory consistency 

between the deadlines in Rule 13d–1(c) 

and (a) and to facilitate the overall goals 

of increasing transparency in beneficial 

ownership and ensuring that investors 

receive material information in a timely 

manner. 

Consistent with our rationale for 

shortening the initial Schedule 13D 

deadline, we believe that many Passive 

Investors are large and sophisticated 

enough to prepare and file an initial 

Schedule 13G within five business 

days.288 The change to a five-business 

day deadline from the proposed fivecalendar day deadline should mitigate 

commenters’ concerns regarding the 

burdens that a shortened deadline 

would impose on Passive Investors and 

the workability of that deadline.289

Further, we note that research indicates 

that at least some beneficial owners may 

improperly rely on Rule 13d–1(c) to file 

a Schedule 13G in lieu of a Schedule 

13D to obscure their control purpose.290

Given this increased likelihood, as 

compared to QIIs and Exempt 

Investors,291 of Passive Investors 

ultimately having a control purpose 

with respect to an issuer, we believe it 

is appropriate to shorten their initial 

Schedule 13G filing deadline to five 

business days in order for that deadline 

to continue to mirror the initial 

Schedule 13D filing deadline. This is 

consistent with the Commission’s 

decision to require Passive Investors to 

file their initial Schedule 13G in 10 

days, the same deadline as Schedule 

13D, when it adopted Rule 13d–1(c).292


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on Passive Investors, including that an ‘‘[i]nitial 

Schedule 13G must be filed within 10 days (instead 

of year end)’’ because ‘‘a control purpose reflects 

the state of mind of a filing person and there are 

incentives to disclose less information’’). The 

Commission also indicated that, as compared to 

QIIs and Exempt Investors, Passive Investors are 

more likely to represent ‘‘voting blocks that have 

the potential of affecting or influencing control of 

the issuer’’ which, therefore, warrants more timely 

notice to the market of their existence. Id. at 2855. 

293 17 CFR 240.13d–2(a). 

294See id. (requiring an amendment ‘‘[i]f any 

material change occurs in the facts set forth in the 

Schedule 13D’’ including ‘‘any material increase or 

decrease in the percentage of the class beneficially 

owned’’). 

295 17 CFR 240.13d–2(b). 

296Proposing Release at 13857. 

297 Id. 

298Under Rule 13d–2(a), the Schedule 13D filer 

only has an obligation to ‘‘file or cause to be filed 

with the Commission an amendment disclosing that 

[material] change.’’ See also 17 CFR 240.12b–15, 

titled ‘‘Amendments,’’ which explains that 

‘‘[a]mendments filed pursuant to this section must 

set forth the complete text of each item as 

amended.’’ 

299Proposing Release at 13857. 

300 Id. at n.67 (quoting In re Cooper Laboratories, 

Release No. 34–22171 (June 26, 1985)). 

301 Id. at 13857. 

302 Id. 

303 Id. 304 Id. at 13857–58. 305 Id. at 13858. 306 Id. (citing Filing and Disclosure Release at 

18489 (stating the Commission’s belief that because 

‘‘the information required by Schedule 13G has 

been reduced to the minimum necessary to satisfy 

the statutory purpose, . . . a materiality standard is 

inherent in those requirements’’ and ‘‘it is 

unnecessary to further minimize it by the insertion 

of an express materiality standard’’)). 

307See, e.g., letters from AFREF (supporting only 

the proposed amendment to Rule 13d–2(a)); 

Anonymous 3; Anonymous 5; Anonymous 11; 

Anonymous 12; Anthony R.; BRT (same); C. 

Robinson; Engineer; FedEx; Freeport-McMoRan; 

HMA I; Jonah; J. Pieper; J. Soucie; Juan; Mark C.; 

Mike; Nasdaq; P. Worts; SIFMA AMG (same); TIAA 

(same); T. Mirvis, et al. (same); Todd. In addition, 

one commenter, which neither clearly supported 

nor opposed the proposed amendment to Rule 13d– 

2(b), supported the proposed shift from an ‘‘any 

change’’ to a ‘‘material change’’ standard. See letter 

from IAA. 

308See supra notes 38–41, 43–44 and 

accompanying text; see also supra note 211 and 

accompanying text. 

3. Rule 13d–2(a) and (b) 

Section 13(d)(2) requires that an 

amendment must be filed to the 

statement required under section 

13(d)(1) if any material change occurs in 

the facts set forth in the statement filed. 

Section 13(d)(2) does not, however, 

identify a specific deadline by which 

such amendment must be filed. Instead, 

Rule 13d–2(a) provides that such 

amendment must be filed with the 

Commission ‘‘promptly.’’ 293 The 

obligation to file an amendment under 

current Rule 13d–2(a) is not limited to 

acquisitions. Instead, changes in the 

disclosure narrative that are material 

also must be reported in an amendment, 

as must material changes in the level of 

beneficial ownership caused by an 

involuntary change in circumstances, 

such as a reduction in the amount of 

beneficial ownership caused solely by 

an increase in the number of shares 

outstanding.294

Section 13(g)(2) requires that an 

amendment be filed to the statement 

required under section 13(g)(1) if any 

material change occurs in the facts set 

forth in the statement filed, but like 

section 13(d)(2), does not identify a 

deadline by which such amendment 

must be filed. Rule 13d–2(b), however, 

does specify a deadline and provides 

that for all persons who report 

beneficial ownership on Schedule 13G, 

an amendment shall be filed ‘‘within 

forty-five days after the end of each 

calendar year if, as of the end of the 

calendar year, there are any changes in 

the information reported in the previous 

filing on that Schedule [13G].’’ 295

a. Proposed Amendments 

In the Proposing Release, the 

Commission proposed to amend Rule 

13d–2(a) to require that all amendments 

to Schedule 13D be filed within one 

business day after the date of the 

material change that triggers the 

amendment obligation. The Commission 

proposed this change from the 

‘‘promptly’’ standard to establish a 

specified filing deadline, remove any 

uncertainty as to the date on which an 

amendment is due, and help ensure that 

beneficial owners amend their filings in 

a more uniform and consistent 

manner.296 The Commission stated that 

it did not believe that requiring 

Schedule 13D amendments to be filed 

within one business day after the date 

on which a material change occurs 

would place those filers at a 

disadvantage.297 The Commission also 

stated that because an amendment to a 

Schedule 13D only requires that the 

material change be reported and not a 

complete set of new narrative responses 

to each of the disclosure form’s 

individual line items,298 it expected that 

those amendments should present a 

lower administrative burden than the 

initial Schedule 13D filing.299 In 

addition, the Commission noted that 

that the proposed amendment would be 

consistent with its existing view that, 

under the current ‘‘promptly’’ standard 

in Rule 13d–2(a), ‘‘[a]ny delay beyond 

the date the filing reasonably can be 

filed may not be prompt’’ and that an 

amendment to a Schedule 13D 

reasonably could be filed in as little as 

one day following the material 

change.300

The Commission also proposed to 

amend Rule 13d–2(b) to require that a 

Schedule 13G be amended within five 

business days of the end of the month 

in which a material change occurs in the 

information previously reported. The 

Commission stated that accelerating the 

deadline for amendments from the 

current standard of 45 days after the end 

of the calendar year would help ensure 

that the information reported would be 

timely and useful.301 The Commission 

also noted that this proposed deadline 

would be consistent with the proposed 

five-business day deadline from the end 

of the month applicable to QIIs’ and 

Exempt Investors’ initial Schedule 13G 

filing obligations arising under Rule 

13d–1(b) and (d).302 In addition, the 

Commission proposed a ‘‘business day’’ 

standard for the proposed deadline to 

partially mitigate the time pressures 

resulting from the reduction of the 

current 45-day deadline.303

The Commission further proposed to 

amend Rule 13d–2(b) to substitute the 

term ‘‘material’’ in place of the term 

‘‘any’’ to serve as the standard for 

determining the type of change that will 

trigger an amendment obligation under 

Rule 13d–2(b). The Commission noted 

that, unlike sections 13(d)(2) and 

13(g)(2), Rule 13d–2(b) does not include 

an express materiality qualifier for 

Schedule 13G amendments and simply 

requires an amendment for ‘‘any 

change.’’ 304 At the time Rule 13d–2(b) 

was adopted, however, the Commission 

stated that there is a materiality 

standard inherent in the provisions 

governing Schedule 13G filings.305 This 

inherent materiality standard is based 

on the fact that any disclosure provided 

by a Schedule 13G filer, in light of the 

infrequency of the reports and 

comparatively minimal statements 

required to be made, is effectively 

material.306 The Commission’s proposed 

change, therefore, was intended to 

merely codify this view in the text of 

Rule 13d–2(b). 

b. Comments Received 

The Commission received a variety of 

comments on the proposed amendments 

to Rule 13d–2(a) and (b). Several 

commenters supported the proposed 

amendments.307 Some of those 

commenters supported revising the 

Schedule 13D and 13G amendment 

deadlines for many of the same reasons 

they supported accelerating the initial 

Schedule 13D and 13G filing 

deadlines.308

In addition, several commenters 

supported the proposed amendments to 

Rule 13d–2(a) and (b) based on changes 

in technology and developments in the 


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309See, e.g., letters from BRT; C. Robinson; 

FedEx; Freeport-McMoRan; Nasdaq; T. Mirvis, et al. 

310See letter from BRT. 

311See, e.g., letters from Anonymous 11; BRT; J. 

Soucie. 

312See letter from FedEx. 

313See, e.g., letters from A. Day; ABA (opposing 

only the proposed amendment to Rule 13d–2(a)); 

AIMA; B. Mason; Dodge & Cox; EEI (same); EIM I 

(same); Hoak and Co. (Apr. 11, 2022) (‘‘Hoak’’) 

(same); ICI I; MFA; MSBA (same); NVCA (same); 

Perkins Coie; SIFMA (opposing only the proposed 

amendment to Rule 13d–2(b)); SIFMA & SIFMA 

AMG (same); SSC (same); STB; TRP (same). 

314See, e.g., letters from ABA; Dodge & Cox; IAA; 

ICI I; TIAA. 

315See supra notes 92–94, 220–224 and 

accompanying text. 

316See letter from ABA. The commenter also 

noted that filing a Schedule 13D amendment 

depends on many factors, including the complexity 

of the information, the pace of developments of the 

information, and the number of persons or parties 

who have an interest in the disclosure and need to 

review the information, contribute to its drafting, 

and, if they are signing the Schedule 13D, are 

subject to liability for the accuracy of the 

information. Id. 

317See, e.g., letters from ABA; AIMA; EIM I; 

Hoak; ICI I; MFA; MSBA; Perkins Coie; STB; see 

also letter from MFA & NAPFM. 

318See letter from STB. The commenter also 

noted that while the one-business day deadline may 

be feasible for an investor engaged in a change of 

control objective, as that investor may have (1) been 

taking preparatory steps toward such goal, (2) an 

internal deal team and external advisors actively 

engaged in the project, and (3) built the Schedule 

13D amendment obligation into its workstream, 

there are many situations requiring a Schedule 13D 

amendment in which such advance notice and 

planning is not possible or practical. Id. The 

commenter further asserted that practical concerns 

regarding the ability to file an amendment pursuant 

to Rule 13d–2(a) in a timely manner may cause 

some Schedule 13D filers to avoid filing 

amendments for changes in their Schedule 13D 

disclosures, preferring to take more risk that their 

determination on materiality is later questioned 

than risk having a ‘‘late’’ filing with the 

Commission. Id. 

319See infra section II.F for a discussion of the 

proposed structured data requirement for Schedules 

13D and 13G. 

320See letter from ABA. 

321See infra section II.A.5 for a discussion of the 

proposed extension of the filing ‘‘cut-off’’ time for 

Schedules 13D and 13G. 

322See letter from Hoak. 

323See, e.g., letters from ABA; EEI; Hoak; MFA; 

NVCA. 

324See letter from NVCA. 

325See, e.g., letters from EIM I; Hoak; MFA. 

326See letter from Hoak. 

327See letters from ABA; STB; see also supra note 

102. 

328See letters from EEI; Hoak. 

329See letter from AIMA. 

330See letters from EIM I; MFA. Those 

commenters also stated that the Commission has 

not justified imposing such a restrictive deadline on 

Schedule 13D amendments, especially given the 

relatively importance of a Form 8–K. Id. One of 

those commenters noted that Schedule 13D 

amendments often disclose agreements between the 

beneficial owner and the issuer, and issuers 

typically have four business days to publicly 

disclose such agreements on Forms 8–K after 

entering into them and often prefer to be the first 

to disclose in order to control the initial message 

to the market, and the proposed deadline would 

deprive issuers of this opportunity. See letter from 

MFA. The commenter also asserted that the 

proposed Schedule 13D amendment deadline 

would make it more difficult for issuers and 

Schedule 13D filers to coordinate their messages 

regarding material agreements they have entered 

into and may force investors to publicly disclose an 

agreement in principle through a Schedule 13D 

amendment before the terms are finalized, creating 

the risk of prematurely disseminating information 

to the market that turns out to be inaccurate or 

incomplete. Id. 

331See letters from MFA; STB. Those commenters 

also asserted that the Form 8–K and section 16 

filing deadlines acknowledge the balance between 

the importance of getting disclosures to investors in 

a timely manner, with the complexity and labor 

required in order to create such filings in a 

complete and thoughtful manner, noting that 

section 16 filings require even less narrative 

disclosure than a Schedule 13D amendment. Id. 

financial markets.309 One commenter 

agreed with the concern in the 

Proposing Release that material 

information about potential change of 

control transactions is not being 

disseminated to the public in a manner 

that would be considered timely in 

today’s financial markets.310 Other 

commenters asserted that the proposed 

amendments would not impose 

significant costs or burdens on 

beneficial owners of more than five 

percent of a covered class 311 and that 

the proposed amendments would be 

consistent in balancing the need for 

adequate disclosures to investors with 

burdens placed on filers to accurately 

prepare required disclosures.312

A number of commenters opposed the 

proposed amendments to Rule 13d–2(a) 

and (b).313 Several commenters 

disagreed with the Commission’s 

technological advancement-based 

justifications for the proposed 

acceleration of the beneficial ownership 

reporting deadlines,314 some of whom 

raised many of the same concerns that 

they expressed with respect to the 

proposed acceleration of the initial 

Schedule 13D and 13G filing 

deadlines.315 One commenter stated that 

filing a Schedule 13D amendment is not 

just a question of technology, but often 

a question of marshalling complex and 

evolving facts and making difficult 

disclosure judgments.316

Some commenters focused solely on 

the proposed amendment to Rule 13d– 

2(a), expressing concern that a onebusiness day deadline would be unduly 

burdensome and may not be enough 

time to prepare a Schedule 13D 

amendment in all circumstances.317 For 

example, one commenter stated that in 

its experience, it generally takes two to 

three business days, and in some cases 

longer, to compile and file such 

amendments.318 One commenter noted 

that if the Commission adopts the 

proposed structured data 

requirements,319 this will add more time 

to the process of preparing a Schedule 

13D amendment and may make the 

proposed one-business day deadline 

impractical.320 Another commenter 

asserted that the proposed extension of 

the filing ‘‘cut-off’’ time to 10 p.m.321

would not be sufficient to offset the 

burden associated with meeting the 

proposed one-business day deadline for 

a Schedule 13D amendment.322

Further, several commenters 

expressed concerns regarding the effect 

of the proposed amendment to Rule 

13d–2(a) on the accuracy of Schedule 

13D amendments.323 For example, one 

of those commenters asserted that the 

proposed amendment would make filing 

accurate amendments nearly 

impossible.324 Some commenters 

expressed concern that by providing 

Schedule 13D filers with insufficient 

time to prepare and file amendments, 

the proposed amendment would 

increase the likelihood of errors and risk 

of liability.325 Another commenter 

noted that the proposed amendment to 

Rule 13d–2(a) could decrease 

transparency by increasing the risk of 

errors in Schedule 13D amendments.326

Commenters also expressed concerns 

about other potential downsides 

associated with the proposed 

amendment to Rule 13d–2(a). For 

example, some commenters expressed 

concern that the proposed amendment 

could negatively impact the ability of 

investors and their advisors to draft 

meaningful disclosures and engage in 

thoughtful analysis.327 Some 

commenters noted that the proposed 

amendment to Rule 13d–2(a) may not 

leave adequate time to prepare the filing 

in the event of unforeseen 

circumstances, including the possibility 

that a necessary approver or signer may 

not be available.328 And, one 

commenter stated that there have been 

very few, if any, abuses associated with 

the current ‘‘promptly’’ regime and 

asserted that it has worked well and 

effectively.329

In addition, some commenters 

questioned the basis for the proposed 

amendment to Rule 13d–2(a). For 

example, some commenters noted that a 

one-business day deadline for Schedule 

13D amendments would be more 

restrictive than the filing deadline for a 

Form 8–K.330 Similarly, some 

commenters noted that Form 8–K and 

section 16 filings do not have as 

restrictive filing deadlines as proposed 

under Rule 13d–2(a).331 One commenter 

asserted that the ‘‘promptly’’ standard 

under Rule 13d–2(a) has ‘‘generally 

been understood’’ to mean within two 


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332See letter from EIM I. 

333See letter from ABA. The commenter stated 

that, as the Commission has acknowledged in the 

past, in order to serve the policies of the Williams 

Act, the timing for public filings should vary based 

on the circumstances. Id. 

334See letters from MFA; STB. The commenters 

noted, for example, that a one-business day 

deadline may not be appropriate for Schedule 13D 

amendments with respect to material changes that 

do not have any nexus to a change or influence in 

corporate control. Id. 

335See letter from ABA. 

336See letter from MFA. 

337See letter from NVCA. Specifically, the 

commenter asserted that the burden of inaccurate 

Schedule 13D amendments and the associated risks 

are far greater than any benefit to be gained from 

the information that a venture capital fund is 

reducing its share ownership in the ordinary course 

of exiting investments and providing returns to 

limited partner-investors. Id. The commenter also 

noted that the proposed amendment would impose 

substantial compliance burdens on venture capital 

funds that make Schedule 13D filings and 

expressed concern that inaccurate Schedule 13D 

amendments caused by the proposed accelerated 

deadline could result in giving the market 

information that is misleading, particularly to retail 

investors, which could reduce liquidity and 

negatively impact an issuer’s share price, harming 

all investors other than short sellers. Id. 

338See, e.g., letters from MFA; Perkins Coie; STB; 

TIAA; TRP. 

339See supra notes 226–228, 235–236, 251 and 

accompanying text. 

340See letter from MFA. The commenter further 

stated that the benefits of the proposed amendment 

would be minimal because Schedule 13G filers 

generally do not have control intent and already 

disclose their holdings on Form 13F. Id. 

341See letter from MFA. 

342See supra notes 99, 106, 226, 243 and 

accompanying text; see also letter from MFA & 

NAPFM. 

343See letters from Freeport-McMoRan; HMA I. 

344See letter from A. Day. 

345See letter from SIFMA AMG. 

346See, e.g., letters from ABA; Dodge & Cox; ICI 

I; MFA. One of those commenters also noted that 

to the extent that a Schedule 13D filer is able to file 

earlier, the filer would still be obligated to do so 

because the rule would still require prompt filings. 

See letter from ABA. Alternatively, the commenter 

suggested that the Commission require that certain 

categories of amendments (e.g., dispositions or 

acquisitions of beneficial ownership of 1% or more) 

be filed within a specified one or two business day 

window. Id. Similarly, another commenter 

recommended that the Commission add a narrative 

setting forth its timing expectations in different 

situations for the filing to satisfy the ‘‘prompt’’ 

standard, including those where a shorter filing 

deadline would be required. See letter from MFA. 

347See letter from AIMA. 

348See, e.g., letters from EEI; EIM I; Hoak; IAA; 

Perkins Coie. Several of those commenters asserted 

that two business days would be consistent with the 

current general understanding of the ‘‘promptly’’ 

standard. See letters from EIM I; IAA. Some 

commenters indicated that a one-business day 

deadline for Schedule 13D amendments would be 

too ‘‘aggressive from an operational perspective,’’ 

would be extremely difficult for filers to comply 

with, and could result in inadvertent errors, see 

letter from IAA, and that a two-business day 

deadline would be less onerous for investors yet 

would ensure the accuracy and transparency of the 

information in their filings. See letter from EEI. 

349See letter from Hoak. 

350See letter from STB. The commenter 

recommended that the Commission engage in 

further study to determine the percentage of 

Schedule 13D filers that ultimately engage in 

activities that impact corporate control and the 

number of such cases in which a Schedule 13D 

amendment is not filed within the one-business day 

timeframe. Id. The commenter also suggested that 

the Commission engage in further study regarding 

the different circumstances under which Schedule 

13D amendments are filed and consider whether 

business days and disagreed with the 

Proposing Release that Commission 

precedent supports a one-business day 

interpretation of that standard.332

Further, one commenter stated that 

the proposed amendment to Rule 13d– 

2(a) would ‘‘unnecessarily sacrifice’’ the 

flexibility that the current version of the 

rule provides.333 Other commenters 

noted that the promptness of a Schedule 

13D amendment filing obligation under 

Rule 13d–2(a) currently is determined 

by considering the facts and 

circumstances related to such filing and 

urged the Commission to continue to 

consider the variation in circumstances 

that can lead to an amendment 

obligation rather than applying the same 

standard in all circumstances.334 One 

commenter asserted that the proposed 

amendment to Rule 13d–2(a) could lead 

to a large increase in the number of late 

Schedule 13D amendment filings.335

In addition, some commenters 

expressed concern about the costs of the 

proposed amendment to Rule 13d–2(a) 

relative to its benefits. For example, one 

commenter stated that the proposed 

amendment to Rule 13d–2(a) does not 

appropriately balance the need for 

prompt disclosure of important, marketmoving events with the need to avoid 

imposing an undue, impracticable 

burden on investors making more 

routine filings.336 Another commenter 

asserted that the burdens and risks of 

the proposed amendment to Rule 13d– 

2(a) associated with venture capital 

funds that make Schedule 13D filings 

exceed its benefits.337

Several commenters 338 opposed the 

proposed amendment to Rule 13d–2(b) 

for many of the same reasons that they 

opposed the proposed acceleration of 

the initial Schedule 13G filing deadlines 

for QIIs and Exempt Investors.339 In 

addition, one commenter broadly 

asserted that the costs of the proposed 

amendment to Rule 13d–2(b) ‘‘far 

outweigh any perceived benefits.’’ 340

Another commenter noted that many 

Schedule 13G filers have filing 

obligations with respect to multiple 

issuers and that the proposed 

amendment may require ‘‘hundreds of 

filings on a monthly basis, as their 

investments fluctuate perpetually.’’ 341

And, other commenters expressed the 

same concerns about the proposed 

amendments to Rule 13d–2(a) and (b) 

that they expressed with respect to the 

proposed acceleration of the initial 

Schedule 13D and 13G filing 

deadlines.342

Finally, some commenters made 

recommendations to the Commission 

regarding the proposed amendments to 

Rule 13d–2(a) and (b). For example, 

some commenters that generally 

supported the proposed amendments 

recommended that the Commission 

consider further shortening the filing 

deadlines.343 Further, specifically with 

respect to the proposed amendment to 

Rule 13d–2(a), one supporting 

commenter recommended that the 

Commission include an assets under 

management-based threshold for the 

proposed accelerated Schedule 13D 

filing deadlines.344 Another commenter 

that generally supported revising the 

Schedule 13D amendment deadline 

recommended that the Commission 

require that Schedule 13D amendments 

be filed within three business days.345

Conversely, several opposing 

commenters recommended that the 

Commission retain the requirement that 

Schedule 13D amendments be filed 

promptly, but require that they be filed 

within no more than a specified number 

of days after the relevant triggering 

event (with recommendations varying 

between two and four business days).346

One opposing commenter suggested that 

the Commission require that Schedule 

13D amendments be filed within five 

business days.347 Other commenters, 

which either generally opposed or 

neither clearly supported nor opposed 

the proposed amendment to Rule 13d– 

2(a), recommended that the Commission 

require that Schedule 13D amendments 

be filed within two business days.348

In addition to focusing on the 

Schedule 13D filing deadline, some 

opposing commenters made other 

recommendations with respect to the 

proposed amendment to Rule 13d–2(a). 

For example, one opposing commenter 

asserted that a Schedule 13D 

amendment should not be required for 

involuntary changes in circumstances 

caused by the issuer because such 

amendments do not relate to the 

Schedule 13D filer’s action or intent and 

are already disclosed to the market by 

the issuer.349 Another opposing 

commenter recommended that if the 

Commission believes that a onebusiness day interpretation of 

‘‘promptly’’ is not being properly 

observed, it should clarify that in 

situations involving acquisition of 

corporate control, ‘‘promptly’’ means 

one business day.350 One commenter, 


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requiring such amendments to be filed within the 

one business day timeframe would materially 

improve the information provided to investors 

relating to such issuer control matters. Id. 

351See letter from IAA. 

352See, e.g., letters from Dodge & Cox; IAA; ICI 

I. 

353See letter from SSC. The commenter also 

recommended that materiality be defined as more 

than a 5% change in beneficial ownership. Id. 

354See letter from ABA. 

355See letter from STB. The commenter also 

suggested that if the Commission’s goal is market 

transparency, and not a targeted concern related to 

matters of corporate control, the Commission 

should consider whether there are more appropriate 

tools to disclose significant beneficial ownership 

positions or material changes to such positions in 

a more concise and efficient manner (e.g., Form 

13F). Id. 

356See, e.g., letters from ABA; IAA; ICI I; STB. 

Several of those commenters requested that the 

Commission confirm that a change in beneficial 

ownership of less than 5% will not be deemed 

‘‘material’’ for purposes of the rule. See letters from 

IAA; ICI I; STB. Further, one of those commenters 

recommended that the Commission clarify whether 

a Schedule 13G amendment obligation would be 

triggered based on actual trading activity of an 

investor or whether such obligation could be 

triggered based on changes in the number of 

outstanding shares. See letter from STB. The 

commenter also requested clarification as to 

whether an investor would be permitted to ‘‘net’’ 

purchases and sales for purposes of the analysis. Id. 

357See letter from TIAA. 

358See letter from IAA. 

359See supra note 134 for a discussion of the new 

definition of ‘‘business day’’ that we are adopting 

for purposes of Regulation 13D–G. 

360Proposing Release at 13857; see also letter 

from EIM I (stating that replacing the ‘‘promptly’’ 

standard with a two-business day deadline would 

‘‘provid[e] a more objective deadline’’). For that 

reason, we also disagree with commenters who 

recommended we should retain a flexible standard. 

See supra notes 333–334 and accompanying text. 

We note that those recommendations were made, in 

part, in response to the proposed one-business day 

deadline. See, e.g., supra note 334 (describing some 

commenters’ assertion that a one-business day 

deadline may not be appropriate for Schedule 13D 

amendments with respect to material changes that 

do not have any nexus to a change or influence in 

corporate control). As such, the additional time 

provided by the two-business day deadline we are 

adopting should address some of these concerns. 

This view is consistent with several commenters’ 

assertions that ‘‘promptly’’ is generally understood 

to mean two business days. See supra note 348. 

361 Id. (expressing the Commission’s belief ‘‘that 

requiring Schedule 13D amendments to be filed 

within one business day after the date on which a 

material change occurs will [not] place those filers 

at a disadvantage’’ and noting that ‘‘those 

amendments should present a lower administrative 

burden than the initial Schedule 13D filing’’). 

362See supra notes 317–322 and accompanying 

text. 

363See supra note 348 and accompanying text. 

364See supra notes 323–326 and accompanying 

text. 

which neither clearly supported nor 

opposed the proposed amendment to 

Rule 13d–2(a), recommended that the 

Commission define the percentage 

ownership change that is deemed a 

‘‘material change’’ as the specified 

percentage only, and that it omit the 

subjective ‘‘facts and circumstances’’ 

part of the standard.351

Further, a number of opposing 

commenters made recommendations 

regarding the proposed amendment to 

Rule 13d–2(b). For example, several 

commenters recommended that the 

Commission require Schedule 13G 

amendments to be filed within 45 days 

after the end of a quarter in which a 

material change occurred, consistent 

with the amendment frequency for Form 

13F.352 One commenter recommended 

that QIIs be required to file an amended 

Schedule 13G within 20 business days 

after the end of a quarter in which a 

material change has occurred.353 One 

commenter, which neither clearly 

supported nor opposed the proposed 

amendment to Rule 13d–2(b), 

recommended that the Commission 

require that Schedule 13G amendments 

be filed within 10 days after the end of 

the month in which a material change 

occurs.354

In addition to focusing on the 

Schedule 13G amendment deadline, 

some commenters made other 

recommendations with respect to Rule 

13d–2(b). For example, one opposing 

commenter suggested that the 

Commission conduct further study and 

analysis to understand what percentage 

of Schedule 13G filers are involved in 

change in control scenarios.355 A 

number of commenters, which either 

generally opposed or neither clearly 

supported nor opposed the proposed 

amendment to Rule 13d–2(b), also 

requested that the Commission clarify 

what constitutes a ‘‘material change’’ for 

Schedule 13G filers.356 One commenter 

recommended that the Commission 

carve out QIIs from the accelerated 

filing deadline, including because QIIs 

must certify that they do not have a 

control intent.357 And, one commenter 

recommended that the Schedule 13G 

amendment filing deadline be expressed 

in business days.358

c. Final Amendments 

We are amending Rule 13d–2(a) and 

(b) to revise the Schedule 13D and 13G 

amendment filing deadlines under those 

rules. In response to commenter 

concerns, however, we are making some 

changes to the proposed deadlines. 

Specifically, we are adopting a Schedule 

13D amendment filing deadline of two 

business days 359 after the date of a 

material change and a Schedule 13G 

amendment filing deadline of 45 days 

after calendar quarter-end. We also are 

amending Rule 13d–2(b) to require an 

amendment to a Schedule 13G be filed 

only if a ‘‘material change’’ occurs. 

As noted above, Rule 13d–2(a) 

currently requires that an amendment 

be filed promptly if a material change 

occurs in the facts set forth in a 

Schedule 13D. Although the 

Commission proposed to amend Rule 

13d–2(a) to replace the ‘‘promptly’’ 

standard with a one-business day 

deadline, we are instead adopting a twobusiness day deadline in light of the 

comments received. As noted in the 

Proposing Release, establishing a 

specified filing deadline for Schedule 

13D amendments should remove any 

uncertainty as to the date on which an 

amendment is due and help ensure that 

beneficial owners amend their filings in 

a more uniform and consistent 

manner.360 We note, however, that 

several commenters disagreed with the 

Commission’s expectation that the 

proposed one-business day deadline 

would impose minimal incremental 

burdens on Schedule 13D filers.361 To 

the contrary, those commenters 

expressed concerns about the 

workability of a one-business day 

deadline for filing Schedule 13D 

amendments and described the burdens 

that beneficial owners would incur 

trying to meet that deadline.362

We believe that shifting from the 

proposed one-business day deadline to 

a two-business day deadline will 

address those concerns and provide 

beneficial owners with adequate time to 

prepare and file a Schedule 13D 

amendment. Relevantly, several 

commenters, including some that 

generally opposed the proposed 

amendment, recommended that the 

Commission adopt a two-business day 

deadline under Rule 13d–2(a).363 We 

agree with those commenters that a twobusiness day deadline, as compared to 

a one-business day deadline, would be 

less onerous for beneficial owners while 

at the same time ensuring that investors 

and markets are provided with material 

information disclosed in Schedule 13D 

amendments in a sufficiently prompt 

manner. We also believe that giving 

beneficial owners additional time, as 

compared to the proposed deadline, to 

prepare their Schedule 13D 

amendments will reduce the risk of 

erroneous or incomplete filings, 

addressing a concern that some 

commenters expressed with respect to 

the proposed one-business day deadline 

and helping to preserve the utility of 

those filings.364

Further, as discussed above, Rule 

13d–2(b) currently requires that an 

amendment be filed within 45 days of 

calendar year-end if there were any 

changes to the information previously 

reported on Schedule 13G during that 

year. Similar to our amendments to the 


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365Proposing Release at 13857. 

366See supra note 308 and accompanying text. 

367See supra notes 314–316, 338–342 and 

accompanying text. 

368See supra section II.A.2. 

369We believe that aligning the Schedule 13G 

amendment deadline under Rule 13d–2(b) with the 

new quarter-end Schedule 13G filing deadlines for 

Exempt Investors and QIIs under Rule 13d–1(b) and 

(d) will promote compliance with those rules, as it 

preserves the uniformity currently in effect with 

respect to the year-end filing deadlines under those 

rules. 

370See supra notes 352–353 and accompanying 

text. 

371See letters from Dodge & Cox (recommending 

a filing deadline of 45 days after quarter-end); IAA 

(same); ICI I (same); SSC (recommending a filing 

deadline of 20 business days for QIIs after quarterend). 

372See supra section II.A.2.c. 

373See letter from IAA (recommending that the 

Commission express deadlines consistently in 

either calendar days or business days across all of 

the Schedule 13D and 13G initial and amendment 

filing deadlines, where the deadlines are less than 

45 days to promote compliance by making it 

simpler and less confusing to keep track of the 

various deadlines). 

374 In addition, the amended deadline may result 

in the same amount of time to file as under the 

current rules, depending on the quarter in which 

the filing obligation is triggered. That is, if a 

material change occurs to the information 

previously reported on Schedule 13G between Oct. 

1 (the beginning of the fourth calendar quarter) and 

Dec. 31 (both calendar year-end and the end of the 

fourth calendar quarter), then the filer would have 

the same amount of time to prepare and submit 

their Schedule 13G amendment under both the 

current and amended Rule 13d–2(b). 

375 Id. See supra note 273 for a discussion of why 

we believe that it is appropriate to accelerate the 

Schedule 13G filing deadlines, notwithstanding 

some commenters’ assertion that the Commission 

did not substantiate its concerns regarding 

Schedule 13G reporting gaps and QIIs selling down 

positions before the end of a reporting period to 

avoid a Schedule 13G filing. See supra note 339 and 

accompanying text. 

376See Proposing Release at 13858; see also supra 

note 306 and accompanying text. 

377See supra note 356 and accompanying text. 

378 17 CFR 240.12b–2 (stating that the term 

‘‘material,’’ when used to qualify a requirement for 

the furnishing of information as to any subject, 

limits the information required to those matters to 

which there is a substantial likelihood that a 

reasonable investor would attach importance in 

determining whether to buy or sell the securities 

registered). 

379See, e.g., Basic Inc. v. Levinson, 485 U.S. 224, 

231–32 (1988) (noting that the U.S. Supreme Court 

‘‘explicitly has defined a standard of materiality 

under the securities laws’’ to mean that ‘‘there must 

be a substantial likelihood that the disclosure of the 

omitted fact would have been viewed by the 

reasonable investor as having significantly altered 

the ‘total mix’ of information made available’’ 

(quoting TSC Industries, Inc. v. Northway, Inc., 426 

U.S. 438, 449 (1976))). 

380 17 CFR 240.13d–2(a). 

381 Id. (providing that a material change includes, 

‘‘but [is] not limited to,’’ a ‘‘material increase or 

decrease in the percentage of the class beneficially 

owned’’ and that ‘‘acquisitions or dispositions of 

initial Schedule 13G filing deadlines 

under Rule 13d–1(b) and (d), we are 

revising Rule 13d–2(b) to require that a 

Schedule 13G amendment pursuant to 

that rule be filed within 45 days after 

calendar quarter-end if, during that 

quarter, there were any material changes 

to the information previously reported 

(rather than five business days after the 

end of the month in which a material 

change occurred, as proposed). Thus, 

there are two components to our 

amendment to Rule 13d–2(b): we are 

both shortening the deadline for the 

filing of a Schedule 13G amendment 

and adding an express qualifier to 

require an amendment only if there is a 

material change to the information 

previously reported. 

We believe that accelerating the 

Schedule 13G amendment deadline will 

help ensure the information reported is 

timely and useful.365 Numerous 

supporting commenters also echoed this 

point.366 We note, however, that several 

commenters asserted that the proposed 

month-end-based deadline would be 

unduly burdensome for Schedule 13G 

filers and that such burdens are not 

sufficiently mitigated by any 

technological advancements to justify 

adopting the proposed deadline,367

reiterating many of the concerns that 

were expressed about the proposed 

amendments to Rule 13d–1(b) and 

(d).368

To mitigate those concerns, and to 

conform to the initial Schedule 13G 

filing deadlines applicable to QIIs and 

Exempt Investors under Rule 13d–1(b) 

and (d),369 we are instead adopting a 

quarter-end-based deadline for Schedule 

13G amendments under Rule 13d–2(b). 

This change from the proposal comports 

with the recommendations that several 

commenters that opposed the proposed 

amendment to Rule 13d–2(b) made to 

the Commission.370 Consistent with the 

comments provided on the proposed 

amendments to Rule 13d–1(b) and (d), 

we note that those commenters that 

suggested a quarter-end-based Schedule 

13G amendment deadline recommended 

various different numbers of days after 

quarter-end for the deadline.371 Taking 

into consideration those various 

recommendations, as we noted in the 

context of our amendments to Rule 13d– 

1(b) and (d),372 we believe that 45 days 

is the appropriate length of time because 

it aligns with the filing deadline for 

Form 13F, and many institutional 

investment managers who file a 

Schedule 13G are already reviewing and 

assessing their holdings on a quarterly 

basis in order to prepare Form 13F 

filings. In addition, although most of the 

other amended Schedule 13D and 13G 

filing deadlines will be expressed in 

‘‘business days,’’ we believe the 

potential compliance benefits of 

aligning the Schedule 13G amendment 

deadline with the Form 13F filing 

deadline justify using calendar days 

rather than business days.373

Even for those Schedule 13G filers 

that are not Form 13F filers, the 45-day 

period after calendar quarter-end 

deadline will be familiar given that they 

currently must file their Schedule 13G 

amendment 45 days after calendar yearend.374 As such, we believe that many 

of those beneficial owners are wellpositioned to submit their Schedule 13G 

filings 45 days after calendar quarterend, and we expect that this change 

from the proposal will produce the same 

benefits and mitigate opposing 

commenters’ concerns to the same 

degree as our amendments to Rule 13d– 

1(b) and (d).375

Finally, we also are revising the text 

of Rule 13d–2(b), as proposed, to 

substitute the term ‘‘material’’ in place 

of the term ‘‘any’’ to serve as the 

standard for determining the type of 

change that will trigger an amendment 

obligation under Rule 13d–2(b). As 

discussed in the Proposing Release, this 

change is merely intended to codify the 

Commission’s previously stated view 

that there is an inherent materiality 

standard in the provisions governing 

Schedule 13G filings.376 We note that 

several commenters requested that the 

Commission clarify what constitutes a 

‘‘material change,’’ with some of those 

commenters recommending that the 

Commission deem a change in 

beneficial ownership of less than five 

percent to not be ‘‘material’’ for 

purposes of Rule 13d–2(b).377 The term 

‘‘material,’’ however, already is defined 

in Rule 12b–2 378 and is a familiar, 

established concept in the Federal 

securities laws.379 As such, we do not 

believe it is necessary or advisable to 

adopt a new materiality standard for 

purposes of Schedule 13G amendments 

under Rule 13d–2(b) or to provide an 

express safe harbor from the application 

of Rule 13d–2(b) for certain specified de 

minimis changes in beneficial 

ownership. 

We recognize that Rule 13d–2(a) 

provides that a ‘‘material change’’ for 

purposes of that rule includes ‘‘any 

material increase or decrease in the 

percentage of the class beneficially 

owned’’ and provides that ‘‘[a]n 

acquisition or disposition of beneficial 

ownership of securities in an amount 

equal to one percent or more of the class 

of securities shall be deemed ‘material’ 

for purposes of this section.’’ 380 We also 

note, however, that these are nonexclusive circumstances in which an 

amendment obligation has been 

triggered.381 Thus, although this 


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less than [one percent of the class of securities] may 

be material, depending upon the facts and 

circumstances’’). 

382See supra section II.A.3.a. 

383Proposing Release at 13858. 

384 Id. 

385 Id. 

386See supra section II.A.2.a. 

387See supra section II.A.3.a. 

388See, e.g., letters from AFREF (expressly 

supporting only the proposed amendment to Rule 

13d–2(d)); Anonymous 3; Anonymous 5; 

Anonymous 11; Anonymous 12; Anthony R.; C. 

Robinson; Engineer; FedEx; Freeport-McMoRan; 

HMA I; J. Pieper; J. Soucie; Jonah; Juan; Mark C.; 

Mike; Nasdaq; P. Worts; Todd. 

389See supra notes 38–40, 43–44 and 

accompanying text; see also supra notes 211, 308 

and accompanying text. 

390See, e.g., letters from Anonymous 11; 

Freeport-McMoRan; J. Soucie. 

391See letter from FedEx. 

392See id. 

393See, e.g., letters from A. Day; ABA; AIMA; B. 

Mason; Dodge & Cox; EEI (opposing only the 

proposed amendment to Rule 13d–2(d)); ICI I; MFA; 

MSBA (same); Perkins Coie; SSC (opposing only the 

proposed amendment to Rule 13d–2(c)); TIAA 

(same). 

394See supra notes 99, 101–102, 226, 236, 243, 

247, 250, 327 and accompanying text. 

language in Rule 13d–2(a) provides 

guidance for beneficial owners to 

determine when a Schedule 13D 

amendment obligation arises under that 

rule, it is fundamentally different from 

the express safe harbor that some 

commenters requested with respect to 

the Schedule 13G amendment 

obligation under Rule 13d–2(b). Further, 

because both Rule 13d–2(a) and (b) will 

now share the same materiality standard 

for determining when an amendment is 

due, the language in Rule 13d–2(a), 

including the statement that ‘‘[a]n 

acquisition or disposition of beneficial 

ownership of securities in an amount 

equal to one percent or more of the class 

of securities shall be deemed 

‘material,’ ’’ is equally instructive for 

purposes of determining what changes 

are material under Rule 13d–2(b). 

4. Rule 13d–2(c) and (d) 

Rule 13d–2(c) governs the amendment 

obligation for QIIs whose beneficial 

ownership exceeds 10 percent of a 

covered class. Under Rule 13d–2(c), QIIs 

are required to file an amendment to 

their Schedule 13G within 10 days after 

the end of the first month in which their 

beneficial ownership exceeds 10 percent 

of a covered class, calculated as of the 

last day of the month. Once across the 

10 percent threshold, QIIs are further 

required under current Rule 13d–2(c) to 

file additional amendments within 10 

days after the end of the first month in 

which their beneficial ownership 

increases or decreases by more than five 

percent of the covered class, calculated 

as of the last day of the month. 

Rule 13d–2(d) governs the 

amendment obligation for Passive 

Investors whose beneficial ownership 

exceeds 10 percent of a covered class. 

Under current Rule 13d–2(d), Passive 

Investors are required to ‘‘promptly’’ file 

an amendment to their Schedule 13G 

upon acquiring greater than 10 percent 

of a covered class. Once across the 10 

percent threshold, Passive Investors are 

further required under current Rule 

13d–2(d) to file additional amendments 

‘‘promptly’’ if their beneficial 

ownership increases or decreases by 

more than five percent of the covered 

class. 

The amendment obligations arising 

under Rule 13d–2(c) and (d) are in 

addition to the general amendment 

requirement in Rule 13d–2(b), which is 

discussed in more detail in section II.3 

above. To comply with Rule 13d–2(c) 

and (d), QIIs and Passive Investors, 

depending on their beneficial 

ownership levels, may have to amend 

their Schedule 13G filings more 

frequently and do so throughout the 

year. 

a. Proposed Amendments 

In connection with the proposed 

amendment to Rule 13d–2(b),382 the 

Commission proposed to amend Rule 

13d–2(c) to require that QIIs file an 

amendment to their Schedule 13G 

within five days after the date on which 

their beneficial ownership exceeds 10 

percent of a covered class, rather than 

10 days after the end of the month. 

Similarly, once across the 10 percent 

threshold, the proposed amendment 

would have required QIIs to file 

additional amendments five days after 

the date on which their beneficial 

ownership increases or decreases by 

more than five percent of the covered 

class, rather than 10 days after the end 

of the month. The Commission intended 

that these amendments, when 

considered in the context of the 

proposed amendment to Rule 13d–2(b), 

would preserve the utility of Rule 13d– 

2(c) as a provision that provides the 

market with earlier notice of QIIs’ 

beneficial ownership exceeding 10 

percent of a covered class and, 

thereafter, upon their beneficial 

ownership of the covered class 

increasing or decreasing by more than 

five percent.383 The Commission also 

expressed the view that the imposition 

of such an accelerated deadline is 

appropriate in the context of our 

proposed amendment to Rule 13d–2(c) 

because the high thresholds in that 

rule—10 percent beneficial ownership 

of a covered class and any subsequent 

five percent increase or decrease in 

beneficial ownership—warranted that 

the amendment be rapidly disseminated 

to the market.384 And, consistent with 

its rationale for proposing to shorten the 

other deadlines, the Commission noted 

that QIIs may have access to the same 

technology as other Schedule 13D and 

13G filers to satisfy this deadline, 

especially given the size and 

sophistication of the persons eligible to 

file as QIIs.385

The Commission also proposed to 

amend Rule 13d–2(d) to change the 

amendment filing deadline from the 

‘‘promptly’’ standard to one business 

day after the date on which an 

amendment obligation arises. The 

Commission proposed this amendment 

for substantially the same reasons it 

proposed to shorten the filing deadline 

for the initial Schedule 13G 386 and 

change the filing deadline for Schedule 

13D amendments.387

b. Comments Received 

Commenters expressed a variety of 

views regarding the proposed 

amendments to Rule 13d–2(c) and (d). A 

number of commenters supported the 

proposed amendments.388 Some of 

those commenters supported the 

proposed amendments for many of the 

same reasons they supported the 

revising the other Schedule 13D and 

13G filing deadlines.389

Some supporting commenters also 

expressed their expectation that the 

proposed amendments to Rule 13d–2(c) 

and (d) would not impose significant 

costs to beneficial owners of more than 

five percent of a covered class.390 One 

commenter asserted that the proposed 

amendments would be consistent in 

balancing the need for adequate 

disclosures to investors with burdens 

placed on filers to accurately prepare 

required disclosures.391 This commenter 

also supported the proposed 

amendments based on changes in 

technology and developments in the 

financial markets.392

Several commenters opposed the 

proposed amendments to Rule 13d–2(c) 

and (d).393 Some of those commenters 

opposed the proposed amendments for 

many of the same reasons they opposed 

revising the other Schedule 13D and 

13G filing deadlines.394

In addition, some commenters also 

expressed concern that the proposed 

amendment to Rule 13d–2(c) would 

impose significant and unnecessary 

additional reporting burdens on QIIs, 

including costs related to enhancing 

their systems to comply with potential 


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395See, e.g., letters from ABA; ICI I; MFA. One 

commenter noted that proposed amendment 

represents a radical change for QIIs as it will require 

them to shift from monitoring and reporting 

Schedule 13G positions on a monthly basis to a 

daily basis. See letter from MFA. The commenter 

also stated that the proposed amendment would be 

particularly burdensome for algorithmic traders 

whose investments are in a perpetual state of flux. 

Id. 

396See letter from ICI I. 397See letter from MSBA. 398See letter from EEI. 399See, e.g., letters from Dodge & Cox; IAA; ICI 

I; MSBA. 400See supra notes 92–94, 220, 223 and 

accompanying text. 401See letter from MSBA. 402See letters from ABA; MFA. One commenter 

stated that because QIIs do not have any control 

intent, the timing of their beneficial ownership 

reporting is not a source of meaningful concern. See 

letter from ABA. 

403See letter from IAA. 

404See letters from EEI; Perkins Coie. 

405See letter from EEI. 

406See letter from ABA. 

407See letter from IAA. The commenter further 

noted that ‘‘Passive Investors (and QIIs) who lose 

eligibility to file on Schedule 13G—for example, by 

changing to a control intent—currently have 10 

calendar days . . . to file their initial Schedule 13D 

reflecting this change in intent’’ and that ‘‘[i]t seems 

inconsistent with the materiality of the information 

disclosed to require Passive Investors who remain 

passive to file a Schedule 13G amendment in a 

shorter timeline than formerly-Passive Investors 

who have to file a Schedule 13D.’’ Id. 

408See supra note 134 for a discussion of the new 

definition of ‘‘business day’’ that we are adopting 

for purposes of Regulation 13D–G. 

409See Proposing Release at 13858 (stating that 

the proposed amendments to Rule 13d–2(c), ‘‘when 

considered in the context of our proposed 

amendment to Rule 13d–2(b), preserve the utility of 

Rule 13d–2(c) as a provision that provides the 

market with earlier notice of’’ significant changes in 

QIIs’ beneficial ownership). 

410See supra section II.A.3.c. 

411See supra notes 394–396 and accompanying 

text. 

intra-month reporting.395 Another 

commenter asserted that retaining the 

current Schedule 13G amendment filing 

deadline under Rule 13d–2(c) would be 

consistent with the Commission’s 

historical recognition that beneficial 

ownership by QIIs does not raise the 

same concerns as beneficial ownership 

by investors that hold positions with a 

control intent and, therefore, it is 

appropriate to minimize the reporting 

burdens on QIIs.396

With respect to the proposed 

amendment to Rule 13d–2(d), one 

commenter asserted that the proposed 

one business day deadline is 

unreasonable given that many Passive 

Investors require assistance of counsel 

and that a filing under that rule may 

require input by multiple parties before 

being filed.397 One commenter stated 

that the proposed amendment would 

compromise the accuracy of Schedule 

13G amendments and also would not 

allow for the possibility that a necessary 

approver or signer may not be 

available.398

Commenters also criticized the 

Commission’s justifications for the 

proposed amendments to Rule 13d–2(c) 

and (d). For example, several 

commenters disagreed with the 

Commission’s technological 

advancement-based justifications for the 

proposed amendments,399 some of 

whom raised many of the same concerns 

that they expressed with respect to the 

proposed amendments to the other 

Schedule 13D and 13G filing 

deadlines.400 One commenter also noted 

that Passive Investors generally do not 

have access to specialized technology 

that would make it practical for them to 

file an amended Schedule 13G on the 

proposed accelerated basis.401 And, 

some commenters asserted that the costs 

of the proposed amendments to Rule 

13d–2(c) and (d) would exceed their 

benefits.402

Commenters also made some 

recommendations regarding the 

proposed amendments. For example, 

one commenter that generally opposed 

the proposed amendment to Rule 13d– 

2(c) recommended that the Commission 

require that Schedule 13G amendments 

pursuant to that rule be filed within 45 

days after the end of a quarter, 

consistent with the amendment 

frequency for Form 13F.403

Some commenters that opposed the 

proposed amendment to Rule 13d–2(d) 

recommended a two-business day 

deadline under that rule,404 with one 

commenter asserting that such a 

deadline would be less onerous for 

investors yet would ensure the accuracy 

and transparency of the information in 

their filings.405 One such commenter 

expressed the view that the Commission 

should require that Schedule 13G 

amendments under Rule 13d–2(d) be 

filed promptly, but within no more than 

some period of time (e.g., between two 

and four business days).406 Another 

opposing commenter suggested that the 

Commission require that Schedule 13G 

amendments pursuant to Rule 13d–2(d) 

be filed within 10 business days because 

Passive Investors ‘‘lack control intent 

and certify to that effect.’’ 407

c. Final Amendments 

We are amending Rule 13d–2(c) and 

(d) to revise the Schedule 13G 

amendment filing deadlines under those 

rules. In response to commenter 

concerns, however, we are making some 

changes from the proposed deadlines. 

Specifically, we are adopting a filing 

deadline of five business days 408 after 

the end of the first month in which an 

amendment obligation is triggered 

under Rule 13d–2(c) and two business 

days after the date on which an 

amendment obligation is triggered 

under Rule 13d–2(d). 

As noted above, Rule 13d–2(c) 

currently requires QIIs to file a Schedule 

13G amendment within 10 days after 

the end of the first month in which their 

beneficial ownership exceeds 10 percent 

of a covered class and, once across the 

10 percent threshold, within 10 days 

after the first month in which their 

beneficial ownership increases or 

decreases by more than five percent. 

Although the Commission proposed to 

revise Rule 13d–2(c) to shorten the 

filing deadline to five days after the date 

on which an amendment obligation 

arises under that rule, we are instead 

retaining the month-end-based filing 

deadline and shortening that deadline 

from 10 days after month-end to five 

business days after month-end. The 

Commission based its proposed 

deadline under Rule 13d–2(c), in large 

part, on the proposal to shorten the 

Schedule 13G amendment deadline 

under Rule 13d–2(b) from a calendar 

year-end-based deadline to a monthend-based deadline.409 Therefore, if we 

had adopted the Commission’s 

proposed amendment to Rule 13d–2(b), 

then Rule 13d–2(c), in its current form— 

which as noted above requires that QIIs 

file a Schedule 13G amendment within 

10 days after the end of the first month 

in which the triggering event occurs— 

would not be of any value. 

As discussed above, however, we did 

not adopt the Commission’s proposed 

month-end-based deadline under Rule 

13d–2(b).410 Instead, we revised Rule 

13d–2(b) to require that a Schedule 13G 

amendment be filed within 45 days after 

the end of a calendar quarter in which 

a material change occurs to the 

information previously reported. 

Because Rule 13d–2(b) will have a 

quarter-end-based filing deadline, the 

month-end-based deadline in Rule 13d– 

2(c) will continue to have utility as a 

provision that provides the market with 

earlier notice of QIIs’ beneficial 

ownership exceeding 10 percent of a 

covered class and, thereafter, upon their 

beneficial ownership increasing or 

decreasing by more than five percent. In 

addition, we expect that retaining the 

month-end-based deadline in Rule 13d– 

2(c) will address the concerns that 

several commenters expressed about the 

burdens that the proposed amendment 

would impose on QIIs.411

Notwithstanding those commenters’ 

concerns, we believe it is appropriate to 

accelerate the filing deadline in Rule 

13d–2(c) in order for investors to receive 

material information in a timely manner 


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412See supra notes 138–144 and accompanying 

text for some examples of those advancements and 

developments. 

413See Filing and Disclosure Release (adopting 

the predecessor to current Rule 13d–2(c)). 

414The five-business day deadline after monthend, as compared to a hypothetical five-calendar 

day deadline, will give beneficial owners additional 

time before their Schedule 13G amendment is due 

if the filing period encompasses days that are not 

business days (i.e., Saturday, Sunday, or a Federal 

holiday). 

415See Proposing Release at 13858. 

416See supra section II.A.3.c. 

417The preamble to Regulation 13D–G states, in 

relevant part, that ‘‘[t]his regulation should be read 

in conjunction with Regulation S–T (part 323 of this 

chapter), which governs the preparation and 

submission of documents in electronic format’’ (all 

capitalized letters in the original). 

418 17 CFR 232.12(c). 

419See 17 CFR 232.13(a)(2). 

420 Id. 

421 17 CFR 232.13(a)(4). Rule 13(a)(3) also 

provides the same accommodation for registration 

statements or any post-effective amendment thereto 

filed pursuant to 17 CFR 230.462(b) (‘‘Rule 462(b)’’). 

See 17 CFR 232.13(a)(3). 

422 17 CFR 232.201(a). 

423 17 CFR 232.13(b). 

424 Id. 

425 Id. 

426Notwithstanding the proposed extension of 

the time period in which accepted Schedule 13D 

and 13G filings may be made and still be 

considered timely, the Commission stated that filer 

support hours would not be extended. Proposing 

Release at 13859, n.82. Thus, filer support would 

continue to remain available only until 5:30 p.m. 

Eastern Time as is currently the case. 

427Proposing Release at 13859. 

428 Id. 

429 Id. at 13859–60. 

430See letters from EIM I (supporting only the 

proposed amendment to Rule 13(a)(4)); Engineer; 

Hoak (same); IAA (same); ICI I. 

in light of the technological 

advancements and other developments 

in the financial markets 412 in the more 

than 40 years since the 10-day deadline 

was adopted.413 As such, we are 

shortening Rule 13d–2(c)’s filing 

deadline from 10 days after month-end 

to five business days after month-end. 

Because the deadline is being expressed 

in ‘‘business days’’ instead of ‘‘days,’’ 414

and given the size and sophistication of 

the persons eligible to file as QIIs, we do 

not expect that this new filing deadline 

under Rule 13d–2(c) will be unduly 

burdensome. 

In addition, as discussed above, Rule 

13d–2(d) currently requires that Passive 

Investors file a Schedule 13G 

amendment promptly upon acquiring 

beneficial ownership of more than 10 

percent of a covered class and, once 

across the 10 percent threshold, 

promptly upon increasing or decreasing 

their beneficial ownership by more than 

five percent. As with the Schedule 13D 

amendment deadline under Rule 13d– 

2(a), the Commission proposed to 

change the deadline under Rule 13d– 

2(d) from the ‘‘promptly’’ standard to 

one business day.415 For the same 

reasons that we changed the filing 

deadline for Schedule 13D amendments 

to two business days,416 and to retain 

the historical consistency with that 

deadline, we also are amending Rule 

13d–2(d) to change the amendment 

filing deadline from the current 

‘‘promptly’’ standard to two business 

days after the date on which an 

amendment obligation arises. 

5. Rules 13(a)(4) and 201(a) of 

Regulation S–T 

Regulation 13D–G states that 

Schedules 13D and 13G should be 

prepared in accordance with Regulation 

S–T, which governs the preparation and 

submission of documents filed 

electronically on the Commission’s 

EDGAR system.417 In accordance with 

17 CFR 232.12, electronic filings may be 

submitted to the Commission Monday 

through Friday, except Federal holidays, 

from 6 a.m. to 10 p.m. Eastern Time.418

Under Rule 13(a) of Regulation S–T, 

however, most filings must be submitted 

by direct transmission commencing on 

or before 5:30 p.m. Eastern Time in 

order to be deemed filed on the same 

business day.419 Most filings submitted 

by direct transmission commencing 

after 5:30 p.m. will be deemed filed as 

of the next business day.420 Rule 

13(a)(4) of Regulation S–T, however, 

sets forth certain exceptions from that 

5:30 p.m. ‘‘cut-off’’ time. Specifically, it 

provides that certain filings—namely, 

Forms 3, 4 and 5, Form 144, and 

Schedule 14N—‘‘submitted by direct 

transmission on or before 10 p.m. 

[Eastern Time] shall be deemed filed on 

the same business day.’’ 421 Rule 

13(a)(4), therefore, effectively extends 

the ‘‘cut-off’’ time for these filings from 

5:30 p.m. to 10 p.m. 

In addition, Rule 201 of Regulation S– 

T and 17 CFR 232.202 (‘‘Rule 202 of 

Regulation S–T’’) address hardship 

exemptions from EDGAR filing 

requirements, and Rule 13(b) of 

Regulation S–T addresses the related 

issue of filing date adjustments. A filer 

may obtain a temporary hardship 

exemption under current Rule 201 of 

Regulation S–T if it experiences 

unanticipated technical difficulties that 

prevent the timely submission of an 

electronic filing by submitting a 

properly formatted paper copy of the 

filing under cover of Form TH.422

Alternatively, instead of pursuing a 

hardship exemption, a filer may request 

a filing date adjustment under Rule 

13(b) of Regulation S–T. That rule 

addresses circumstances in which a filer 

attempts in good faith to file a document 

with the Commission in a timely 

manner, but the filing is delayed due to 

technical difficulties beyond the filer’s 

control.423 In those instances, the filer 

may request a filing date adjustment.424

The staff may grant the request if it 

appears that the adjustment is 

appropriate and consistent with the 

public interest and the protection of 

investors.425

a. Proposed Amendments 

In the Proposing Release, the 

Commission proposed to amend Rule 

13(a)(4) of Regulation S–T to provide 

that any Schedule 13D or Schedule 13G, 

including any amendments thereto, 

submitted by direct transmission on or 

before 10 p.m. Eastern Time on a given 

business day will be deemed filed on 

the same business day.426 Conversely, 

under the proposed amendment, any 

Schedule 13D or 13G filing not 

submitted by direct transmission by 10 

p.m. on its due date will be assigned a 

filing date of the next business day, and 

for purposes of compliance with the 

applicable reporting requirements, 

would be considered late. The 

Commission proposed this extension of 

the ‘‘cut-off’’ time to ease filers’ 

administrative burdens in connection 

with the proposed accelerated filing 

deadlines for Schedule 13D and 13G 

filings, including those filers located in 

different time zones.427

The Commission also proposed to 

amend Rule 201(a) of Regulation S–T to 

remove a Schedule 13D or 13G filer’s 

ability to rely on a temporary hardship 

exemption under that rule. The 

Commission noted that this proposal 

would be consistent with the treatment 

of Forms 3, 4, and 5, which have a 10 

p.m. ‘‘cut-off’’ time under Rule 13(a)(4) 

of Regulation S–T and are ineligible for 

a temporary hardship exemption under 

Rule 201(a) of Regulation S–T.428 The 

Commission also based this proposal on 

the following factors: the relative ease of 

using the EDGAR on-line filing system; 

the proposed extended 10 p.m. Eastern 

Time filing deadline; the limited value 

to the public of paper filings; and the 

availability of a filing date adjustment 

under the same circumstances as a 

temporary hardship exemption would 

have been available but for the proposed 

amendment.429

b. Comments Received 

Commenters largely supported the 

proposed amendments to Rules 13(a)(4) 

and 201(a) of Regulation S–T,430 with 

only one commenter expressly opposing 

the proposed amendment to Rule 201(a) 


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431See letter from EIM I. 

432See letter from ICI I. 

433See letter from IAA. 

434See letter from ICI I. 

435See letter from IAA. 

436One commenter requested that we allow 

Schedule 13D and 13G filers to request a filing date 

adjustment under Rule 13(b) of Regulation S–T if 

they experience unanticipated technical difficulties. 

See supra note 435 and accompanying text. For 

example, as noted above and consistent with the 

Commission’s statement in the Proposing Release, 

‘‘[f]iling date adjustments may . . . be made if a 

filer is unable to submit its Schedule 13D or 13G 

as a result of an EDGAR outage . . . under Rule 

13(b) of Regulation S–T on the grounds that such 

outage constitutes technical difficulties beyond the 

filer’s control.’’ Proposing Release at 13860, n.84. 

437See Proposing Release at 13859–60 (‘‘We are 

proposing to amend Rule 201(a) of Regulation S– 

T to make temporary hardship exemptions 

unavailable to filers of Schedules 13D and 13G 

because of: The relative ease of using the EDGAR 

on-line filing system; the proposed extended 10 

p.m. eastern time filing deadline; the limited value 

to the public of paper filings; and the availability 

of a filing date adjustment under the same 

circumstances as a temporary hardship exemption 

would have been available but for the proposed 

amendment.’’); see also supra section II.A.5.a. 

438See supra section II.A.5.b. 439See supra note 434 and accompanying text. 440Proposing Release at 13859, n.82. 441See Mandated Electronic Filing and Website 

Posting for Forms 3, 4 and 5, Release No. 34–47809 

(May 7, 2003) [68 FR 25788 at 25793 (May 13, 

2003)] (‘‘[W]e have amended Rule 13(a) to provide 

that any Form 3, 4 or 5 submitted by direct 

transmission on or before 10 p.m. Eastern time is 

deemed filed on the same business day. However, 

filer support hours will not be correspondingly 

extended . . . .’’). 

442Adoption of Beneficial Ownership Disclosure 

Requirements, Release No. 34–13291 (Feb. 24, 1977) 

[42 FR 12342 (Mar. 3, 1977)]. The Commission 

emphasized that ‘‘[a]n analysis of all relevant facts 

and circumstances in a particular situation is 

essential in order to identify each person possessing 

the requisite voting power or investment power.’’ 

Id. at 12344. 

443See, e.g., Maria Lucia Passador, The Woeful 

Inadequacy of Section 13(d): Time for a Paradigm 

Shift?, 13 VA. L. & Bus. Rev. 279, 296–99 (2019) 

(‘‘[I]n the recent past, cash-settled equity 

derivatives—mainly call and security-based 

options—were frequently used not only with a 

speculative and hedging purpose, but also with the 

immediate, explicit, and specific aim of silently 

accumulating a leading (or even control) position in 

public companies.’’); Wachtell Petition, supra note 

139, at 8 (‘‘Even in the absence of voting or 

dispositive power, participants in large hedging 

transactions gain influence in a number of 

ways. . . . [V]oting of the shares may be subject to 

counterparty influence or control, either directly or 

because the counterparty is motivated to vote the 

hedged shares in a way that will please the investor 

and induce them to continue to transact with such 

counterparty. . . . Even those derivatives that are 

characterized as ‘cash-settled’ may ultimately be 

settled in kind, creating further market pressure as 

the participants need to acquire shares for such 

settlement.’’). 

444Proposing Release at 13861. 

445Proposing Release at 13862. Proposed 

paragraph (e)(1) also would have included a 

provision stating that any securities that are not 

outstanding but are referenced by the relevant cashsettled derivative security would be deemed to be 

outstanding for the purpose of calculating the 

percentage of the relevant covered class beneficially 

owned by the holder of the derivative security. Id. 

at 13862–63. Those reference securities, however, 

would not have been deemed to be outstanding for 

the purpose of any other person’s calculation of the 

percentage of the covered class it beneficially owns. 

Id. 

446 Id. (noting that ‘‘the concept ‘purpose or effect 

of changing or influencing the control of the issuer’ 

is a familiar one under Regulation 13D–G, both in 

the context of determining whether a person is a 

beneficial owner under Rule 13d–3 and for 

purposes of determining whether a beneficial owner 

of Regulation S–T.431 One of the 

supporting commenters asserted that 

additional time to file would be critical 

under the Commission’s proposed 

acceleration of the Schedule 13D and 

13G filing deadlines.432 Another 

supporting commenter noted that the 

proposed amendment to Rule 13(a)(4) 

would conform to the section 16 filing 

deadlines and help ease the compliance 

burdens of shortened filing deadlines 

and time zone differences.433

Some commenters also made 

recommendations in connection with 

the proposed amendments to Rules 

13(a)(4) and 201(a) of Regulation S–T. 

One supporting commenter 

recommended that the Commission 

extend filer support hours beyond 6 

p.m. Eastern Time.434 Another 

commenter, which neither clearly 

supported nor opposed the proposed 

amendment to Rule 201(a), stated that it 

would not object to making a temporary 

hardship exemption unavailable to 

Schedules 13D and 13G filers as long as 

a filer may request a filing date 

adjustment under Rule 13(b) of 

Regulation S–T if it experiences 

unanticipated technical difficulties that 

prevent the timely submission of an 

electronic filing.435

c. Final Amendments 

We are amending Rules 13(a)(4) and 

201(a) of Regulation S–T as proposed. 

Thus, the filing ‘‘cut-off’’ time for 

Schedules 13D and 13G under Rule 

13(a)(4) of Regulation S–T will be 

extended from 5:30 p.m. to 10 p.m. 

Eastern Time. In addition, the 

temporary hardship exemption under 

Rule 201(a) of Regulation S–T will be 

made unavailable for Schedule 13D and 

13G filers. Schedule 13D and 13G filers 

will, however, remain eligible to request 

a filing date adjustment under Rule 

13(b) of Regulation S–T.436

We are adopting these amendments as 

proposed for the same reasons the 

Commission discussed in the Proposing 

Release,437 which were largely 

supported by the commenters.438 We 

note that a commenter also requested 

that we extend filer support hours 

beyond 6 p.m. Eastern Time.439 As the 

Commission noted in the Proposing 

Release, however, the amendment to 

Rule 13(a)(4) of Regulation S–T mirrors 

the existing filing ‘‘cut-off’’ time for 

Forms 3, 4, and 5.440 In extending the 

filing ‘‘cut-off’’ time for those forms, the 

Commission declined to extend filer 

support hours.441 We also decline to do 

so here in light of the relative ease of 

using the EDGAR on-line filing system, 

the extension of the ‘‘cut-off’’ time by 

four and a half hours, and the 

availability of a filing date adjustment if 

the filer experiences unanticipated 

technical difficulties as previously 

described. 

B. Proposed Amendment to Rule 13d–3 

Regarding the Use of Cash-Settled 

Derivative Securities 

Neither section 3(a) nor section 13(d) 

of the Exchange Act defines the term 

‘‘beneficial owner’’ or ‘‘beneficial 

ownership.’’ Regulation 13D–G 

similarly does not expressly define 

those terms. To provide clarity, the 

Commission adopted Rule 13d–3, which 

provides standards for the purpose of 

determining whether a person is a 

beneficial owner subject to section 13(d) 

and section 13(g).442 Over the years, 

some observers have raised concerns 

about the ability of investors in cashsettled derivative securities to influence 

or control an issuer by, for example, 

pressuring a counterparty to the 

derivative transaction to make certain 

decisions regarding the voting and 

disposition of substantial blocks of 

securities of the reference issuer.443 To 

address these and related concerns,444

the Commission proposed new Rule 

13d–3(e). 

1. Proposed Amendment 

The Commission proposed to add 

new paragraph (e) to Rule 13d–3 to 

deem certain holders of cash-settled 

derivative securities, other than SBS, to 

be the beneficial owners of the reference 

covered class. Proposed Rule 13d– 

3(e)(1) would have treated a holder of a 

cash-settled derivative security, 

excluding SBS, as the beneficial owner 

of the equity securities in the covered 

class referenced by the cash-settled 

derivative security if such person held 

the cash-settled derivative security with 

the purpose or effect of changing or 

influencing the control of the issuer of 

the class of equity securities, or in 

connection with or as a participant in 

any transaction having that purpose or 

effect.445 The Commission included this 

control-based standard in proposed Rule 

13d–3(e) to ease the administrative 

burdens associated with the application 

of this proposed provision by employing 

a familiar standard under Regulation 

13D–G.446 In addition, proposed Rule 


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is eligible to report on Schedule 13G in lieu of 

Schedule 13D under Rule 13d–1’’). 

447See id. at 13863 (describing that formula and 

providing illustrative examples of its application). 

The Commission also proposed three notes to Rule 

13d–3(e) that would have clarified the application 

of the proposed rule’s formula. Id. at 13863–64. 

448 Id. at 13862. 

449 Id. The Commission acknowledged the 

possibility that derivative counterparties may have 

a business relationship to develop and protect, and 

thus may ultimately cast votes in accordance with 

the preference of the derivative holder or not vote 

the shares. See id. 

450 Id. 

451 Id. 

452 Id. (citing the Filing and Disclosure Release, 

which notes that section 13(d)’s legislative history 

indicates that the purpose of that section is ‘‘to 

provide information to the public and the affected 

issuer about rapid accumulations of its equity 

securities’’ by ‘‘persons who would then have the 

potential to change or influence control of the 

issuer.’’). 

453See, e.g., letters from Andres Loubriel (Feb. 19, 

2022) (‘‘A. Loubriel’’); AFL–CIO; AFREF; AFREF, et 

al.; Anonymous (Feb. 25, 2022) (‘‘Anonymous 7’’); 

Better Markets I; Convergence; Dan Pierce (Feb. 20, 

2022) (‘‘D. Pierce’’); Freeport-McMoRan; FundApps; 

HMA I; Justin G. (Feb. 19, 2022) (‘‘Justin G.’’); Labor 

Unions; Mark C.; NIRI; P. Worts; PL Salvati; Henry 

T Hu, Allan Shivers Chair in the Law of Banking 

and Finance at the University of Texas Law School 

(Apr. 11, 2022) (‘‘Prof. Hu’’); Robert Rutkowski 

(Apr. 12, 2022) (‘‘R. Rutkowski’’); Samuel Ryan, 

Senior Battery Test Engineer, ESS Inc. (Feb. 18, 

2022) (‘‘S. Ryan’’); SCG; Sen. Baldwin, et al.; T. 

Reilly; Todd; WLRK I; WLRK II; see also Letter 

Type C. 

454See, e.g., letters from AFL–CIO; AFREF; Better 

Markets I; Convergence; D. Pierce; FundApps; 

Justin G.; Labor Unions; NIRI; P. Worts; PL Salvati; 

Prof. Hu; SCG; WLRK I; WLRK II. 

455See letter from Better Markets I. 

456See letter from WLRK II. 

457See letters from NIRI; SCG. 

458See, e.g., letters from ABA; AIMA; B. Mason; 

CIRCA I; CIRCA III; EIM I; IAA; ICI I; ICM; J. 

Kennedy; MFA; Robert Plesnarski, O’Melveny & 

Myers LLP (June 27, 2023) (‘‘O’Melveny & Myers’’); 

Perkins Coie; Prof. Gordon; Profs. Bishop and 

Partnoy I; Profs. Bishop and Partnoy II; Profs. 

Bishop and Partnoy III; Profs. Eccles and Rajgopal; 

SIFMA; SIFMA AMG; SIFMA & SIFMA AMG; STB; 

TIAA. We note that several commenters expressed 

concern that proposed Rule 13d–3(e) would 

‘‘[a]ssign[] voting rights to derivative holders.’’ See, 

e.g., letter from Susanne Trimbath, Ph.D., 

Economist, Author, Retired Professor (June 24, 

2023); see also Letter Type B; Letter Type D, 

available at https://www.sec.gov/comments/s7-06- 

22/s70622-typed.htm; Letter Type E, available at 

https://www.sec.gov/comments/s7-06-22/s70622- 

typee.htm. For avoidance of doubt, we note that 

neither proposed Rule 13d–3(e) nor any of the other 

Proposed Amendments, nor any of the final 

amendments we are adopting, would have that 

effect. 

459See letters from CIRCA I; MFA; Profs. Bishop 

and Partnoy III; SIFMA; SIFMA AMG. 

460See letter from EIM I. 

461See letters from ABA; AIMA; CIRCA I; EIM I; 

IAA; MFA; STB; TIAA. 

462See letters from ABA; CIRCA I; EIM I; 

O’Melveny & Myers; SIFMA; SIFMA AMG; STB. 

463See letters from AIMA; CIRCA I; EIM I; IAA; 

ICI I; MFA; Profs. Bishop and Partnoy II; Profs. 

Bishop and Partnoy III; SIFMA; SIFMA AMG. One 

commenter expressly recommended that the 

Commission issue interpretive guidance on this 

point. See letter from Profs. Bishop and Partnoy II; 

see also letter from Profs. Bishop and Partnoy III. 

Similarly, another commenter suggested that the 

Commission ‘‘publish clarifying guidance 

explaining that the beneficial ownership 

determination for all cash-settled derivatives is 

consistent with the treatment of SBS, as described 

in the 2011 Release.’’ See letter from IAA. The 

‘‘2011 Release’’ that the commenter refers to is 

Beneficial Ownership Reporting Requirements and 

Security-Based Swaps, Release No. 34–64628 (June 

8, 2011) [76 FR 34579 (June 14, 2011)], which we 

henceforth refer to as the ‘‘Security-Based Swaps 

Release.’’ 

464See letter from Wm. Robertson Dorsett, 

Columbia Law School (Feb. 11, 2022). 

465See letters from ABA; IAA; MFA; Wm. 

Robertson Dorsett, Columbia Law School (Apr. 11, 

2022). One of these commenters also stated that the 

Continued 

13d–3(e) would have set forth the 

formula for calculating the number of 

equity securities that a holder of a cashsettled derivative security would be 

deemed to beneficially own.447

In proposing Rule 13d–3(e), the 

Commission noted that non-SBS cashsettled derivative securities held with 

the purpose or effect of changing or 

influencing control of the issuer may be 

used to influence the voting, 

acquisition, or disposition of any shares 

the holder’s counterparty may have 

acquired in a hedge, proprietary 

investment, or otherwise.448 The 

Commission also stated that a non-SBS 

cash-settled derivative holder’s 

probability of success in exerting 

influence or control over the issuer of 

the reference security may increase 

given that any voting power the 

derivative holder held would be 

magnified by minimizing the number of 

shares that potentially could be voted 

against the holder’s plans or 

proposals.449 Finally, the Commission 

recognized that holders of non-SBS 

cash-settled derivative securities may 

position themselves to acquire any 

reference securities that the 

counterparty may acquire to hedge the 

economic risk of that transaction.450 The 

Commission also noted that holders of 

non-SBS cash-settled derivative 

securities may present their economic 

positions to persuade an issuer or its 

shareholders to engage with them.451

The Commission concluded, therefore, 

that these persons’ holdings of non-SBS 

cash-settled derivative securities may 

implicate the policies underlying 

section 13(d).452

2. Comments Received 

Commenters were divided on 

proposed Rule 13d–3(e). Many 

commenters expressed general support 

for the proposed amendment.453 A 

number of these commenters indicated 

that proposed Rule 13d–3(e) would add 

needed market transparency.454 One 

commenter expressed the view that the 

proposal would mitigate what it 

described as ‘‘hidden risk 

concentration.’’ 455 Another commenter 

stated that the proposal would provide 

‘‘the markets more generally with full 

information’’ and allow stockholders to 

better assess whether to support or 

oppose activists’ proposals.456 Some 

commenters asserted that an investment 

fund used derivatives (reportedly 

forward purchase contracts) to conceal 

an economic interest in an issuer that it 

later converted into a profitable 

beneficial ownership stake ultimately 

reported on Schedule 13D.457

Opposing commenters, by contrast, 

raised numerous objections to proposed 

Rule 13d–3(e).458 Some of these 

commenters questioned whether there 

was a sound basis for the proposal.459

One commenter asserted that the 

proposal was not based on empirical 

analysis or ‘‘evidence to establish . . . 

an actual problem in the marketplace’’ 

and is a ‘‘solution in search of a 

problem.’’ 460 Other commenters 

asserted that holders of cash-settled 

derivative securities should not be 

deemed beneficial owners because such 

derivative securities confer no control or 

influence over the voting or disposition 

of the reference equity securities.461

Some commenters asserted that in 

actuality, a counterparty would not look 

to the derivative holder as to whether to 

acquire for hedging purposes, or how to 

vote and/or dispose of, any securities of 

the reference class or that doing so 

would be contrary to market practice 

and/or standard industry legal 

documentation.462 Several opposing 

commenters asserted that investors in 

cash-settled derivative securities already 

may be subject to regulation as 

beneficial owners under existing Rule 

13d–3 in applicable circumstances or 

that the Commission could proceed via 

interpretation or other means and 

without a rule amendment.463 Similarly, 

one commenter stated that it may not be 

necessary to deem investors in cashsettled derivative securities beneficial 

owners if the Commission is satisfied 

that derivative counterparties can 

effectively and irrevocably contract out 

of the right to convert such derivatives 

to either physical ownership of 

underlying shares or any other form of 

voting rights.464

In addition, some opposing 

commenters expressed concerns 

regarding proposed Rule 13d–3(e) 

related to the APA or the Commission’s 

statutory authority to adopt the 

proposal. For example, some 

commenters said that the proposal 

represents an inappropriate expansion 

of the applicable statutory provisions 465


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proposal would be inconsistent with the 

Commission’s interpretation in the Security-Based 

Swaps Release. See letter from MFA. Another 

commenter questioned the Commission’s authority 

to adopt proposed Rule 13d–3(e) ‘‘when Rule 13d– 

3(a) and all relevant authority relating to an 

understanding of beneficial ownership has 

historically required a showing of control over the 

voting or the disposition of securities.’’ See letter 

from ABA. 

466See letter from EIM I. 

467See letter from SIFMA; see also letter from 

SIFMA & SIFMA AMG. 

468See letter from SIFMA. The commenter also 

recommended that the Proposed Amendments be 

revised and re-proposed for notice and comment. 

See id. 

469See letters from CIRCA I; MFA. 

470See letters from ABA; CIRCA I; EIM I; IAA; 

MFA; Perkins Coie; SIFMA; SIFMA AMG; TIAA; 

see also IAC Recommendations (stating that the 

proposed rule, together with the Commission’s 

proposed 17 CFR 240.10B–1 (‘‘Rule 10B–1’’), could 

‘‘cause confusion in the markets and make 

compliance difficult for market participants’’ and 

recommending that the two proposed rules be better 

aligned). 

471See letters from ABA; AIMA; IAA; ICI I; Profs. 

Bishop and Partnoy I; SIFMA; SIFMA AMG; SIFMA 

& SIFMA AMG; STB; TIAA; see also letter from 

MFA & NAPFM. 

472See letter from ICI I. 

473See letter from IAA; see also letters from MFA 

and Perkins Coie that expressed similar concerns 

about excessive beneficial ownership reporting and 

potential market confusion even though the persons 

holding cash-settled derivatives ordinarily have 

mere economic exposure and no power to vote a 

reference security or influence or change control of 

an issuer. 

474See supra note 463 and accompanying text. 

475See letter from IAA; see also letter from Profs. 

Bishop and Partnoy II (stating that, under existing 

Rule 13d–3, holders of cash-settled derivative 

securities may be subject to regulation as beneficial 

owners of the reference equity securities in 

applicable circumstances, and recommending that 

the Commission not adopt proposed Rule 13d–3(e) 

but instead issue ‘‘guidance on cash-settled 

derivatives’’ and ‘‘articulat[e] how the 

Commission’s current rules continue to prohibit 

problematic conduct related to the [Proposing 

Release]’’). 

476Security-Based Swaps Release at 34582. 

477Some commenters expressed the view that 

non-SBS cash-settled derivatives only represent an 

economic interest and that section 13 generally 

should not or does not apply to these securities. See 

letters from ABA; IAA; MFA; Perkins Coie. 

or would be arbitrary and capricious, if 

adopted.466 Further, one commenter 

emphasized that ‘‘[b]y focusing on 

speculative harms; failing to engage 

seriously with the question whether 

new or different rules were needed to 

combat them; and failing to consider 

costs, the Proposed Rule falls short of 

providing a sound justification for the 

proposals being made.’’ 467 The 

commenter stated that ‘‘[f]or these 

reasons, the Commission has not 

satisfied its obligations under sections 

3(f) and 23(a)(2) of the Exchange 

Act.’’ 468

Finally, some opposing commenters 

discussed other concerns regarding 

proposed Rule 13d–3(e). Some 

commenters expressed concern that the 

proposal would inhibit activist 

investment strategies.469 Other 

commenters expressed concern that the 

proposed rule, including its ‘‘change of 

control’’ standard, is overly broad, 

unclear, and would be difficult to 

administer.470 Many commenters 

indicated that the proposal’s 

computational methodology, including 

the need to conduct daily calculations, 

would be complex or increase the 

compliance burden of the rule.471 In 

addition, one commenter noted that the 

‘‘concept of beneficial ownership is 

used . . . in many other federal and 

state laws and rules, as well as in 

contracts’’ and, therefore, ‘‘expanding 

the definition of ‘beneficial ownership’ ’’ 

as proposed in Rule 13d–3(e) could 

have ‘‘significant unintended 

consequences.’’ 472 Further, another 

commenter indicated that the proposed 

rule’s expansion of the scope of the 

matters that may give rise to beneficial 

ownership ‘‘could result in potential 

and significant overreporting by 

[investment] advisers, leading to 

unfounded inferences from public 

filings that holders of cash-settled 

derivatives may have voting and 

investment power over securities that 

they do not, in fact, have, nor do they 

have the right to acquire.’’ 473

3. Commission Guidance 

We are not adopting proposed 

paragraph (e) to Rule 13d–3 to deem 

certain holders of cash-settled derivative 

securities as beneficial owners of the 

reference covered class. Consistent with 

the views expressed by several 

commenters, we have determined that 

Commission guidance on the 

applicability of existing Rule 13d–3 to 

cash-settled derivative securities, 

similar to the guidance provided in the 

Security-Based Swaps Release,474 would 

provide sufficient clarity.475

The Commission explained in the 

Security-Based Swaps Release the 

circumstances under which a holder of 

a SBS may become a beneficial owner 

as determined under Rule 13d–3. It 

noted that ‘‘our existing regulatory 

regime may require the reporting of 

beneficial ownership’’ in cases in which 

a SBS (1) ‘‘confers voting and/or 

investment power (or a person 

otherwise acquires such power based on 

the purchase or sale of a [SBS]),’’ (2) ‘‘is 

used with the purpose or effect of 

divesting or preventing the vesting of 

beneficial ownership as part of a plan or 

scheme to evade the reporting 

requirements,’’ or (3) ‘‘grants a right to 

acquire an equity security.’’ 476

Although the determination under Rule 

13d–3 as to whether the holder of any 

cash-settled derivative security is the 

beneficial owner of the reference 

covered class ultimately will depend on 

the relevant facts and circumstances, the 

above-described reasoning in the 

Security-Based Swaps Release (the three 

elements of which correspond to Rule 

13d–3(a), (b), and (d)(1), respectively) 

provides an instructive analytical 

framework with respect to cash-settled 

derivative securities. 

As is the case with persons holding 

cash-settled SBS, Rule 13d–3 similarly 

may be applied to holders of non-SBS 

cash-settled derivatives 477 to treat those 

persons as beneficial owners in 

applicable instances. Although non-SBS 

derivative securities settled exclusively 

in cash generally are designed to 

represent only an economic interest, 

discrete facts and circumstances could 

arise where the holder of these 

securities may have voting or 

investment power as described in Rule 

13d–3(a) or otherwise could be deemed 

to be a beneficial owner as determined 

under Rule 13d–3(b) or (d), as described 

below. First, under Rule 13d–3(a), to the 

extent a non-SBS cash-settled derivative 

security provides its holder, directly or 

indirectly, with exclusive or shared 

voting or investment power, within the 

meaning of that rule, over the reference 

covered class through a contractual term 

of the derivative security or otherwise, 

the holder of that derivative security 

may become a beneficial owner of the 

reference covered class. Second, to the 

extent a non-SBS cash-settled derivative 

security is acquired with the purpose or 

effect of divesting its holder of 

beneficial ownership of the reference 

covered class or preventing the vesting 

of that beneficial ownership as part of 

a plan or scheme to evade the reporting 

requirements of section 13(d) or 13(g), 

the derivative security may be viewed as 

a contract, arrangement, or device 

within the meaning of those terms as 

used in Rule 13d–3(b). The holder of 

such cash-settled derivative security, 

therefore, may be deemed a beneficial 

owner under Rule 13d–3(b) in this 

context. Finally, under Rule 13d– 

3(d)(1), a person is deemed a beneficial 

owner of an equity security if the person 

(1) has a right to acquire beneficial 

ownership of the equity security within 

60 days or (2) acquires the right to 

acquire beneficial ownership of the 

equity security with the purpose or 

effect of changing or influencing the 

control of the issuer of the security for 

which the right is exercisable, or in 

connection with or as a participant in 

any transaction having such purpose or 

effect, regardless of when the right is 


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478See Rule 13d–3(d)(1)(i). The first prong 

described above (i.e., the lead-in of Rule 13d– 

3(d)(1)(i)) applies to any ‘‘right to acquire,’’ 

including but not limited to those enumerated in 

Rule 13d–3(d)(1)(i)(A) through (D). The second 

prong described above (i.e., the proviso of Rule 

13d–3(d)(1)(i)) applies to any ‘‘security or power’’ 

specified in Rule 13d–3(d)(1)(i)(A) through (C), 

thereby excluding Rule 13d–3(d)(1)(i)(D) (namely, 

‘‘any right to acquire . . . pursuant to the automatic 

termination of a trust, discretionary account or 

similar arrangement’’) from the types of securities 

or powers that, if held, can result in the holder 

being deemed a beneficial owner regardless of when 

the right is exercisable. Thus, the holder of any 

right to acquire beneficial ownership as described 

in Rule 13d–3(d)(1)(i)(D) will be subject to being 

deemed a beneficial owner pursuant to Rule 13d– 

3(d)(1) if the right creates an entitlement to acquire 

securities of the underlying covered class within 60 

days. 

479Security-Based Swaps Release at 34582. 

480See supra note 22. 

481Proposing Release at 13868–69. 

482 Id. 

483Although commenters generally focused on 

proposed Rule 13d–5(b)(1)(i) and did not explicitly 

address proposed Rule 13d–5(b)(2)(i), given the 

substantial similarity of those proposed rules, we 

treat comments on proposed Rule 13d–5(b)(1)(i) as 

also applying to proposed Rule 13d–5(b)(2)(i) 

unless the comment letter stated otherwise. 

484See letters from AFREF; AFREF, et al.; BRT; 

Freeport-McMoRan; Labor Unions; Nasdaq; NIRI; P. 

Worts; Perkins Coie; R. Rutkowski; SCG; Sen. 

Baldwin, et al.; T. Reilly; WLRK I; WLRK II. 

485See letter from NIRI. 

486See letter from WLRK II. 

exercisable.478 As the Commission 

stated in the Security-Based Swaps 

Release, Rule 13d–3(d)(1) applies 

regardless of the origin of the right to 

acquire the equity security.479 If such a 

right originates in a derivative security 

that is nominally ‘‘cash-settled’’ or from 

an understanding in connection with 

that derivative security, Rule 13d– 

3(d)(1) would apply. 

C. Proposed Amendments to Rule 13d– 

5 

In the Proposing Release, the 

Commission proposed to amend Rule 

13d–5 to, among other things: 

• Revise Rule 13d–5(b)(1) to remove 

the potential implication that it sets 

forth the exclusive legal standard for 

group formation under section 13(d)(3) 

or 13(g)(3); 

• Add new paragraph (b)(1)(ii) to 

specify that if a person, in advance of 

filing a Schedule 13D, discloses to any 

other person that such filing will be 

made and such other person acquires 

securities in the covered class for which 

the Schedule 13D will be filed, those 

persons will have formed a group 

within the meaning of section 13(d)(3); 

and 

• Add new paragraph (b)(2)(i) to 

specify that when two or more persons 

‘‘act as’’ a group under section 13(g)(3) 

of the Act, the group will be deemed to 

have become the beneficial owner, for 

purposes of section 13(g)(1) and (2) of 

the Exchange Act, of the beneficial 

ownership held by its members. 

Rather than adopt these amendments, 

we instead are issuing guidance on the 

operation of existing Rule 13d–5(b) and 

sections 13(d)(3) and 13(g)(3) that 

clarifies and affirms that, among other 

matters, two or more persons who ‘‘act 

as’’ a group for purposes of acquiring, 

holding, or disposing securities may be 

treated as a group. 

In addition to the foregoing, we are 

adopting certain amendments to Rule 

13d–5 that the Commission included in 

the Proposing Release. Specifically, we 

are: 

• Adding new paragraph (b)(1)(ii) to 

specify that a group subject to reporting 

obligations under section 13(d) shall be 

deemed to acquire any additional equity 

securities acquired by a member of the 

group after the group’s formation; 

• Adding new paragraph (b)(1)(iii) to 

carve out from paragraph (b)(1)(ii) any 

intra-group transfers of equity securities; 

• Adding new paragraph (b)(2)(i) to 

specify that a group regulated under 

section 13(g) shall be deemed to acquire 

any additional equity securities 

acquired by a member of the group after 

the group’s formation; 

• Adding new paragraph (b)(2)(ii) to 

carve out from paragraph (b)(2)(i) any 

intra-group transfers of equity securities; 

• Redesignating current Rule 13d– 

5(b)(1) as Rule 13d–5(b)(1)(i) to 

accommodate the inclusion of these 

amendments, but otherwise not altering 

the substance of that rule; and 

• Making other technical changes to 

Rule 13d–5.480

Those amendments, as well as our 

guidance, are discussed in more detail 

below. 

1. Proposed Rule 13d–5(b)(1)(i), (b)(2)(i), 

and (b)(1)(ii) 

a. Proposed Amendments 

In the Proposing Release, the 

Commission proposed to amend Rule 

13d–5 to track the statutory text of 

sections 13(d)(3) and (g)(3) and specify 

that two or more persons who ‘‘act as’’ 

a group for purposes of acquiring, 

holding, or disposing of securities are 

treated as a group.481 Specifically, the 

Commission proposed to redesignate 

Rule 13d–5(b)(1) as Rule 13d–5(b)(1)(i) 

and revise it to, among other things, 

remove the reference to an agreement 

between two or more persons and 

instead indicate that when two or more 

persons act as a group under section 

13(d)(3), the group will be deemed to 

have acquired beneficial ownership of 

all of the equity securities of a covered 

class beneficially owned by each of the 

group’s members as of the date on 

which the group is formed. The 

Commission also proposed new Rule 

13d–5(b)(2)(i), which would contain 

nearly identical language to proposed 

Rule 13d–5(b)(1)(i), with conforming 

changes to address circumstances in 

which two or more persons act as a 

group under section 13(g)(3) and the 

group is deemed to become the 

beneficial owner of all of the equity 

securities of a covered class beneficially 

owned by each of the group’s members 

as of the date on which the group is 

formed. 

The Commission proposed these 

amendments, among other things, to (1) 

make clear that ‘‘the determination 

[under sections 13(d)(3) and 13(g)(3)] as 

to whether two or more persons are 

acting as a group does not depend solely 

on the presence of an express agreement 

and that, depending on the particular 

facts and circumstances, concerted 

actions by two or more persons for the 

purpose of acquiring, holding or 

disposing of securities of an issuer are 

sufficient to constitute the formation of 

a group,’’ and (2) eliminate any 

potential for Rule 13d–5(b)(1) to be 

misconstrued as the definition of a 

group and consequently used as a basis 

to narrow the application of sections 

13(d)(3) and 13(g)(3).482

In addition, the Commission proposed 

to amend Rule 13d–5 to include new 

paragraph (b)(1)(ii). The proposed 

paragraph would provide that a person 

who shares information about an 

upcoming Schedule 13D filing such 

person is or will be required to make 

with respect to a covered class, to the 

extent this information is not yet public 

and was communicated with the 

purpose of causing others to make 

purchases of securities of the same 

covered class, and a person who 

subsequently purchases securities of 

that class based on this information, 

will have formed a group within the 

meaning of section 13(d)(3). 

b. Comments Received 

Commenters expressed a wide range 

of views on proposed Rule 13d– 

5(b)(1)(i) and (b)(2)(i).483 A number of 

commenters supported the 

amendments.484 One supporting 

commenter expressed the view that the 

proposed amendments would ensure 

that the terms of sections 13(d) and (g) 

will be applied as originally 

intended.485 Another commenter 

observed that the proposed amendments 

appear designed to simply adhere to the 

underlying statutory language in the 

Exchange Act.486 One commenter stated 


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487See letter from SCG. 488See letter from P. Worts. 489See letters from AFL–CIO; Sen. Baldwin, et al.; 

WLRK II. 490See letter from Sen. Baldwin, et al. 491See letter from WLRK II. 492See id. 493See letter from Sen. Baldwin, et al. 

494See IAC Recommendations. 

495See letters from Andrew L. Stern, SEIU (Apr. 

11, 2022) (‘‘A. Stern’’); ABA; AIMA; Steven M. 

Rothstein, Managing Director, Ceres Accelerator for 

Sustainable Capital Markets, Ceres, Inc. (Apr. 11, 

2022) (‘‘Ceres’’); CIRCA I; CIRCA III; Dodge & Cox; 

EIM I; HMA II; IAA; ICI I; ICM; MFA; Neuberger 

Berman Group LLC (Apr. 11, 2022) (‘‘NBG’’); 

O’Melveny & Myers; Benjamin Edwards, Associate 

Professor of Law, University of Nevada, Las Vegas, 

William S. Boyd School of Law, Sarah C. Haan, 

Professor of Law and Cary Martin Shelby, Professor 

of Law, Washington and Lee University School of 

Law, Geeyoung Min, Assistant Professor of Law, 

Michigan State University College of Law, Faith 

Stevelman, Professor of Law, New York Law School 

(Apr. 12, 2022) (‘‘Prof. Edwards, et al.’’); Prof. 

Gordon; David H. Webber, Professor of Law and 

Paul M. Siskind Scholar, Boston University School 

of Law (Apr. 11, 2022) (‘‘Prof. Webber’’); Profs. 

Bishop and Partnoy I; Profs. Bishop and Partnoy II; 

Profs. Bishop and Partnoy III; Halit Coussin, Chief 

Legal Officer & Chief Compliance Officer, Pershing 

Square Capital Management, L.P. (Apr. 11, 2022) 

(‘‘PSCM’’); Rice Management; SIFMA; SIFMA AMG; 

SIFMA & SIFMA AMG; SSC; STB; TRP. 

496See letters from CIRCA I; EIM I; ICI I; MFA; 

Prof. Edwards, et al.; PSCM; SIFMA. 

497See letter from EIM I. 

498See id. 

499See letters from CIRCA I; EIM I, MFA; SIFMA; 

SIFMA AMG. 

500See letter from PSCM. 

501See letters from A. Stern; ABA; Ceres; CIRCA 

I; Dodge & Cox; EIM I; IAA; MFA; NBG; Prof. 

Edwards, et al.; Prof. Gordon; Prof. Webber; Profs. 

Bishop and Partnoy II; Rice Management; SIFMA; 

STB; TRP; see also letter from MFA & NAPFM. 

502See letter from Prof. Edwards, et al. 

503 Id. 

504See letters from HMA II; IAA; MFA; Perkins 

Coie; Prof. Gordon; Profs. Bishop and Partnoy I; 

SIFMA; SIFMA AMG; SSC; TRP. 

505See letter from PSCM. 

506See letters from ABA; Dodge & Cox; EIM I; 

Prof. Edwards, et al.; Prof. Gordon; PSCM; Rice 

Management; SIFMA. 

that it supported the proposed 

amendments and observed that, under 

the proposed amendments, compliance 

with the group formation rules would 

not depend on whether an express or 

implied agreement exists among the 

parties that are acting together.487 One 

commenter asserted that the proposed 

amendments ‘‘could prevent 

sophisticated investors from skirting 

reporting requirements when 

coordinating accumulations of 

significant stakes’’ which could ‘‘help[ ] 

ensure retail investors have fair 

insight.’’ 488

Several commenters expressed views 

rejecting criticism that the proposed 

amendments would interfere with 

shareholder activism or 

collaboration.489 One of these 

commenters disagreed with the 

contention by other commenters that 

such amendments would prevent the 

build-up of ownership stakes and chill 

shareholder communications.490

Another commenter disagreed with 

concerns that the proposal ‘‘would put 

mainstream institutional investors at 

risk of being deemed part of a group 

simply because they take a meeting with 

an activist or management and indicate 

that they may be inclined to vote in 

favor of their proposed course of 

action.’’ 491 This commenter further 

stated that it did not view the proposal 

as propounding a definition of ‘‘group’’ 

that would consider a ‘‘regular passive 

institutional investor’’ as a member of a 

group with an activist simply because it 

met with an activist, heard its proposed 

plans, and signaled it would likely use 

its voting power to support the activist’s 

proposed campaign.492 One commenter 

stated a similar view, asserting that 

nothing in the proposal would limit the 

ability of investors to engage with 

company management.493

In addition, although the IAC did not 

make a recommendation with respect to 

the proposed amendments to Rule 13d– 

5 ‘‘because of a lack of consensus on the 

effects of the proposed definition of a 

‘group’ and how that would impact 

shareholder communication,’’ the IAC 

stated that it ‘‘agree[d] with the SEC’s 

description of existing case-law 

regarding the definition of ‘group’ ’’ and 

‘‘would support the inclusion of such 

description in any final rulemaking 

regarding Schedule 13D reporting to 

highlight to market participants the 

scope of such case law when 

considering the applicability of the 

‘group’ rules.’’ 494

Numerous commenters opposed the 

proposed amendments, largely because, 

in their view, the proposed amendments 

would eliminate a requirement that 

there be some form of ‘‘agreement’’ 

among members of a group.495 Some 

opposing commenters expressed the 

view that the proposal—particularly the 

removal of some form of an 

‘‘agreement’’—would exceed the 

Commission’s authority under the 

Exchange Act or raise concerns under 

the APA or the U.S. Constitution.496

One commenter asserted that 

eliminating the ‘‘agreement’’ 

requirement in determining whether a 

group has been formed would 

contravene the plain meaning of the 

statutory text, disregard the legislative 

history, and depart from ‘‘longestablished’’ judicial precedent.497 The 

same commenter asserted that the initial 

adoption of Rule 13d–5, with what the 

commenter described as its express 

requirement for an agreement to exist in 

order to establish group status, simply 

reflected the Commission’s affirmation 

of established judicial precedent, not an 

unwarranted departure from the 

statutory language.498 A number of 

commenters expressed similar points of 

view, and, among other things, used 

canons of construction or statutory 

analysis to assert that persons can only 

‘‘act as’’ a group under section 13(d)(3) 

if an agreement exists among the group 

members.499 Another commenter 

suggested the absence of the term 

‘‘agreement’’ from section 13(d)(3) did 

not restrict the Commission’s capacity 

to use the term ‘‘agree’’ in Rule 13d–5(b) 

because administrative rulemakings 

commonly include language not present 

in a statute in order to implement 

congressional intent.500

Some opposing commenters 

expressed concern that the proposed 

amendments would introduce a 

standard that was overly broad and that 

could chill or eliminate shareholder 

communications with other 

shareholders, issuers’ management and/ 

or other parties.501 One commenter 

expressed the view that the proposal 

could deter investors from engaging in 

‘‘socially valuable activism’’ and noted 

that to the extent that the proposed rules 

resulted in restraints on shareholder 

communications, that may lead to 

claims that the proposed rules burden 

investors’ First Amendment rights.502

The commenter also stated that the 

Commission ‘‘should take care to 

minimize any burdens on investors’ 

expression.’’ 503 Other commenters 

anticipated that under the proposed 

amendments, ordinary course business 

transactions or conversations, without 

more, could result in a finding of group 

formation.504 One commenter raised the 

concern that the proposed rule would 

produce disruptive collateral 

consequences, including in relation to 

ownership reporting under the HartScott-Rodino Antitrust Improvements 

Act of 1976 Act as it is uncertain 

whether being deemed a member of a 

group would deprive an investor of 

relying on the ‘‘passive investor’’ 

exemption from the antitrust 

notification requirements under that 

statute.505 A number of commenters also 

asserted that the proposed amendments 

would prompt litigation over whether 

communications between parties 

resulted in group formation.506 Some 

commenters expressed the view that the 

resulting increase in uncertainty that 

would be caused by the proposed 

amendments also would result in 

additional legal exposure under 


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507See letters from ABA; EIM I; SIFMA; see also 

letter from MFA & NAPFM. 

508See letters from AIMA; CIRCA I; EIM I; ICI I; 

MFA; PSCM; SIFMA; SIFMA AMG. 

509See letter from SIFMA. 

510See letter from SIFMA AMG. 

511See letter from EIM I (‘‘Until now, courts have 

sensibly required and the markets have understood 

that there must be an agreement (whether implicit 

or explicit) between shareholders before they could 

be legally found to be a group and subject to the 

consequences of such a finding.’’). 

512See letters from AIMA; EIM I; ICI I; Profs. 

Bishop and Partnoy II; PSCM; SSC; STB. 

513See letters from AIMA; CIRCA I; ICI I; MFA; 

PSCM. 

514See letters from EIM I; ICI I; Profs. Bishop and 

Partnoy I; PSCM; SIFMA; STB. 

515See letters from ABA; AFREF; AIMA; HMA II; 

IAA; ICI I; Labor Unions; MFA; Perkins Coie; Profs. 

Bishop and Partnoy II (expressing the view that it 

would be sufficient for the Commission to issue 

guidance instead of adopting a rule change and 

recommending that the Commission take the 

position that it ‘‘intends to enforce the ‘group’ 

definition as it stands’’); SIFMA; SSC; STB; TRP. 

516See letters from ABA; HMA II; IAA; Perkins 

Coie; TRP. 

517See letters from ABA; MFA. 

518See letter from ABA. 

519See letter from SIFMA. One commenter, 

which generally supported the proposal, similarly 

recommended that the Commission address 

concerns that the proposal could result in a ‘‘regular 

passive institutional investor’’ becoming a member 

of a group with an activist simply because it met 

with the activist, heard its proposed plans, and 

signaled that it would likely use its voting power 

to support the activist’s proposed campaign. See 

letter from WLRK II. 

520See letter from SIFMA. 

521See letter from Labor Unions. 

522See letter from STB. 

523See letters from AIMA; ICI I; SIFMA; SSC. 

524See letter from AIMA. 525See letters from Perkins Coie; R. Rutkowski; 

Reilly Steel, Ph.D. Candidate, Department of 

Politics, Princeton University, and Zohar Goshen, 

Jerome L. Greene Professor of Transactional Law, 

Columbia Law School (May 22, 2023) (‘‘R. Steel and 

Prof. Goshen’’) (supporting the proposal 

conditionally, if Congress does not take the action 

that the commenter recommended as the primary 

course of action and if the Commission actively 

enforces the proposed rule and seeks expansive 

remedies); SCG. 

526See letter from SCG. 

527See letter from R. Rutkowski. 

528See letters from Dodge & Cox; EIM I; HMA I 

(stating its belief that ‘‘straightforward application 

of existing law’’ is sufficient); IAA; PSCM (citing 

proposed Rule 13d–5(b)(1)(iii) but apparently 

referring to proposed Rule 13d–5(b)(1)(ii)); SIFMA; 

SIFMA AMG. 

529See letter from SIFMA AMG (adding that this 

apparent presumption would be unfair, 

inappropriate, and poorly tailored, and citing to the 

example of a client acquiring shares from a dealer 

who also coincidentally acquires shares). 

530See letter from IAA (observing that that 

adoption of any such rule would be unfair absent 

Continued 

Exchange Act section 16 for persons 

alleged to have formed a group.507

Opposing commenters also criticized 

the proposed amendments as 

inconsistent with those Federal court 

opinions that have addressed the 

standard for group formation.508 One 

commenter asserted that courts have 

recognized an ‘‘agreement’’ as being a 

necessary element of group formation 

based on the need for a ‘‘workable 

compromise’’ between the regulatory 

objective of having a statute’s policies 

implemented, on one hand, and the 

market’s need for clear rules, on the 

other hand.509 Another commenter 

expressed concern that the proposed 

amendments would, in its view, 

dispense ‘‘with more than 40 years of 

practice and court decisions’’ and 

replace them ‘‘with a vague, circular 

rule . . . impossibly burdensome to 

market participants.’’ 510 One 

commenter noted that Federal courts 

‘‘have consistently held that the 

existence of an agreement is necessary 

to establish the existence of a ‘group’ 

under Section 13(d).’’ 511 Other 

commenters expressed the view that the 

existing standards in Rule 13d–5(b) 

have worked well for decades or are not 

in need of reform.512 Notwithstanding 

these and other similar criticisms,513 we 

note that multiple opposing commenters 

recognized that, even today, the 

determination of whether or not a group 

exists is ultimately dependent upon the 

facts and circumstances.514

A number of commenters offered 

suggestions on how the Commission 

should proceed with respect to the 

proposed amendments.515 Some 

commenters expressed the view that the 

Commission should set forth more 

specific parameters of what joint 

conduct or communications may result 

in group formation.516 A few 

commenters offered alternative language 

to be used in any revision the 

Commission may ultimately adopt.517

One commenter encouraged the 

Commission to consider exempting QIIs 

from any new ‘‘group formation’’ 

provisions so long as QIIs act 

consistently with the requirements of 

Rule 13d–1(b).518 One commenter 

suggested that the Commission adopt 

the equivalent of an exemption from 

section 16 for any groups formed 

pursuant to the proposed 

amendments.519 Another commenter 

suggested that the proposed 

amendments should not be adopted 

unless a safe harbor is created for 

securities dealing activities.520 One 

commenter recommended no change to 

the proposal but expressed the view that 

the proposed rules would not interfere 

with shareholder rights to engage in, 

among other things, shareholder 

activism on ESG issues, collaboration on 

shareholder proposals under 17 CFR 

240.14a–8 (‘‘Rule 14a–8’’), and ‘‘vote 

no’’ initiatives and any concerns 

regarding the filing obligations of such 

investor groups could be clarified by the 

Commission in an explanatory 

statement issued with any final rule.521

Another commenter stated the 

Commission should consider whether 

the public dissemination of information 

on message boards or through media 

interviews, and, by extension, social 

media platforms, could result in group 

formation.522 A number of commenters 

recommended no change be made to 

current Rule 13d–5(b)(1),523 which, 

according to some of these commenters, 

would result in retention of the 

‘‘agreement’’ standard. One commenter 

made reference to existing Rule 13d– 

5(b) and advocated for the Commission 

to retain what it referred to as the 

‘‘current ‘group’ definition,’’ including 

the requirement that there be an 

agreement to act as a group, because the 

current provision does not: (1) chill 

shareholder engagement; (2) create the 

challenge to determine whether a group 

has been formed or if an exemption 

applies; or (3) make activist campaigns 

more difficult to pursue.524

Commenters also expressed differing 

views on proposed Rule 13d–5(b)(1)(ii). 

Some commenters expressly supported 

the proposal.525 One commenter stated 

that because information about a 

planned Schedule 13D filing is clearly 

material to investors, it makes sense to 

deem tippers and tippees to be acting as 

a group even without an explicit 

agreement.526 Another commenter, 

while expressing the view that 

modifications should be made to the 

Commission’s overall proposed 

amendments relating to group 

formation, stated that the ‘‘definition of 

who should constitute a ‘group’ under 

the proposal . . . should only apply to 

the sharing of material nonpublic 

information related to not yet disclosed 

large positions instead of efforts to 

improve the long-term corporate 

governance of companies.’’ 527

Other commenters opposed the 

proposal.528 One commenter analyzed 

the proposed rule text and observed that 

linking ‘‘indirectly discloses’’ to the 

‘‘with the purpose of causing’’ clause 

appears intended to establish a 

presumption, for all practical purposes, 

that an acquisition by ‘‘such other 

person’’ was ‘‘based on such 

information.’’ 529 Another commenter 

similarly expressed the view that such 

a rule would be unfair given that an 

adviser may also have independently 

determined to acquire or even continue 

to hold the same securities and 

disclosure of the imminent Schedule 

13D may have been outside of the 

adviser’s control and without his or her 

input or expression of approval.530


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some intent to form a group because certain parties 

could be restricted from buying shares just because 

a third party told an adviser that it was going to file 

a Schedule 13D). 

531See letter from PSCM. 

532See letters from AIMA; IAA; Prof. Gordon; 

SIFMA; SIFMA AMG; STB. 

533See letter from Prof. Gordon; see also letter 

from R. Steel and Prof. Goshen. 

534See letter from WLRK II. Another commenter, 

which objected to the proposed amendments to 

Rule 13d–5 in the Proposing Release, specifically 

responded to that commenter’s recommended 

alternative, intimating that the Commission should 

not adopt this suggested change for a variety of 

reasons. See letter from Profs. Bishop and Partnoy 

II. 

535See letter from HMA I. 

536See letter from SIFMA. 

537See letter from IAA. 

538See letter from AIMA. 

539See letter from STB. 

540See Proposing Release at 13869. 

541 Id. at 13868–69. 

542See, e.g., letters from EIM I (‘‘[A]n agreement 

can be constituted informally, and without a 

writing. The Commission, in adopting Rule 13d–5 

in 1977, selected the word ‘agreement’ rather than 

‘contract’ for a reason—an agreement is a less 

formal arrangement, which is consistent with the 

requirement of Section 13(d)(3) that the persons ‘act 

together.’’’); PSCM (‘‘Courts, whether looking to the 

existence of an agreement out of an interpretation 

that Rule 13d–5(b) requires it, or as an 

administrable evidentiary standard for establishing 

action in concert, have interpreted the term 

‘agreement’ broadly to include informal and 

unwritten arrangements, and have relied on 

circumstantial evidence in order to establish that 

some manner of agreement existed.’’); SIFMA 

(‘‘[T]he existence of a group surely does not depend 

on the intent of the members to create and wear the 

label of a ‘Section 13(d) group.’ It does, however, 

depend on an intent to take the coordinated actions 

that will create that relationship.’’). Cf., letter from 

ABA (explaining that an agreement need not be 

‘‘written’’ or ‘‘formal’’ and acknowledging that Rule 

13d–5(b) could be modified to add ‘‘arrangement or 

understanding’’ to address any concern that the 

term ‘‘agreement’’ has been misconstrued in the 

context of Rule 13d–5(b)). 

543 In addition to the guidance set forth in this 

section, we provide additional guidance in section 

II.D.3 in connection with the discussion regarding 

our final disposition of the proposed exemptions 

under Rule 13d–6. 

544See Proposing Release at 13865. 

545Because sections 13(d)(3) and 13(g)(3) ‘‘deem’’ 

a group to be a single ‘‘person,’’ the correct 

articulation of how the statutory framework applies 

in this context is to a ‘‘person, including any group’’ 

and not a ‘‘person or group.’’ Thus, under sections 

13(d) and 13(g) and Regulation 13D–G, groups are 

regulated no differently from natural persons or 

companies described in the definition of ‘‘person’’ 

under section 3(a)(9) of the Exchange Act. 

Another commenter similarly asserted 

that the proposed rule would place 

those who receive information from a 

blockholder at risk of inadvertently 

becoming subject to group reporting 

obligations in circumstances that were 

‘‘never intended to be covered by 

Section 13.’’ 531

Some commenters provided 

recommendations to revise the 

proposal.532 One commenter suggested 

the Commission alternatively ‘‘impose a 

prohibition on tipping by an activist as 

soon as it reaches the 5 percent 

disclosure threshold until it files a 

Schedule 13D.’’ 533 One commenter 

recommended that the Commission 

address concerns that the proposal 

could result in a passive institutional 

investor becoming a member of a group 

with an activist simply because it met 

with the activist, heard its proposed 

plans, and signaled that it would likely 

use its voting power to support the 

activist’s proposed campaign by revising 

proposed Rule 13d–5(b)(1)(ii) to include 

its suggested alternative text.534 One 

commenter, who neither clearly 

supported nor opposed the proposal, 

stated that it would be ‘‘deeply troubled 

if the Commission were to invent a new, 

extremely difficult to establish element 

to insider trading law, such as a 

requirement that the recipient of the tip 

have an intention of coordinating with 

the tipper or make its purchases in 

reliance on the non-public information 

that the tipper provided.’’ 535 A 

commenter objected to the concept of 

‘‘indirect’’ disclosure within proposed 

Rule 13d–5(b)(1)(ii) on grounds that the 

term ‘‘indirect’’ is ‘‘intrinsically illdefined’’ and could create a 

presumption that certain transactions in 

the ordinary course of a market-making 

business were executed ‘‘based on such 

[indirect] information.’’ 536 Another 

commenter similarly suggested that the 

rule, if adopted, should only apply to 

situations where an express or implied 

intent by parties exists to form a 

group.537

Commenters also expressed 

observations concerning the collateral 

consequences to an investor that 

received information about an 

impending Schedule 13D filing. One 

commenter implicitly asked the 

Commission to consider that once the 

tippee has the information, ‘‘[t]his 

quasi-lock-up period not only 

discourages other shareholders from 

meeting with the activist but also, 

effectively, removes the liquidity these 

other shareholders may provide to the 

market in that issuer.’’ 538 Another 

commenter suggested the rule should 

clarify for how long a recipient of 

information that a Schedule 13D filing 

would be forthcoming must remain 

‘‘frozen’’ from making further 

purchases, particularly if such filing 

does not get filed in the near term.539

c. Commission Guidance 

As noted above, we are not adopting 

proposed Rule 13d–5(b)(1)(i) and (ii) 

and (b)(2)(i). The Commission’s stated 

objectives were to (1) align the text of 

Rule 13d–5(b) with the statutory 

provisions that it serves to implement 

while clarifying and affirming its 

application and operation and (2) 

provide clarity on whether a group is 

formed if a person shares information 

about an upcoming Schedule 13D filing 

that the person is or will be required to 

make.540 The proposed amendments 

were not intended to change how the 

Commission views what is meant by 

‘‘act as a group’’ for purposes of sections 

13(d)(3) and 13(g)(3). They were 

intended to codify through a rule 

amendment our views that ‘‘the 

determination of whether two or more 

persons are acting as a group does not 

depend solely on the presence of an 

express agreement and that, depending 

on the particular facts and 

circumstances, concerted actions by two 

or more persons for the purpose of 

acquiring, holding or disposing of 

securities of an issuer are sufficient to 

constitute the formation of a group.’’ 541

Several commenters generally shared 

our view that the formation of a group 

does not depend on the presence of an 

express agreement.542 However, some 

commenters raised objections to the 

proposal based on their view that the 

amendments could result in a group 

being formed for purposes of sections 

13(d)(3) and 13(g)(3) absent some 

evidence of agreement, arrangement, 

understanding, or concerted action. 

That was not the Commission’s intent. 

Upon consideration of the comments 

received, we believe that the better 

approach is not to adopt the proposed 

amendment to Rule 13d–5 but instead to 

provide guidance as to the application 

of the existing legal standard established 

in sections 13(d)(3) and 13(g)(3) with 

respect to the formation of a group.543

i. Background of the Regulatory 

Framework 

Sections 13(d)(3) and 13(g)(3) are 

identical, and each of these provisions 

provides that ‘‘[w]hen two or more 

persons act as a . . . group for the 

purpose of acquiring, holding, or 

disposing of securities of an issuer, such 

. . . group shall be deemed a ‘person.’ ’’ 

As the Commission noted in the 

Proposing Release, Congress enacted 

these provisions based on two practical 

considerations.544 First, sections 

13(d)(1) and 13(g)(1), by their terms, 

apply to, and impose filing obligations 

upon, a single ‘‘person.’’ 545 Second, 

Congress recognized the need to protect 

against the evasion of disclosure 

requirements by persons who 

collectively sought to change or 

influence control of an issuer yet who 

each acquired and held an amount of 


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546Section 13(d)(3) was enacted to prevent ‘‘easy 

avoidance of section 13(d)’s disclosure 

requirements by a group of investors acting together 

in their acquisition or holding of securities.’’ S. Rep. 

No. 550, at 8 (1967); H.R. No. 1711, at 8–9 (1968); 

see also 113 Cong. Rec. Bill S. 510 (Jan. 18, 1967) 

(noting that the specific provision applicable to 

groups was added to ‘‘close the loophole that now 

exists which allows a syndicate, where no member 

owns more than 10 percent, to escape the reporting 

requirements of the Securities Exchange Act’’). 

547The operative term ‘‘after acquiring’’ in section 

13(d)(1) makes the application of section 13(d) 

contingent upon the existence of an acquisition. 

Determining that an acquisition has occurred—in 

particular, an acquisition that is neither exempt nor 

otherwise not recognized under section 13(d)(1)— 

is thus necessary to establish the application of 

section 13(d). 

548See 17 CFR 240.13d–1. 

549The predecessor rule, Rule 13d–6, was 

redesignated Rule 13d–5 in 1978. See Filing and 

Disclosure Release. Unless otherwise noted, 

references to Rule 13d–5 in this section of the 

release also refer to the predecessor Rule 13d–6. 

550When proposing Rule 13d–5(b), the 

Commission did not present the rule as a proposed 

definition of ‘‘group,’’ solicit comment on the 

sufficiency or any limitations of any such 

definition, or use any reference to the term ‘‘group’’ 

in the proposed rule text. See Disclosure of 

Corporate Ownership, Release No. 34–11616 (Aug. 

25, 1975) [40 FR 42212 (Sept. 11, 1975)]. Instead, 

the Commission explained that it was proposing to 

define the term ‘‘acquisition’’ to address certain 

technical issues with respect to section 13(d) and 

the determination of the due date for a Schedule 

13D. 

551The Commission, in adopting Rule 13d– 

5(b)(1), indicated that it viewed the term ‘‘holding’’ 

as subsuming the term ‘‘voting,’’ but nevertheless 

expressly referenced the term ‘‘voting’’ in the rule 

for the avoidance of doubt. See Proposing Release 

at 13869 n.135 (citing Filing and Disclosure Release 

at 18492). 

552See, e.g., SEC v. Levy, 706 F. Supp. 61, 69 

(D.D.C. 1989) (‘‘In order to find that a ‘group’ exists 

under Section 13(d)(3), a court must find that two 

or more people have formed a combination in 

support of a common objective.’’); In the Matter of 

John A. Carley, Release No. 34–50695 (Nov. 18, 

2004) (‘‘A group need not be formally organized, 

nor memorialize its intentions in writing . . . . All 

that is required is that its members combine in 

furtherance of a common objective.’’); In the Matter 

of John Joslyn, Joseph Marsh, P. David Lucas, 

Steven Sybesma, Stanley Thomas and Jon 

Thompson, Release No. 34–50588 (Oct. 26, 2004). 

553Proposing Release at 13868. 

554Both the House and Senate Reports 

accompanying the bill reflect an effort to prevent 

circumvention of the reporting threshold in this 

situation with the inclusion of a provision ‘‘that 

would prevent a group of persons who seek to pool 

their voting or other interests from evading the . . . 

statute because no one individual owns more than 

[five] percent.’’ See Disclosure of Corporate Equity 

Ownership, H.R. Rep. No. 1711, at 9 (1968) and Full 

Disclosure of Corporate Equity Ownership and in 

Corporate Takeover Bid, S. 510, Report of the S. 

Comm. On Banking and Currency, 90th Cong. 1, 8 

(1967). As such, the reports noted that section 

13(d)(3) ‘‘is designed to obtain full disclosure of the 

identity of any person or group obtaining the 

benefits of ownership [b]y reason of any contract, 

understanding, relationship, agreement or other 

arrangement’’ (emphasis added). S. Rep. No. 550, at 

8 (1967); H.R. Rep. No. 1711, at. 8–9 (1968), as 

reprinted in 1968 U.S.C.C.A.N. 2811, 2818. Id. 

555 Group activity may be demonstrated by 

circumstantial evidence. See Proposing Release at 

13868, n. 132 (citing SEC v. Savoy Indus., Inc., 587 

F.2d 1149, 1162 (D.C. Cir. 1978) and noting as 

indicia of group formation: (1) the presence of a 

common plan or goal, Fin. Gen. Bankshares, Inc. v. 

Lance, 1978 WL 1082, at *9 (D.D.C. 1978); (2) 

‘‘considerable dissatisfaction’’ with certain officers 

and a ‘‘desire to reduce’’ those officers’ role in 

company management, Id. at *10; (3) strategy 

meetings with, among others, attorneys, SEC v. 

Levy, 706 F. Supp. 61, 70 (D.D.C. 1989); (4) a pattern 

of coordinated stock purchases, Hallwood Realty 

Partners, LP v. Gotham Partners, LP, 286 F.3d 613, 

618 (2d Cir. 2002); (5) the solicitation of others to 

join the group, Wellman v. Dickinson, 682 F.2d 355 

363–364 (2d Cir. 1979), cert. denied sub. nom. 

Dickinson v. SEC, 460 U.S. 1069 (1983); or (6) the 

existence of communications between and among 

group members. Gen. Aircraft Corp. v. Lampert, 556 

F.2d 90, 95 (1st Cir. 1977)); see also supra note 482. 

556The Commission recognizes that inadvertent 

or coincidental contact would not be sufficient to 

satisfy the standard given the absence of volitional 

acts made in concert or in coordination with others. 

beneficial ownership at or just below 

the reporting threshold.546

Congress sought to address this 

problem of coordinated circumvention 

by deeming two or more persons to be 

one person for purposes of sections 

13(d) and 13(g). Based on the statutory 

treatment of two or more persons as if 

they were a single person when they 

‘‘act as’’ a group for at least one of the 

three purposes specified in the statutory 

provisions (i.e., acquiring, holding, or 

disposing of securities of an issuer), the 

beneficial ownership collectively held 

by the group members is imputed to the 

group. If the aggregate amount of 

beneficial ownership exceeds five 

percent of a covered class, the group 

may be required to file a beneficial 

ownership report. The determination of 

which statutory provision (i.e., section 

13(d)(3) or 13(g)(3)) applies to a group 

depends on whether a non-exempt 

acquisition of beneficial ownership has 

been made that can be imputed to the 

group and, when on its own or added 

to any other beneficial ownership held 

by the group, results in the group’s 

beneficial ownership exceeding five 

percent of the covered class. If such an 

acquisition occurs, the group is subject 

to regulation under section 13(d).547 If 

no such acquisition attributable to the 

group has occurred, but the collective 

amount of beneficial ownership held by 

the group members exceeds five percent 

of a covered class at the end of a 

calendar year under current rules 548 (or 

at the end of a calendar quarter based on 

the amendments to Rule 13d–1 we are 

adopting in this release), the group is 

subject to section 13(g). 

ii. Guidance 

Neither the statute nor our rules 

provide a definition of a ‘‘group.’’ The 

appropriate legal standard for 

determining whether a group is formed 

is found in sections 13(d)(3) and 

13(g)(3). While some may view the 

language of Rule 13d–5(b) as providing 

a definition of ‘‘group,’’ we reiterate that 

neither the current rule nor its 

predecessor 549 was designed or adopted 

by the Commission to serve as a 

substitute for the legal standard 

expressly stated in sections 13(d)(3) and 

13(g)(3) for determining when two or 

more persons form a group.550

Whether two or more persons have 

formed a group as contemplated by 

sections 13(d)(3) and 13(g)(3) depends 

on a determination of whether they 

acted together for the purpose of 

‘‘acquiring,’’ ‘‘holding,’’ or ‘‘disposing 

of’’ securities of an issuer.551 Such 

persons could be viewed as acting 

together if they are taking concerted 

actions in furtherance of any of these 

purposes.552 The determination 

depends on an analysis of all the 

relevant facts and circumstances and 

not solely on the presence or absence of 

an express agreement, as two or more 

persons may take concerted action or 

agree informally.553 This approach is 

consistent with the statutory language of 

sections 13(d)(3) and 13(g)(3) and with 

the purpose of these statutory 

provisions.554 It also is consistent with 

views previously expressed by courts 

and the Commission, which have 

determined that groups were established 

by activities that fell short of an express 

agreement.555 Indeed, the Commission 

recognizes that for a finder of fact, 

including the Commission itself, to 

determine that a group has been formed 

under section 13(d)(3) or 13(g)(3), the 

evidence must show, at a minimum, 

indicia, such as an informal 

arrangement or coordination in 

furtherance, of a common purpose to 

acquire, hold, or dispose of securities of 

an issuer. If two or more persons took 

similar actions, that fact is not 

conclusive in and of itself that a group 

has been formed.556 We therefore 

disagree with the comments raising 

constitutional concerns, as well as the 

comments concerning the scope of our 

authority under the Exchange Act and 

the APA. We note, however, that those 

comments were directed at the proposed 

amendment to Rule 13d–5 and the belief 

that the contemplated rule change 

meant the Commission was taking a 

position that a group could be formed 

without some type of an agreement, 

arrangement, understanding, or 

concerted action. As explained above, 

this is not the Commission’s view, and 

we are not adopting the proposed 

amendment to Rule 13d–5. Further, the 

commenters’ concerns are not 

implicated by the guidance we provide 

here. 


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557Each illustration assumes that the rules 

adopted in this release are in effect and that the 

securities of the subject company are in a covered 

class. 

558The conclusion reflected in this example 

assumes the Rule 14a–8 or other non-binding 

shareholder proposal is submitted jointly and 

without ‘‘springing conditions’’ such as an 

arrangement, understanding, or agreement among 

the shareholders to vote against director candidates 

nominated by the issuer’s management or other 

management proposals if the non-binding proposal 

is not included in the issuer’s proxy statement or, 

if passed, not acted upon favorably by the issuer’s 

board. 

559Examples of the type of consents or 

commitments given in furtherance of a common 

purpose to acquire, hold (inclusive of voting), or 

dispose of securities of an issuer could include the 

granting of irrevocable proxies or the execution of 

written consents or voting agreements that 

demonstrate that the parties had an arrangement to 

act in concert. 

560Amendments to Beneficial Ownership 

Reporting Requirements, Release No. 34–39538 (Jan. 

12, 1998) [63 FR 2854, 2858 (Jan. 16, 1998)]. 

Relatedly, we recognize the concern 

expressed by some commenters that the 

Commission’s proposal to amend Rule 

13d–5 could chill shareholder 

engagement, with, some commenters 

asserted, shareholders unable to 

communicate freely with each other or 

with the issuer’s management without 

forming a group. In response to some of 

the concerns raised by commenters, we 

provide guidance below on the 

application of the current legal standard 

found in section 13(d)(3) and 13(g)(3) to 

certain common types of shareholder 

engagement activities.557

Question: Is a group formed when two 

or more shareholders communicate with 

each other regarding an issuer or its 

securities (including discussions that 

relate to improvement of the long-term 

performance of the issuer, changes in 

issuer practices, submissions or 

solicitations in support of a non-binding 

shareholder proposal, a joint 

engagement strategy (that is not controlrelated), or a ‘‘vote no’’ campaign 

against individual directors in 

uncontested elections) without taking 

any other actions? 

Response: No. In our view, a 

discussion whether held in private, 

such as a meeting between two parties, 

or in a public forum, such as a 

conference that involves an 

independent and free exchange of ideas 

and views among shareholders, alone 

and without more, would not be 

sufficient to satisfy the ‘‘act as a . . . 

group’’ standard in sections 13(d)(3) and 

13(g)(3). Sections 13(d)(3) and 13(g)(3) 

were intended to prevent circumvention 

of the disclosures required by Schedules 

13D and 13G, not to complicate 

shareholders’ ability to independently 

and freely express their views and ideas 

to one another. The policy objectives 

ordinarily served by Schedule 13D or 

Schedule 13G filings would not be 

advanced by requiring disclosure that 

reports this or similar types of 

shareholder communications. Thus, an 

exchange of views and any other type of 

dialogue in oral or written form not 

involving an intent to engage in 

concerted actions or other agreement 

with respect to the acquisition, holding, 

or disposition of securities, standing 

alone, would not constitute an ‘‘act’’ 

undertaken for the purpose of ‘‘holding’’ 

securities of the issuer under section 

13(d)(3) or 13(g)(3). 

Question: Is a group formed when two 

or more shareholders engage in 

discussions with an issuer’s 

management, without taking any other 

actions? 

Response: No. For the same reasons 

described above, we do not believe that 

two or more shareholders ‘‘act as a . . . 

group’’ for the purpose of ‘‘holding’’ a 

covered class within the meaning of 

those terms as they appear in section 

13(d)(3) or 13(g)(3) if they simply engage 

in a similar exchange of ideas and 

views, alone and without more, with an 

issuer’s management. 

Question: Is a group formed when 

shareholders jointly make 

recommendations to an issuer regarding 

the structure and composition of the 

issuer’s board of directors where (1) no 

discussion of individual directors or 

board expansion occurs and (2) no 

commitments are made, or agreements 

or understandings are reached, among 

the shareholders regarding the potential 

withholding of their votes to approve, or 

voting against, management’s director 

candidates if the issuer does not take 

steps to implement the shareholders’ 

recommended actions? 

Response: No. Where 

recommendations are made in the 

context of a discussion that does not 

involve an attempt to convince the 

board to take specific actions through a 

change in the existing board 

membership or bind the board to take 

action, we do not believe that the 

shareholders ‘‘act as a . . . group’’ for 

the purpose of ‘‘holding’’ securities of 

the covered class within the meaning of 

those terms as they appear in sections 

13(d)(3) or 13(g)(3). Rather, we view this 

engagement as the type of independent 

and free exchange of ideas between 

shareholders and issuers’ management 

that does not implicate the policy 

concerns addressed by section 13(d) or 

section 13(g). 

Question: Is a group formed if 

shareholders jointly submit a nonbinding shareholder proposal to an 

issuer pursuant to Exchange Act Rule 

14a–8 for presentation at a meeting of 

shareholders? 

Response: No. The Rule 14a–8 

shareholder proposal submission 

process is simply another means 

through which shareholders can express 

their views to an issuer’s management 

and board and other shareholders. For 

purposes of group formation, we do not 

believe shareholders engaging in a free 

and independent exchange of thoughts 

about a potential shareholder proposal, 

jointly submitting, or jointly presenting, 

a non-binding proposal to an issuer in 

accordance with Rule 14a–8 (or other 

means) should be treated differently 

from, for example, shareholders jointly 

meeting with an issuer’s management 

without other indicia of group 

formation. Accordingly, where the 

proposal is non-binding, we do not 

believe that the shareholders ‘‘act as a 

. . . group’’ for the purpose of 

‘‘holding’’ securities of the covered class 

within the meaning of those terms as 

they appear in section 13(d)(3) or 

13(g)(3). Assuming that the joint 

conduct has been limited to the 

creation, submission, and/or 

presentation of a non-binding 

proposal,558 those statutory provisions 

would not result in the shareholders 

being treated as a group, and the 

shareholders’ beneficial ownership 

would not be aggregated for purposes of 

determining whether the five percent 

threshold under section 13(d)(1) or 

13(g)(1) had been crossed. 

Question: Would a conversation, 

email, phone contact, or meetings 

between a shareholder and an activist 

investor that is seeking support for its 

proposals to an issuer’s board or 

management, without more, such as 

consenting or committing to a course of 

action,559 constitute such coordination 

as would result in the shareholder and 

activist being deemed to form a group? 

Response: No. Communications such 

as the types described, alone and 

without more, would not be sufficient to 

satisfy the ‘‘act as a . . . group’’ 

standard in sections 13(d)(3) and 

13(g)(3) as they are merely the exchange 

of views among shareholders about the 

issuer. This view is consistent with the 

Commission’s previous statement that a 

shareholder who is a passive recipient 

of proxy soliciting activities, without 

more, would not be deemed a member 

of a group with persons conducting the 

solicitation.560 Activities that extend 

beyond these types of communications, 

which include joint or coordinated 

publication of soliciting materials with 

an activist investor might, however, be 

indicative of group formation, 


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561For example, public announcement of a voting 

intention qualifies for the exclusion from the 

definition of solicitation under 17 CFR 240.14a– 

1(l)(2)(iv). 

562While each group member individually bears 

a reporting obligation arising under Rule 13d– 

1(k)(2), a tippee would not become a member of a 

group, and thus would not incur a reporting 

obligation, until it makes a purchase of securities 

of the same covered class in response to having 

been tipped even if the tippee already is a beneficial 

owner of that class. 

563See Alon Brav, Wei Jiang, Frank Partnoy, and 

Randall S. Thomas, Hedge Fund Activism, 

Corporate Governance and Firm Performance, 61 J. 

Fin. 1729 (2008) (finding on average an abnormal 

short-term return of 7% over the window before 

and after a Schedule 13D filing); Marco Brecht, 

Julian Franks, Jeremy Grant, and Hammes F. 

Wagner, The Returns to Hedge Fund Activism: An 

International Study, Center for Economic Policy 

Research, Discussion Paper No. 10507 (Mar. 15, 

2015). 

564See, e.g., Susan Pulliam, Juliet Chung, David 

Benoit, and Rob Barry, Activist Investors Often Leak 

Their Plans to a Favored Few, Wall St. J. (Mar. 26, 

2014), available at https://www.wsj.com/articles/ 

SB10001424052702304888404579381250791

474792 (‘‘Activists, who push for broad changes at 

companies or try to move prices with their 

arguments, sometimes provide word of their 

campaigns to a favored few fellow investors days 

or weeks before they announce a big trade, which 

typically jolts the stock higher or lower.’’). 

565For example, any near-term gains made by 

these other investors attributable to information 

about the impending filing may cause uninformed 

shareholders who sell at prices reflective of the 

status quo to question the efficacy of existing 

regulatory framework. Even though the demand to 

acquire shares in the covered class may increase as 

a direct result of the blockholder’s communications, 

and in turn increase the prices at which selling 

shareholders exit, such prices may be discounted in 

comparison to the price such shareholders would 

have realized had the information about the 

impending Schedule 13D filing been public. See, 

e.g. John C. Coffee, Jr. & Darius Palia, The Wolf at 

the Door: The Impact of Hedge Fund Activism on 

Corporate Governance, 41 J. Corp. L. 545, 596 

(2016) (explaining that ‘‘the gains that activists 

make in trading on asymmetric information—before 

the Schedule 13D’s filing—come at the expense of 

selling shareholders [and] represent[ ] another 

wealth transfer’’). Consequently, this informational 

imbalance could, to the extent some perceive it to 

be unfair, diminish trust in markets. See, e.g., 

Georgy Chabakauri et al., Trading Ahead of 

Barbarians’ Arrival at the Gate: Insider Trading on 

Non-Inside Information (Colum. Bus. Sch. Rsch. 

Paper, Jan. 2022), available at https://ssrn.com/ 

abstract=4018057 (finding a significant concurrence 

between purchases of stock by insiders of the issuer 

and purchases by an activist in the 60 days, and 

particularly in the last 10 days, preceding a 

Schedule 13D filing). 

566As the Commission noted, groups may form at 

a time when a class of equity securities is not yet 

registered under section 12 or the aggregate 

beneficial ownership held by the membership in 

the group on the date of its formation is 5% or 

below of a covered class. See Proposing Release at 

13870. Expressly capturing post-formation 

acquisitions of beneficial ownership by group 

members therefore can become important for 

purposes of assessing whether a group intentionally 

tried to evade the reporting process, determining 

whether an amendment was due for a pre-existing 

Schedule 13D filing, and evaluating the availability 

of the section 13(d)(6)(B) exemption. See id. 

567Proposing Release at 13870. 

depending upon the facts and 

circumstances. 

Question: Would an announcement or 

a communication by a shareholder of 

the shareholder’s intention to vote in 

favor of an unaffiliated activist 

investor’s director nominees, without 

more, constitute coordination sufficient 

to find that the shareholder and the 

activist investor formed a group? 

Response: No. We do not view a 

shareholder’s independentlydetermined act of exercising its voting 

rights, and any announcements or 

communications regarding its voting 

decision, without more, as indicia of 

group formation. This view is consistent 

with our general approach towards the 

exercise of the right of suffrage by a 

shareholder in other areas of the Federal 

securities laws.561 Shareholders, 

whether institutional or otherwise, are 

thus not engaging in conduct at risk of 

being deemed to give rise to group 

formation as a result of simply 

independently announcing or advising 

others—including the issuer—how they 

intend to vote and the reasons why. 

Question: If a beneficial owner of a 

substantial block of a covered class that 

is or will be required to file a Schedule 

13D intentionally communicates to 

other market participants (including 

investors) that such a filing will be 

made (to the extent this information is 

not yet public) with the purpose of 

causing such persons to make purchases 

in the same covered class, and one or 

more of the other market participants 

make purchases in the same covered 

class as a direct result of that 

communication, would the blockholder 

and any of those market participants 

that made purchases potentially become 

subject to regulation as a group? 

Response: Yes. To the extent the 

information was shared by the 

blockholder with the purpose of causing 

others to make purchases in the same 

covered class and the purchases were 

made as a direct result of the 

blockholder’s information, these 

activities raise the possibility that all of 

these beneficial owners are ‘‘act[ing] as’’ 

a ‘‘group for the purpose of acquiring’’ 

securities of the covered class within 

the meaning of section 13(d)(3). Such 

purchases may implicate the need for 

public disclosure underlying section 

13(d)(3) and these purchases could 

potentially be deemed as having been 

undertaken by a ‘‘group’’ for the 

purpose of ‘‘acquiring’’ securities as 

specified under section 13(d)(3).562

Given that a Schedule 13D filing may 

affect the market for and the price of an 

issuer’s securities, non-public 

information that a person will make a 

Schedule 13D filing in the near future 

can be material.563 By privately sharing 

this material information in advance of 

the public filing deadline, the 

blockholder may incentivize the market 

participants who received the 

information to acquire shares before the 

filing is made.564 Such arrangements 

also raise investor protection concerns 

regarding perceived unfairness and trust 

in markets.565 The final determination 

as to whether a group is formed between 

the blockholder and the other market 

participants will ultimately depend 

upon the facts and circumstances, 

including (1) whether the purpose of the 

blockholder’s communication with the 

other market participants was to cause 

them to purchase the securities and (2) 

whether the market participants’ 

purchases were made as a direct result 

of the information shared by the 

blockholder. 

2. Proposed Rule 13d–5(b)(1)(iii) and 

(b)(2)(ii) 

a. Proposed Amendments 

The Commission proposed to amend 

Rule 13d–5 to expressly impute 

acquisitions made by a group member 

after the date of group formation to the 

group once the collective beneficial 

ownership among group members 

exceeds five percent of a covered 

class.566 Specifically, proposed Rule 

13d–5(b)(1)(iii) would provide that a 

group under section 13(d)(3) will be 

deemed to have acquired beneficial 

ownership of equity securities of a 

covered class if any member of the 

group becomes the beneficial owner of 

additional equity securities of such 

covered class after the date of the 

group’s formation. Similarly, proposed 

Rule 13d–5(b)(2)(ii) would contain 

nearly identical language, with 

conforming changes to address 

circumstances in which a member of a 

group under section 13(g)(3) becomes 

the beneficial owner of additional 

equity securities of a covered class after 

the date of the group’s formation. The 

Commission noted that absent an 

express provision that would treat postformation acquisitions of beneficial 

ownership by group members as 

acquisitions by the group, the 

Commission or other affected parties 

must prove the acquisition is 

attributable to the group.567

b. Comments Received 

The Commission did not receive any 

comments on proposed Rule 13d– 

5(b)(1)(iii) and (b)(2)(ii). 


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568See id. 

569 Id. at 13870–71. 

570 15 U.S.C. 78(m)(d)(6). 

571 15 U.S.C. 78(m)(g)(6). 

572 17 CFR 240.13d–6. 

573Proposing Release at 13872. 

574 Id. at 13873. 

575 Id. 

576 Id. 

c. Final Amendments 

For the reasons set forth in the 

Proposing Release,568 we are adopting 

the text of Rule 13d–5(b)(1)(iii) and 

(b)(2)(ii) substantially as proposed. We 

also are redesignating these provisions 

as Rule 13d–5(b)(1)(ii) and (b)(2)(i) and 

slightly modifying them to account for 

the possibility that group members may 

make acquisitions in furtherance of the 

group’s common purpose on the same 

day the group has been formed. 

Accordingly, the rule text will now 

attribute acquisitions by group members 

to the group at any time after the group 

has been formed rather than after the 

date on which the group has been 

formed. 

3. Proposed Rule 13d–5(b)(1)(iv) and 

(b)(2)(iii) 

a. Proposed Amendments 

The Commission proposed 

amendments to Rule 13d–5 to carve out 

from the purview of proposed Rule 13d– 

5(b)(1)(iii) and (b)(2)(ii) intra-group 

transfers of equity securities of a 

covered class.569 Specifically, proposed 

Rule 13d–5(b)(1)(iv) would provide that 

a group under section 13(d)(3) will not 

be deemed to have acquired beneficial 

ownership in a covered class if a 

member of the group becomes the 

beneficial owner of additional equity 

securities in such covered class through 

a sale by, or transfer from, another 

member of the group. Proposed Rule 

13d–5(b)(2)(iii) would contain nearly 

identical language, with conforming 

changes to address circumstances in 

which a member of a group under 

section 13(g)(3) becomes the beneficial 

owner of additional equity securities in 

a covered class through a sale by, or 

transfer from, another member of the 

group. 

b. Comments Received 

The Commission did not receive any 

comments on proposed Rule 13d– 

5(b)(1)(iv) and (b)(2)(iii). 

c. Final Amendments 

For the reasons set forth in the 

Proposing Release, we are adopting the 

text of Rule 13d–5(b)(1)(iv) and 

(b)(2)(iii) substantially as proposed, but 

redesignating these provisions as Rule 

13d–5(b)(1)(iii) and (b)(2)(ii). We also 

are slightly modifying the rule text to 

account for the possibility that group 

members may make intra-group 

transfers on the same day but after the 

time at which the group has been 

formed instead of ‘‘after the date of 

group formation.’’ 

D. Proposed Amendments to Rule 13d– 

6 To Create Certain Exemptions 

Congress granted the Commission the 

authority to issue exemptions from the 

application of sections 13(d) and 13(g). 

The Commission can, under section 

13(d)(6)(D), exempt acquisitions ‘‘as not 

entered into for the purpose of, and not 

having the effect of, changing or 

influencing the control of the issuer or 

otherwise as not comprehended within 

the purposes of [section 13(d)].’’ 570

Congress similarly granted the 

Commission authority, under section 

13(g)(6), to exempt any person or class 

of persons from section 13(g) ‘‘as it 

deems necessary or appropriate in the 

public interest or for the protection of 

investors.’’ 571 The Commission 

exercised this authority when it adopted 

Rule 13d–6, titled ‘‘Exemption of certain 

acquisitions.’’ Rule 13d–6 currently sets 

forth one exemption from section 13(d) 

for the acquisition of securities of an 

issuer by a person who, prior to such 

acquisition, was a beneficial owner of 

more than five percent of the securities 

of the same class as those acquired, 

provided certain conditions are met.572

1. Proposed Amendments 

In the Proposing Release, the 

Commission proposed to exempt certain 

circumstances from resulting in a 

person being deemed to have acquired 

beneficial ownership of, or otherwise to 

beneficially own, equity securities of a 

covered class for purposes of sections 

13(d) and 13(g). Specifically, the 

Commission proposed to amend Rule 

13d–6 to: 

• Add new paragraph (c) to create an 

exemption from sections 13(d)(3) and 

13(g)(3) for certain circumstances in 

which two or more persons take 

concerted actions with respect to an 

issuer or a covered class; and 

• Add new paragraph (d) to create an 

exemption from sections 13(d)(3) and 

13(g)(3) for certain circumstances in 

which two or more persons enter into an 

agreement setting forth the terms of a 

derivative security. 

The Commission proposed these 

amendments to Rule 13d–6 to exempt 

certain actions taken by two or more 

persons from the scope of sections 

13(d)(3) and 13(g)(3) if those actions do 

not have the purpose or effect of 

changing or influencing the control of 

an issuer and thus are not within the 

purpose of section 13(d). 

In light of the proposed amendments 

to Rule 13d–5, the Commission 

proposed to add new paragraph (c) to 

Rule 13d–6 to avoid potentially chilling 

communications among shareholders or 

impeding shareholders’ engagement 

with issuers where those activities are 

undertaken without the purpose or 

effect of changing or influencing control 

of the issuer (and are not made in 

connection with or as a participant in 

any transaction having such purpose or 

effect).573 Proposed Rule 13d–6(c) 

would provide that two or more persons 

would not be deemed to have acquired 

beneficial ownership of, or otherwise 

beneficially own, an issuer’s equity 

securities as a group solely because of 

their concerted actions related to an 

issuer or its equity securities, including 

engagement with one another or the 

issuer, provided they meet certain 

conditions. The Commission noted that 

such interactions, depending upon the 

level of coordination and degree to 

which the persons advocated in 

furtherance of a common purpose 

specified within the statutory 

framework, could be found to satisfy the 

‘‘act as’’ a group standard under section 

13(d)(3) or 13(g)(3) for the purpose of 

‘‘holding’’ a covered class.574 To help 

ensure that the exemption is available 

only where such persons independently 

determine to take concerted actions, the 

proposed exemption would be available 

only if such persons are not obligated to 

take such actions (e.g., pursuant to the 

terms of a cooperation agreement or 

joint voting agreement).575

In addition, the Commission proposed 

to add new paragraph (d) to Rule 13d– 

6, in light of proposed new Rule 13d– 

3(e), to avoid impediments to certain 

financial institutions’ ability to conduct 

their business in the ordinary course.576

Proposed Rule 13d–6(d) would have 

provided that two or more persons 

would not be deemed to have formed a 

group under section 13(d)(3) or 13(g)(3) 

solely by virtue of their entrance into an 

agreement governing the terms of a 

derivative security. This exemption 

would have been available if the 

agreement is a bona fide purchase and 

sale agreement entered into in the 

ordinary course of business. Further, the 

exemption would have been available 

only if such persons did not enter into 

the agreement with the purpose or effect 

of changing or influencing control of the 

issuer, or in connection with or as a 


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577See, e.g., letters from Anonymous (Mar. 13, 

2022) (‘‘Anonymous 10’’); Kerrie Waring, Chief 

Executive Officer, ICGN (June 27, 2023) (‘‘ICGN’’); 

Kyle (Mar. 13, 2022) (‘‘Kyle’’); Perkins Coie. 

578See, e.g., letters from Ceres (generally 

supporting the proposal, but stating that the rule, 

as proposed, could create some ambiguity as to the 

circumstances under which a group is formed and 

suggesting changes to the proposal); Jeff Mahoney, 

General Counsel, Council of Institutional Investors 

(Apr. 8, 2022) (‘‘CII’’) (same); ICI I (supporting the 

intent of the proposal, but stating that the 

exemption, as proposed, would be too narrow and 

could create additional uncertainty regarding the 

circumstances under which a group is formed); 

Shareholder Rights Group, Interfaith Center on 

Corporate Responsibility and The Shareholder 

Commons (Apr. 11, 2022) (‘‘Interfaith Center, et 

al.’’) (endorsing the comments in the letter from 

Ceres). 

579See letters from Ceres; CII; ICGN; ICI I; Perkins 

Coie. 

580See letter from CII. 

581See, e.g., letters from B. Mason; CIRCA I; 

Dennis and Mary Spohn (June 25, 2023); EIM I; 

NBG; Prof. Edwards, et al.; Prof. Gordon; Prof. 

Webber; see also letter from SIFMA AMG 

(describing the proposed exemption as 

‘‘problematic’’ and recommending that it not be 

adopted if the Commission also does not adopt the 

proposed amendments to Rule 13d–5). 

582See letters from CIRCA I; Prof. Edwards, et al.; 

Prof. Webber. These commenters characterized the 

proposed exemption as setting forth the exclusive 

circumstances under which two or more persons 

may engage with one another or an issuer without 

being regulated as a group. One of these 

commenters further said that the Commission’s 

description of proposed Rule 13d–6(c) ‘‘indicate[d] 

that two shareholders of the same Covered Security 

that coordinate in any manner regarding the 

holding would be deemed to be a group’’ unless 

those shareholders qualify for the proposed 

exemption and that ‘‘[t]his is not consistent with 

the legislative history underlying the Williams 

Act.’’ See letter from CIRCA I. And, one of these 

commenters asserted that the effect of proposed 

Rule 13d–6(c), in tandem with the proposed 

amendments to Rule 13d–5, on shareholder 

communications could raise concerns under the 

First Amendment. See letter from Prof. Edwards, et 

al.; see also supra note 503 and accompanying text. 

583See letters from EIM I; SIFMA AMG. 

584See letter from EIM I. 

585See letter from Prof. Gordon. 

586See letters from AFREF; Ceres; CII; IAA; ICGN; 

ICI I; Interfaith Center, et al.; NBG; Prof. Edwards, 

et al.; SSC; STB. 

587See letters from AFREF; Ceres; ICI I; Interfaith 

Center, et al. 

588See letters from AFREF; Ceres; CII; Interfaith 

Center, et al. For example, one commenter 

expressed support for the recommendations of 

another commenter that ‘‘the Commission [should] 

clarify the Rule 13d–6(c) exception to ensure it 

covers launching and participating in ‘vote no’ 

campaigns and communications with Schedule 13D 

filers post-filing.’’ See letter from AFREF (indicating 

support of a corresponding recommendation in the 

letter from CII). 

589See letters from ICI I; Interfaith Center, et al.; 

SSC. 

590See letters from Ceres; CII. 

591See letter from CII. The commenter stated 

‘‘that the positive step taken by adopting Rule 13d– 

6(c) could be undercut if there is a concern among 

investors that communicating with a Rule 13D 

‘group’ could expose investors to being considered 

as a part of that ‘group.’ ’’ Id. 

592See letters from Ceres; CII; ICI I. 

593See letter from ICI I. 

594See letter from Prof. Edwards, et al. 

595See letters from ICGN; O’Melveny & Myers; 

Perkins Coie. 

596See letter from ICGN. 

597See letters from ABA; EIM I; Engineer; Gabriel 

Morales, Retail Investor (Feb. 23, 2022) (‘‘G. 

Morales’’); IAA; ICI I; J. Kennedy; PSCM; SIFMA 

AMG; STB. 

598See letters from ABA; ICI I; STB. 

599See letter from STB. 

participant in any transaction having 

such purpose or effect. 

2. Comments Received 

Some commenters supported 

proposed Rule 13d–6(c),577 while others 

generally supported the proposal’s 

intent but expressed some reservations 

regarding Rule 13d–6(c) as proposed.578

Some of those commenters generally 

indicated that the exemption (as 

proposed or as modified in accordance 

with their recommendations) could 

provide clarity that would help prevent 

the chilling of communications among 

shareholders and shareholder 

engagement with issuers.579 In addition, 

one commenter appeared to support the 

inclusion of the ‘‘no obligation’’ to act 

concept in the second prong of the 

proposed exception and noted that 

when the institutional investors that are 

its members act jointly, they are acting 

independently, consistent with their 

fiduciary, legal, and other obligations to 

their fund participants and 

beneficiaries.580

Other commenters opposed the 

proposed Rule 13d–6(c) exemption.581

Some commenters appeared to base 

their opposition on the argument that 

such an exemption would impliedly 

define what a group is by stating what 

it is not.582 Several commenters said 

that ambiguity in the proposed 

exemption could inhibit market 

participants’ ability to readily discern 

when a ‘‘purpose or effect of changing 

or influencing control’’ has been 

manifested.583 One commenter further 

submitted that the subjective ‘‘control 

intent’’ standard likely will create more 

uncertainty and confusion than it will 

resolve.584 One commenter indicated, in 

light of its comments on the proposed 

amendments to Rule 13d–5, that ‘‘[t]his 

rule [exemption] would chill the kind of 

shareholder communications that are 

central to a proxy contest’’ and stated 

that ‘‘[c]onsultation among fellow 

shareholders and discussion with the 

activist are . . . essential.’’ 585

A number of commenters made 

recommendations regarding proposed 

Rule 13d–6(c).586 Some commenters 

requested that coordination with respect 

to Rule 14a–8 shareholder proposals be 

expressly made exempt.587 Several 

commenters requested that coordination 

with respect to ‘‘vote no’’ campaigns be 

expressly made exempt.588 Other 

commenters requested that it be made 

clear that the state of mind of one 

person would not be imputed to another 

for purposes of determining the 

availability of the exemption.589 Some 

commenters asked that the ‘‘in 

connection with [any change of control] 

transaction’’ language be removed from 

the exemption.590 One of those 

commenters stated that the ‘‘in 

connection with’’ language ‘‘might be 

read too broadly and have an 

unintended chilling effect of the sort of 

communications that routinely occur 

today.’’ 591 Some commenters indicated 

that the ‘‘indirectly obligated to act’’ 

standard was in need of clearly defined 

boundaries and/or should be deleted.592

One of these commenters asserted that 

the ‘‘indirectly obligated’’ standard is 

vague and would engender additional 

uncertainty, and recommended that the 

Commission eliminate the proposed 

condition that ‘‘[s]uch persons, when 

taking such concerted actions, are not 

directly or indirectly obligated to take 

such actions.’’ 593 One commenter stated 

the Commission should consider the 

circumstances under which investors 

advocating for specific changes (e.g., 

board composition or diversity) might 

later be subjected to an inquiry about 

whether their communications or 

activities were protected by the 

exemptions given the terms in the 

proposal such as ‘‘solely,’’ ‘‘only,’’ 

‘‘indirectly,’’ ‘‘purpose,’’ ‘‘effect,’’ and 

‘‘contemplated.’’ 594

In response to the Commission’s 

solicitation for comments on proposed 

Rule 13d–6(d), several commenters 

expressed support for the proposal.595

One commenter stated that the proposal 

would ‘‘help investors understand when 

they could become subject to regulation 

as a ‘group’ under these circumstances 

and avoid costly regulatory filings for 

activity in the ordinary course of 

business.’’ 596

Several other commenters opposed 

the proposed Rule 13d–6(d) 

exemption.597 Some of those 

commenters questioned whether the 

proposed exemption is necessary, and 

implied that the proposal’s inclusion in 

this rulemaking intimates that ordinary 

course of business transactions 

currently present risks of group 

formation.598 One of those commenters 

said that it was fairly settled that a 

bilateral transaction, negotiated at arm’s 

length, would not by itself be sufficient 

to create a group absent other indicia of 

group status such as agreements to vote 

and other factors.599 Another of these 

commenters questioned whether this 


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600See letter from ICI I. 

601See letter from ABA. 

602See id. 

603See letters from EIM I; IAA; STB. One of these 

commenters further reasoned that the exemption is 

arbitrary and capricious because it would treat 

similarly situated parties differently inasmuch as 

only a subset of dealer transactions may be viewed 

as having contributed to an activist’s goals. See 

letter from EIM I. 

604See letter from PSCM. 

605See letter from STB. The commenter added 

that ‘‘the uncertainty caused by proposed Rule 13d– 

6(d) may increase risks for market participants in 

otherwise established financial transactions which 

may inhibit such activity.’’ Id. 

606See letter from ABA. 

607See letters from Engineer; G. Morales; J. 

Kennedy. 

608See letter from J. Kennedy. 

609See letter from Engineer. 

610See letter from G. Morales. 

611See supra note 22 for a discussion of our 

redesignation of current Rules 13d–6 and 13d– 

5(b)(2) as Rule 13d–6(a) and (b), respectively. 

612Proposing Release at 13872. 

613See supra section II.C.1. 

614Proposing Release at 13872. 

615See supra notes 585–591 and accompanying 

text. 

616See supra notes 582–584 and accompanying 

text. 

617See supra notes 595–610 and accompanying 

text. 

618See supra section II.B.3 for a discussion of 

those circumstances. 

proposed provision or any explicit 

exemption is necessary or would 

instead create further uncertainty given 

that market participants have been 

entering into ordinary course 

derivatives transactions for years 

without treating these transactions as 

creating a group.600 One commenter 

expressed concerns regarding potential 

negative collateral effects of the 

exemption.601 This commenter said that 

proposed Rule 13d–6(d) suggests that, 

‘‘outside of the safe harbor,’’ the parties 

to a derivative security transaction may 

be deemed to form a ‘‘group’’ and 

implied that the exemption’s existence 

would create a risk of eroding the 

confidence of parties to any ‘‘ordinary’’ 

securities purchase and sale 

transactions that they do not constitute 

a ‘‘group.’’ 602

Some commenters indicated that few 

dealers or market participants would be 

able to rely on the exemption or that it 

would not serve its intended 

purpose.603 Another commenter 

similarly implied the exemption should 

not be adopted because ‘‘financial 

institutions would not just be 

apprehensive about, or marginally 

disincentivized from, entering into 

transactions with an activist 

counterparty’’ but instead ‘‘would avoid 

the risk altogether, and wholly refrain 

from engaging in these transactions that 

are economically useful and unrelated 

to the purposes of Section 13.’’ 604

Another commenter echoed the 

concerns regarding the projected 

heightened level of risk arising in 

relation to the exemption and stated that 

the exemption would significantly 

impair ordinary-course derivatives 

transactions by dealers and financial 

institutions, even with counterparties 

who do not have any control intent.605

A similar criticism was offered by a 

commenter who explained that if the 

proposed exemption were adopted, an 

implication would be created that 

counterparties to a derivative 

transaction agreement that did not 

qualify for the exemption would be 

viewed as having formed a group.606

Some commenters expressed doubt 

that proposed Rule 13d–6(d) would 

operate to only exempt legitimate 

business activity, suggesting the 

purpose of the proposed amendments 

regarding group formation and 

derivatives would be undermined.607

One of these commenters said that the 

proposal ‘‘sounds like this is an open 

invitation for high profile firms to 

actually work together as a group 

without [repercussion] of 

regulation.’’ 608 Another of these 

commenters appeared to refer to 

proposed Rule 13d–6(d) and expressed 

concern that the proposed exemption 

‘‘will get taken advantage of too easily 

and will obscure transactions that might 

substantially and singlehandedly affect 

a security.’’ 609 A different commenter 

impliedly alluded to the undermining of 

the proposed change to Rule 13d–5(b) 

and speculated that no benefit of other 

proposed rule changes will be received 

if derivative position holders can claim 

an exemption under a different law.610

3. Final Amendments 

We are adopting the proposed 

redesignation of current Rules 13d–6 

and 13d–5(b)(2) as Rule 13d–6(a) and 

(b), respectively, for the reasons set forth 

in the Proposing Release and as 

discussed above.611 As discussed in 

more detail below, however, we are not 

adopting proposed Rule 13d–6(c) or (d). 

The Commission proposed Rule 13d– 

6(c) in connection with proposed Rule 

13d–5(b)(1)(i) and (b)(2)(i).612 As 

discussed above, we are not adopting 

those amendments.613 Proposed Rule 

13d–6(c) was intended to avoid 

potentially chilling communications 

among shareholders or impeding 

shareholders’ engagement with issuers 

where those activities are undertaken 

without the purpose or effect of 

changing or influencing control of the 

issuer (and are not made in connection 

with or as a participant in any 

transaction having such purpose or 

effect).614 Some commenters, however, 

expressed concern that the exemption 

would in fact have the opposite 

effect.615 This concern appears to be 

based on their view that the exemption 

would be too narrow and impliedly 

define what actions would be sufficient 

to constitute ‘‘acting as a group’’ (i.e., 

any actions that would not qualify for 

the proposed exemption).616 To address 

those concerns, and in light of the fact 

that we are not adopting the 

amendments to Rule 13d–5 that 

prompted the proposal of the exemption 

in Rule 13d–6(c), we are not adopting 

Rule 13d–6(c). We also believe that the 

discussion and guidance we provided in 

section II.C.1.c above will help to 

address the Commission’s goals of 

preserving shareholder communications 

and engagement with issuers that are 

undertaken without the purpose or 

effect of changing or influencing 

control. 

Similarly, after considering the 

comments received regarding proposed 

Rule 13d–6(d),617 we also do not believe 

adoption of that exemption is necessary. 

Under sections 13(d)(3) and 13(g)(3), 

formation of a group requires that two 

or more persons be found to have acted 

as a group for the purpose of acquiring, 

holding, or disposing ‘‘of securities of 

an issuer.’’ Many cash-settled 

derivatives, including those that were 

intended to be covered by proposed 

exemption, are not considered 

‘‘securities of [the] issuer.’’ Those 

derivatives originate with persons other 

than the issuer and simply reference a 

class of an issuer’s securities. The 

holders of such cash-settled derivative 

securities are, therefore, generally not 

owed a fiduciary duty by the issuer and 

do not generally have legal standing to 

bring a claim against the issuer. 

Moreover, holders of such derivative 

securities are not, by virtue of those 

instruments, debt or equity holders of 

the issuer and are not entitled to a right 

to vote or dispose of any security ‘‘of an 

issuer’’ based on their investment in 

these derivatives. Absent the 

circumstances in which a holder of a 

derivative settled exclusively in cash 

that did not originate with the issuer 

could become a beneficial owner of the 

reference security,618 the Commission 

does not believe that persons who, in 

the ordinary course of business, acquire 

derivative securities settled exclusively 

in cash would generally be deemed to 

‘‘act as a . . . group’’ under sections 

13(d)(3) and 13(g)(3) with the financial 


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619 17 CFR 240.13d–101, Item 6. 

620Proposing Release at 13874. 

621 Id. To further minimize any potential 

ambiguity regarding what interests need to be 

disclosed, the Commission also proposed to 

eliminate the ‘‘including but not limited to’’ 

regulatory text that precedes the itemization of the 

instruments or arrangements covered. Id. 622 Id. 623See, e.g., letters from AFL–CIO; D. Pierce; 

Mark C. 624See letter from STB. Specifically, the 

commenter said that the filing of the cash-settled 

derivative instruments as an exhibit to Schedule 

13D is unnecessary because the ‘‘material terms of 

such arrangements . . . can be described in’’ Item 

6. Id. The commenter also stated that the filing of 

such instruments as exhibits would present 

logistical difficulties if the proposed ‘‘compressed’’ 

timeframes for reporting Schedule 13D amendments 

are adopted. Id. 

625See, e.g., letters from IAA; Slade Thornburg 

(June 25, 2023) (‘‘S. Thornburg’’). 

626See letter from IAA. 

institutions that sell such derivatives. 

Simply put, such persons cannot be 

found, as a matter of law, to have 

acquired, held, or disposed ‘‘of 

securities of an issuer’’ as that term is 

used in sections 13(d)(3) and 13(g)(3). 

While investors in a cash-settled 

equity-based derivative security, in 

order to acquire the derivative security, 

may need to enter into an agreement 

governing the terms of such instrument 

with a financial institution that, in the 

ordinary course of its business, acts as 

a counterparty to such investors, that 

agreement, without more, does not 

result in group formation. We believe 

that a bilateral transaction, negotiated at 

arm’s length and entered into solely for 

commercial purposes, as described, 

would not by itself introduce facts 

sufficient to find that a group exists. In 

our view, an agreement between an 

investor in a cash-settled derivative 

security and a counterparty entered into 

for the ordinary course of business 

would fail to satisfy the ‘‘act as a . . . 

group’’ element in sections 13(d)(3) and 

13(g)(3) absent other indicia of group 

status such as agreements to vote or 

other factors. 

To offset any risk exposure to that 

derivative security, including any 

obligations that may arise at settlement, 

the financial institution counterparty 

may, in practice, purchase securities in 

the reference covered class and hold 

such reference security for the duration 

of the agreement. While it may be true 

that but for the joint actions of the 

parties in entering into the agreement, 

that specific acquisition of beneficial 

ownership in the covered class by the 

financial institution would not have 

occurred, we believe that if the 

counterparty acts on its own initiative 

and not at the direction of the investor 

or otherwise on its behalf, there is no 

basis to assert that the investor and 

counterparty acted in concert and thus 

subjected themselves to regulation as a 

group. As such, entry into such an 

agreement will not implicate sections 

13(d)(3) and (g)(3) because the two 

persons cannot be viewed as acting as 

a group even given the financial 

institution’s foreseeable acquisition of 

securities of a covered class. Assuming 

that the investor and the financial 

institution did not enter into the 

agreement with the purpose or effect of 

changing or influencing control of the 

issuer, the regulatory purposes of 

sections 13(d) and 13(g) would not be 

furthered by treating the investor and 

the financial institution as members of 

a group under section 13(d)(3) or section 

13(g)(3) solely by virtue of their 

entrance—for strictly commercial 

purposes and not for purposes of 

acquiring, holding, or disposing of a 

covered class—into that agreement. 

Accordingly, we have elected not to 

adopt proposed Rule 13d–6(d) as the 

exemption is not needed in order for 

such ordinary course of business 

transactions in derivative securities to 

freely occur. 

E. Amendment to Schedule 13D To 

Clarify Disclosure Requirements 

Regarding Derivative Securities 

Schedule 13D sets forth the 

information that beneficial owners 

reporting pursuant to section 13(d)(1) 

and Rule 13d–1(a) must disclose. Item 6 

of Schedule 13D requires beneficial 

owners to ‘‘[d]escribe any contracts, 

arrangements, understandings or 

relationships (legal or otherwise) among 

the persons named in Item 2 [of 

Schedule 13D] and between such 

persons and any person with respect to 

any securities of the issuer’’ and sets 

forth a non-exclusive list of examples of 

such contracts, arrangements, 

understandings or relationships.619

Because cash-settled derivative 

securities were not expressly included 

among these examples, questions may 

arise as to whether beneficial owners 

should report their holdings of these 

derivative securities as contracts ‘‘with 

respect to’’ an issuer’s securities under 

the rationale that (1) only a purely 

economic, but no legal, interest is 

generally held through such derivatives 

in any class of an issuer’s securities and 

(2) the issuer’s securities are only used 

as a reference security. Further, as 

discussed below, the current 

requirement could be interpreted as 

excluding the disclosure of cash-settled 

options not offered or sold by the issuer, 

or other derivatives not originating with 

the issuer, including other cash-settled 

derivatives such as SBS. 

1. Proposed Amendment 

In the Proposing Release, the 

Commission proposed to amend 

Schedule 13D to clarify the disclosure 

requirements with respect to derivative 

securities held by a person reporting on 

that schedule. The Commission noted 

that, at present, the formulation ‘‘with 

respect to securities of the issuer’’ in 

Item 6 might be read to suggest that 

contracts, arrangements, understandings 

or relationships that only create 

economic exposure to the issuer’s equity 

securities or are otherwise considered 

synthetic could be excluded.620

Accordingly, to remove any ambiguity 

as to the scope of the required 

disclosures, the Commission proposed 

to revise Item 6 to expressly state that 

the use of derivative securities, 

including cash-settled SBS and other 

derivatives settled exclusively in cash, 

which use the issuer’s securities as a 

reference security are included among 

the types of contracts, arrangements, 

understandings and relationships which 

must be disclosed.621 The Commission 

also proposed the amendment to clarify 

that the derivative security need not 

have originated with the issuer or 

otherwise be part of its capital structure 

in order for a disclosure obligation to 

arise.622 The proposed amendment thus 

specified that a person filing a Schedule 

13D would be required to disclose 

interests in all contracts, arrangements, 

understandings, or relationships, 

including derivative securities, that use 

the issuer’s equity security as a 

reference security. 

2. Comments Received 

Commenters expressed various views 

on the proposed amendment to Item 6 

of Schedule 13D. Some commenters 

supported the proposed amendment.623

One commenter, which did not clearly 

support or oppose the proposal with 

respect to Item 6, appeared to indicate, 

in connection with a response to a 

request for comment with respect to 

Item 7, Exhibits, that Item 6 may already 

apply to cash-settled derivatives.624

Other commenters opposed the 

proposed amendment to Item 6 of 

Schedule 13D, stating that requiring 

disclosure of SBS arrangements in Item 

6 would be confusing and indicating 

that it did not believe this disclosure 

would serve any additional purpose.625

One commenter explained that 

determining which type of derivative 

security to include in different parts of 

Schedule 13D would present a logistical 

challenge.626 The commenter 

anticipated that the compliance-related 

challenge would arise, from an 

operational point of view, because of the 


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627 Id. According to the commenter, ‘‘[n]ot only 

would this be confusing, but we do not believe such 

disclosure would serve any additional purpose.’’ Id. 

628 Id. Specifically, the commenter noted that 

proposed ‘‘Schedule 10B . . . would not require 

identification of the swap counterparty’’ while ‘‘the 

instruction to Item 6 requires ‘naming the persons 

with whom such contracts, arrangements, 

understandings, or relationships have been entered 

into.’’’ Id. Schedule 10B is a proposed disclosure 

statement containing information regarding large 

SBS positions and other information that would be 

required by proposed 17 CFR 240.10B–101. The 

Commission proposed this disclosure statement in 

a proposing release titled Prohibition Against 

Fraud, Manipulation, or Deception in Connection 

with Security-Based Swaps; Prohibition against 

Undue Influence over Chief Compliance Officers; 

Position Reporting of Large Security-Based Swap 

Positions, Release No. 34–93784 (Dec. 15, 2021) [87 

FR 6652 (Feb. 4, 2022)] (‘‘Schedule 10B Proposal’’). 

629See Disclosure of Corporate Equity 

Ownership, H.R. Rep. No. 1711, at 8 (1968) (‘‘The 

purpose of section 13(d) is to require disclosure of 

information by persons who have acquired a 

substantial interest, or increased their interest in the 

equity securities of a company by a substantial 

amount, within a relatively short period of time.’’ 

(Emphasis added)). 

630 15 U.S.C. 78m(d)(1). 

631 Id. 

632See supra notes 626–627 and accompanying 

text. 

633See id. 

634For example, Item 6 requires a description of 

‘‘any contracts, arrangements, understandings or 

relationships . . . with respect to any securities of 

the issuer, including . . . puts or calls.’’ 17 CFR 

240.13d–101, Item 6. If any such ‘‘puts or calls’’ 

include call options with respect to the issuer’s 

covered class that are not exercisable within 60 

days (and were not acquired with a change of 

control purpose or effect), then they would be 

required to be disclosed in response to Item 6, but 

they would not factor into the Schedule 13D filer’s 

beneficial ownership. See Rule 13d–3(d)(1)(i). 

Similarly, Item 4(a) of Schedule 13D requires a 

description of ‘‘any plans or proposals which the 

reporting persons may have which relate to or 

would result in . . . [t]he acquisition by any person 

of additional securities of the issuer, or the 

disposition of securities of the issuer.’’ 17 CFR 

240.13d–101, Item 4(a). Although such plans for 

potential future acquisitions or dispositions of 

securities of the issuer could, if consummated, 

result in changes to the Schedule 13D filer’s 

beneficial ownership, they generally would not 

factor into the beneficial ownership amount 

reflected in the Schedule 13D filing in which such 

plans are disclosed. 

635See supra section II.B.3. 

636See supra note 628 and accompanying text. 

regulatory inconsistency created by the 

exclusion of SBS from the beneficial 

ownership calculation under proposed 

Rule 13d–3(e) but the inclusion of SBS 

under Item 6 (to the extent they use the 

issuer’s equity security as a reference 

security).627 The commenter expressed 

additional concern that requiring 

disclosure of SBS arrangements under 

Item 6 would negate the benefits to 

these holders of non-disclosure of 

counterparties in proposed Schedule 

10B.628

3. Final Amendment 

We are adopting the amendment to 

Item 6 of Schedule 13D as proposed. 

Specifically, we are amending Rule 

13d–101 to expressly state that 

derivative contracts, arrangements, 

understandings, and relationships with 

respect to an issuer’s securities, 

including cash-settled SBS and other 

derivatives which are settled 

exclusively in cash, would need to be 

disclosed under Item 6 of Schedule 13D 

in order to comply with section 13(d)(1) 

and Rule 13d–1(a). We also are 

eliminating the ‘‘including but not 

limited to’’ language in Item 6 that 

currently precedes the itemization of the 

instruments or arrangements covered to 

remove any implication that additional 

interests may need to be disclosed. 

We believe that investors could 

benefit from a more complete disclosure 

of a Schedule 13D filer’s economic 

interests in the relevant issuer, 

including economic interests via 

positions in cash-settled derivatives. For 

example, disclosure of any such cashsettled derivatives may help investors 

evaluate whether their interests with 

respect to the issuer’s securities are 

aligned with the Schedule 13D filer’s. In 

addition, disclosure of this information 

is consistent with other interests 

required to be disclosed under Item 6, 

such as, for example, ‘‘division of 

profits or loss.’’ 

Our adoption of the amendment also 

furthers the congressional purpose of 

section 13(d)(1), as demonstrated by the 

legislative history accompanying 

Congress’ enactment of this 

provision.629 The disclosures required 

under Item 6 of Schedule 13D originated 

with a congressional mandate. Congress 

specified certain information within 

sections 13(d)(1)(A) through (E) that 

beneficial owners must report once they 

incur a filing obligation. In addition to 

the disclosure required under sections 

13(d)(1)(A) through (E), Congress also 

authorized the Commission to require 

disclosure of ‘‘such additional 

information’’ it prescribes as ‘‘necessary 

or appropriate in the public interest or 

for the protection of investors.’’ 630

Under section 13(d)(1)(E), Congress 

provided that a beneficial owner must 

report ‘‘information as to any contracts, 

arrangements, or understandings with 

any person with respect to any 

securities of the issuer, including [the] 

transfer of any of the securities, joint 

ventures, loan or option arrangements, 

puts or calls, guaranties of loans, 

guaranties against loss or guaranties of 

profits, division of losses or profits, or 

the giving or withholding of 

proxies.’’ 631 Consistent with the 

mandate of section 13(d)(1)(E), which 

forms part of the basis for the disclosure 

requirements of existing Item 6, this 

baseline disclosure requirement has 

existed in Schedule 13D since 1968. 

We note that one commenter opposed 

the proposed amendment to Item 6. The 

commenter stated, among other things, 

that requiring disclosure of SBS 

holdings in Item 6 would be 

confusing.632 Specifically, the 

commenter pointed out that proposed 

Rule 13d–3(e) would have excluded 

SBS and stated that there would be a 

‘‘logistical challenge’’ associated with 

excluding SBS from the beneficial 

ownership calculation but including 

them in the narrative disclosure in 

response to Item 6.633 We disagree. Item 

6 (as well as the other items in Schedule 

13D) already requires disclosure of 

various information that does not factor 

into calculating a Schedule 13D filer’s 

beneficial ownership.634 We do not 

believe that requiring disclosure in Item 

6 of SBS that may be excluded from a 

Schedule 13D filer’s beneficial 

ownership calculation would present 

any unique complications or be more 

complex than disclosure of this other 

information, and the commenter did not 

present any specific ‘‘logistical 

challenges’’ that could arise from this 

requirement. Moreover, we are not 

adopting proposed Rule 13d–3(e),635

further diminishing this concern about 

potential confusion. 

The commenter also noted that the 

proposed amendment to Item 6 would 

be unnecessary in light of, and could 

conflict with, the disclosure of SBS 

positions in proposed Rule 10B–1.636

While the Commission will consider 

concerns about a potential conflict if it 

takes any final action with respect to 

proposed Rule 10B–1, we note that 

proposed Rule 10B–1 (along with 

proposed Schedule 10B) is intended to 

serve a purpose different from Item 6 of 

Schedule 13D. The Commission 

proposed Rule 10B–1 to, among other 

things, provide market participants 

(including counterparties, issuers, and 

issuers’ stakeholders) and regulators 

with access to information that may 

indicate that a person (or a group of 

persons) is building up a large SBS 

position, and to alert market 

participants and regulators to the 

existence of concentrated exposures to a 

limited number of counterparties, which 

should inform those market participants 

and regulators of the attendant risks, 

allow counterparties to risk manage and 

lead to better pricing of the SBS with 

respect to transactions with persons 

holding large positions in those SBS (as 

a result of all market participants having 


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637Prohibition Against Fraud, Manipulation, or 

Deception in Connection with Security-Based 

Swaps; Prohibition against Undue Influence over 

Chief Compliance Officers; Position Reporting of 

Large Security-Based Swap Positions, Release No. 

34–93784 (Dec. 15, 2021) [87 FR 6652, 6667, 6678 

(Feb. 4, 2022)]. 

638EDGAR Filer Manual (Volume II) version 67 

(Sept. 2023) (‘‘EDGAR Filer Manual’’), at 5–1 

(requiring EDGAR filers generally to use ASCII or 

HTML for their document submissions, subject to 

certain exceptions). Schedule 13D and 13G filers 

are required, by rule, to comply with the 

requirements of the EDGAR Filer Manual. See 17 

CFR 232.301 (‘‘Filers must prepare electronic filings 

in the manner prescribed by the EDGAR Filer 

Manual, promulgated by the Commission, which 

sets forth the technical formatting requirements for 

electronic submissions.’’). 

639The term ‘‘machine-readable’’ is defined in 44 

U.S.C. 3502 as ‘‘data in a format that can be easily 

processed by a computer without human 

intervention while ensuring no semantic meaning is 

lost.’’ 

640See Securities and Exchange Commission, 

Current and Draft Technical Specifications, 

available at https://www.sec.gov/edgar/filerinformation/current-edgar-technical-specifications. 

641Examples include the section 16 beneficial 

ownership reports (Forms 3, 4, and 5) and Form 

13F. See id. 

642The Commission noted that this would be 

consistent with the approach used for other XMLbased structured data languages created by the 

Commission for certain EDGAR Forms, including 

the data languages used for reports on each of Form 

13F, Form D and the section 16 beneficial 

ownership reports (Forms 3, 4, and 5). Proposing 

Release at 13874, n. 154. 

643 Id. at 13875. These considerations are 

generally consistent with objectives of the Financial 

Data Transparency Act of 2022, which directs the 

establishment by the Commission and other 

financial regulators of data standards for collections 

of information. Such data standards must meet 

specified criteria relating to openness and machinereadability and promote interoperability of financial 

regulatory data across members of the Financial 

Stability Oversight Council. See James M. Inhofe 

National Defense Authorization Act for Fiscal Year 

2023, Public Law 117–263, tit. LVIII, 136 Stat. 2395, 

3421–39 (2022). 

644See, e.g., letters from Aaron Leonard (June 28, 

2023); Anonymous 12; Benjamin Ng (Feb. 21, 2022) 

(‘‘B. Ng’’); Convergence; David Kraft (June 26, 2023); 

FundApps; HMA I; IAA; ICI I; J. Kennedy; J. Pieper; 

J. Soucie; Mike Slavens, Retail Investor and 

Mechanical Engineer (Feb. 19, 2022) (‘‘M. 

Slavens’’); Mark C.; P. Worts; Todd; XBRL US (Apr. 

11, 2022) (‘‘XBRL’’). 

645See, e.g., letter from A. Day; see also letters 

from B. Mason; S. Thornburg. 

646See letters from Anonymous 12; J. Kennedy; 

M. Slavens. 

647See letter from B. Ng. 

648See letter from J. Soucie. 

649See letters from Convergence; FundApps. 

650See letter from ICI I. 

access to the information about the 

positions).637 Item 6 of Schedule 13D, 

on the other hand, is intended to 

implement section 13(d)(1)(E), where 

Congress specifically mandated that the 

disclosure statement filed would 

include information as to any contracts, 

arrangements, or understandings with 

any person with respect to any 

securities of the issuer, including the 

names of relevant parties, as part of its 

intent to require disclosures to security 

holders regarding persons with 

significant holdings. Thus, in light of 

that congressional mandate, we believe 

it is appropriate to require disclosure of 

such information pursuant to Item 6 of 

Schedule 13D. 

F. Structured Data Requirement for 

Schedules 13D and 13G 

Currently, the EDGAR Filer Manual 

requires Schedules 13D and 13G to be 

filed electronically on the Commission’s 

EDGAR system in HTML or ASCII 

format.638 HTML and ASCII are both 

unstructured data languages; thus, the 

disclosures reported on Schedules 13D 

and 13G are not currently machinereadable.639 As a result, information 

disclosed on Schedules 13D and 13G is 

generally more difficult for investors 

and other market participants to access, 

compile, and analyze as compared to 

information that is submitted in a 

machine-readable data language. 

While the majority of EDGAR filings 

under the Commission’s rules are 

submitted in HTML or ASCII, certain 

EDGAR filings are submitted using 

machine-readable, XML-based 

languages that are each specific to the 

particular EDGAR document type being 

submitted.640 This includes filings that, 

like Schedules 13D and 13G, are 

submitted by individuals and entities 

other than the registrant of the class of 

securities.641 For these EDGAR XML 

filings, filers are typically provided the 

option to either submit the filing 

directly to EDGAR in XML, or manually 

input their disclosures in a fillable web 

form as part of an online web 

application developed by the 

Commission that converts the 

completed form into an EDGAR-specific 

XML document. 

1. Proposed Amendment 

In the Proposing Release, the 

Commission proposed to require that 

beneficial ownership reports on 

Schedules 13D and 13G be filed using 

a structured, machine-readable data 

language. In particular, the Commission 

proposed to require that Schedules 13D 

and 13G be filed in part using an XMLbased language specific to Schedules 

13D and 13G (‘‘13D/G-specific 

XML’’).642 For both Schedules, all 

disclosures, including quantitative 

disclosures, textual narratives, and 

identification checkboxes, would be 

structured in 13D/G-specific XML under 

the proposal, with the exception of the 

exhibits to the Schedules, which would 

remain unstructured. The Commission 

stated that a structured data requirement 

for the disclosures reported on 

Schedules 13D and 13G would greatly 

improve the accessibility and usability 

of the disclosures, allowing investors to 

access, aggregate and analyze the 

reported information in a much more 

timely and efficient manner.643

2. Comments Received 

Commenters largely supported the 

proposed structured data requirement 

for Schedules 13D and 13G.644 Other 

commenters objected to the proposed 

structured data requirement for 

Schedules 13D and 13G, with one 

commenter expressing concern that the 

proposed structured data requirement 

would be unduly burdensome for small 

beneficial owners.645

Some of the supporting commenters 

asserted that the proposed structured 

data requirement would improve the 

fairness and transparency of the 

markets.646 One commenter asserted 

that the proposal would be a 

fundamental step toward ensuring that 

the beneficial ownership reporting 

requirements remain modern and 

comprehensible.647 One commenter 

noted that the proposed structured data 

requirement would not impose 

significant costs to beneficial owners of 

more than five percent of a covered 

class and stated that the requirement 

would allow the Commission to make 

use of advancing technologies in order 

to reduce costs to taxpayers and more 

speedily provide the public with the 

information it needs to accurately assess 

the conditions of the market.648 Another 

commenter asserted that the proposal 

would enable the Commission to 

process filings instantaneously and 

therefore allow for real-time analysis 

and if necessary, remedial action and 

stated that any data which cannot be 

easily processed by machines will 

become largely useless as the century 

progresses.649 In addition, one 

commenter agreed with the Commission 

that tagging the data reported on 

Schedules 13D and 13G will make it 

easier for investors and other market 

participants to access, compile, and 

analyze this information and expressly 

supported the Commission’s 

development of electronic ‘‘style sheets’’ 

that, when applied to the reported XML 

data, would represent that data in 

‘‘human readable’’ format.650

Some of the supporting commenters 

also made recommendations to the 

Commission regarding the proposed 

structured data requirement. One 

commenter requested that the 

Commission release the taxonomy at 

least six months in advance of the date 

by which any revised Schedules 13D or 

13G must be filed so that reporting 


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651 Id. 652See letters from IAA; ICI I. 653See letter from XBRL. The commenter asserted 

that, among other purported benefits, an XBRLbased standard will result in significantly lower 

costs and efficiencies across both reporting entities 

and data users, consistent datasets that can be easily 

commingled with other datasets, and enhanced 

validation capabilities to improve data quality. Id. 

654Section 13(g)(5) of the Exchange Act provides, 

in part, that ‘‘the Commission shall take such steps 

as it deems necessary or appropriate in the public 

interest or for the protection of investors . . . to 

tabulate and promptly make available the 

information contained in any report filed pursuant 

to this subsection in a manner which will, in the 

view of the Commission, maximize the usefulness 

of the information to . . . the public.’’ 15 U.S.C. 

78m(g)(5). The requirement proposed in this section 

would be consistent with this mandate. Although 

this statutory language applies only to beneficial 

ownership reports filed pursuant to section 13(g)— 

i.e., a Schedule 13G filed by an Exempt Investor— 

we believe these public benefits would be furthered 

by applying the requirement proposed in this 

section to all Schedule 13D and 13G filers. 

655 In addition, the Commission’s staff intends to 

develop electronic ‘‘style sheets’’ that, when 

applied to the reported XML data, will represent 

that data in human-readable form on EDGAR. 

656See supra section II.F.2. 

657See supra note 645 and accompanying text. 

658For example, this web-based reporting 

application will contain and prompt a beneficial 

owner to respond to the Schedule 13D and 13G 

disclosure requirements, as set forth in Rules 13d– 

101 and 13d–102, respectively, which should make 

the preparation process more streamlined and 

convenient. 

659See also infra section IV.D.3. 

660See supra notes 651–652 and accompanying 

text. 

661See id. 

662See H.R. Rep. No. 1711, at 8 (1968). 

663See S. Rep. No. 114, at 14 (1977). 

persons can incorporate the taxonomy 

into their filing system.651 Similarly, 

other commenters recommended that 

the Commission provide for a test 

period in which reporting persons can 

make test filings using the taxonomy in 

advance of the date by which the 

revised schedules must be filed.652

Finally, one commenter suggested that 

the Commission opt for the XBRL data 

language, rather than creating an XML 

schema designed specifically for 

beneficial ownership reporting as 

proposed.653

3. Final Amendment 

We are adopting the structured data 

requirement for Schedules 13D and 13G 

as proposed. Specifically, we are 

replacing the current HTML or ASCII 

requirement for Schedules 13D and 13G 

in the EDGAR Filer Manual with a 

requirement to use 13D/G-specific XML 

for the disclosures reported on those 

Schedules.654 As is the case with other 

EDGAR XML filings, reporting persons 

will be able to, at their option, submit 

filings directly to EDGAR in 13D/Gspecific XML or use a web-based 

reporting application developed by the 

Commission that will generate the 

Schedule in 13D/G-specific XML in 

connection with the submission of the 

filing to EDGAR.655

In adopting the structured data 

requirement as proposed, we note that 

commenters overwhelmingly supported 

the proposal.656 Although one 

commenter opposed the proposed 

structured data requirement on the basis 

that it would be unduly burdensome for 

small beneficial owners,657 we believe 

the web-based reporting application that 

will generate the Schedule in 13D/Gspecific XML should serve to reduce the 

burden of preparing a Schedule 13D or 

13G for small beneficial owners (and 

other Schedule 13D and 13G filers), as 

compared to the current system 

whereby beneficial owners generally use 

third-party software to prepare their 

Schedule 13D or 13G.658 In addition, 

because 13D/G-specific XML lends itself 

more readily to the development of a 

web-based reporting application on 

EDGAR than XBRL does, we believe 

13D/G-specific XML is more suitable 

than XBRL for structuring Schedules 

13D and 13G.659 In response to 

commenters requesting a test period for 

the revised Schedules and requesting a 

taxonomy (i.e., schema) release at least 

six months before compliance is 

required, we are providing an extended 

voluntary compliance period during 

which the schema will be publicly 

available.660 The compliance period is 

discussed in further detail in section 

II.G below. 

G. Compliance Dates 

The Commission did not propose a 

transition period for any of the Proposed 

Amendments. Some commenters 

suggested, however, that the 

Commission should provide for an 

extended compliance period with 

respect to the proposed structured data 

requirement for Schedules 13D and 

13G.661 Based on this feedback, we 

believe that an extended transition 

period for compliance with the 

structured data requirement is 

appropriate. As such, compliance with 

the structured data requirement for 

Schedules 13D and 13G will not be 

required until December 18, 2024. We 

welcome, however, early compliance 

with this requirement, and Schedule 

13D and 13G filers may begin to 

voluntarily comply with the structured 

data requirement on December 18, 2023. 

In order to further reduce some of the 

potential burdens that commenters 

described, compliance with the revised 

Schedule 13G filing deadlines under 

Rules 13d–1 and 13d–2 will not be 

required before September 30, 2024. 

Thus, notwithstanding the fact that the 

final amendments will become effective 

on February 5, 2024, beneficial owners 

will continue to be required to comply 

with the current Schedule 13G filing 

deadlines through September 29, 2024. 

Beginning on September 30, 2024, 

however, beneficial owners will be 

required to comply with the revised 

Schedule 13G filing deadlines. For 

example, under Rule 13d–2(b), as 

amended, a Schedule 13G filer will be 

required to file an amendment within 45 

days after September 30, 2024, if, as of 

end of the day on that date, there were 

any material changes in the information 

the filer previously reported on 

Schedule 13G. 

III. Other Matters 

If any of the provisions of these 

amendments, or the application thereof 

to any person or circumstance, is held 

to be invalid, such invalidity shall not 

affect other provisions or the 

application of such provisions to other 

persons or circumstances that can be 

given effect without the invalid 

provision or application. 

Pursuant to the Congressional Review 

Act, the Office of Information and 

Regulatory Affairs has designated these 

amendments a ‘‘major rule,’’ as defined 

by 5 U.S.C. 804(2). 

IV. Economic Analysis 

A. Overview 

As discussed in section II, the final 

amendments generally shorten the filing 

deadlines for initial Schedule 13D and 

13G filings, together with other changes 

described below. These filings are 

required in accordance with sections 

13(d) and 13(g) of the Exchange Act. 

Section 13(d) was enacted in 1968 with 

the intent to alert issuers and the 

marketplace to rapid accumulations of 

equity securities by persons who would 

then have the potential to change or 

influence control of the issuer.662

Section 13(g), subsequently enacted in 

1977, was intended, together with 

section 13(d), to provide a 

‘‘comprehensive disclosure system of 

corporate ownership’’ applicable to all 

persons who are the beneficial owners 

of more than five percent of a covered 

class.663


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664For the purpose of this economic analysis, the 

term ‘‘significant shareholders’’ is used to represent 

persons with a large shareholding in a particular 

issuer. The terms ‘‘blockholders’’ and ‘‘significant 

stockholders’’ were used to represent such persons 

in the Proposing Release. 665Some commenters indicated that the 

Commission failed to appropriately justify the 

shortened filing deadlines or identify an associated 

market failure, or stated that the information 

asymmetry between a filer and the market is not a 

market failure or otherwise problematic. See, e.g., 

letters from AIMA; EIM I; IAA; ICM; Profs. Bishop 

and Partnoy I; Profs. Eccles and Rajgopal; Profs. 

Swanson, Young, and Yust; SIFMA; SIFMA AMG; 

TIAA. We agree that the initial information 

asymmetry between a prospective filer and the 

market is not a market failure because in its 

absence, the filer may not be sufficiently rewarded 

for the expenses of its efforts expended in 

information acquisition and in pursuing changes at 

the issuer, which often have market-level benefits. 

Nevertheless, an earlier resolution of this 

information asymmetry is expected to have the 

benefits discussed in this economic analysis. 

666See infra section IV.C.1.a.iii. 

667See infra section IV.C.1.a.iv. 

668See id. 

669Section 3(f) of the Exchange Act [17 U.S.C. 

78c(f)] requires the Commission, when engaging in 

rulemaking where it is required to consider or 

determine whether an action is necessary or 

appropriate in the public interest, to consider, in 

addition to the protection of investors, whether the 

action will promote efficiency, competition, and 

capital formation. Further, section 23(a)(2) of the 

Exchange Act [17 U.S.C. 78w(a)(2)] requires the 

Commission, when making rules under the 

Exchange Act, to consider the impact that the rules 

would have on competition, and prohibits the 

Commission from adopting any rule that would 

impose a burden on competition not necessary or 

appropriate in furtherance of the Exchange Act. 

670Several commenters raised concerns about the 

Proposing Release’s discussion of potential effects 

on efficiency, competition, and/or capital 

formation. See, e.g., Craig Lewis, Review of the 

Economic Analysis for Proposed Rule Amendments 

to Modernize Beneficial Ownership Reporting, 

exhibit to letter from EIM I (‘‘Lewis Study I (exhibit 

to letter from EIM I)’’) (stating that the discussion 

of efficiency, competition, and capital formation in 

the Proposing Release ‘‘appears to be an 

afterthought and glosses over or fails to address 

many important points’’); see also letters from 

AIMA; B. Sharfman; Profs. Schwartz and Shavell I; 

Profs. Schwartz and Shavell II. Our analysis of 

potential effects on efficiency, competition, and 

capital formation has been revised and expanded 

from the Proposing Release and has been integrated 

into the discussion of the benefits and costs of the 

final amendments. 

671See, e.g., Nasdaq v. SEC, 34 F.4th 1105, 1111– 

15 (D.C. Cir. 2022). This approach also follows 

Commission staff guidance on economic analysis 

for rulemaking. See Staff’s ‘‘Current Guidance on 

Economic Analysis in SEC Rulemaking’’ (Mar. 16, 

2012), available at https:/www.sec.gov/divisions/ 

riskfin/rsfi_guidance_econ_analy_

secrulemaking.pdf (‘‘The economic consequences of 

proposed rules (potential costs and benefits 

including effects on efficiency, competition, and 

capital formation) should be measured against a 

baseline, which is the best assessment of how the 

world would look in the absence of the proposed 

action.’’); Id. at 7 (‘‘The baseline includes both the 

Continued 

The efficiency of financial markets 

rests on material information becoming 

public in a timely fashion. In addition 

to protecting investors, greater 

availability of information allows 

securities prices to better reflect their 

issuers’ fundamental value, and 

ultimately promotes capital formation. 

The widespread enactment of laws and 

regulations that restrict the use of 

information obtained by virtue of 

insider status, as well as regulations that 

restrict selective disclosure to certain 

persons in the absence of public 

disclosure, point to the public-good 

nature of rules requiring public 

disclosure. 

This same principle motivates the 

requirement to disclose beneficial 

ownership of significant shareholders 

with the potential to change or 

influence control of the issuer. 

Knowledge of who is influencing 

control is highly material.664 Investors 

benefit from this information just as 

they benefit from material information 

regarding their investments more 

broadly. The five-business day deadline 

balances the interest of investors to be 

in possession of material information 

with the interest of investors seeking 

changes in control that may benefit 

shareholders, and is longer than the 

filing deadline for other settings 

involving ownership changes, such as 

for Form 4 under Exchange Act section 

16 reporting.665

Moreover, as we discuss below, 

studies suggest that traders other than 

the filer may be in a position to become 

aware of a potential activist campaign 

and buy stock of the target issuer 

immediately prior to a Schedule 13D 

filing, thereby benefiting directly from 

foreknowledge of the filing rather than 

their own efforts.666 Shortened filing 

deadlines may lessen the opportunity 

for these traders to gain such an 

advantage, as discussed below, which 

could enhance trust in markets and 

thereby capital formation. Finally, 

shortening the deadline is expected to 

reduce overall informational 

asymmetries in the market. Both 

theoretical and empirical studies have 

connected information asymmetry, and 

in particular the presence of informed 

traders, to wider bid-ask spreads.667 We 

therefore expect shortening the initial 

Schedule 13D filing deadline to improve 

liquidity.668

Shortening the initial Schedule 13D 

filing deadline will have costs. 

Specifically, activist investors will have 

less time in which to accumulate shares 

before the filing deadline and, therefore, 

before the price of the stock reflects 

their plans. This may reduce their 

expected profit, and accordingly some 

of the incentives for activism. However, 

although we cannot predict with 

precision the magnitude of the ultimate 

effect on activism and how the overall 

markets and activists themselves will 

respond to these changes, we believe it 

is likely that the shortened deadline will 

not significantly reduce the level of 

activism as we expect most campaigns 

will not be affected by the amended 

deadline, based on our analysis of 

historical campaigns, and most activists 

will have ability to adapt to the 

shortened deadline through various 

alternatives. 

We are also, among other things, 

revising the filing deadlines for 

Schedule 13D and 13G amendments and 

amending Item 6 of Schedule 13D, 

which requires the disclosure of certain 

contracts, arrangements, 

understandings, and relationships, to 

remove any implication that a person is 

not required to disclose interests in all 

derivative securities that use a covered 

class as a reference security. Each of 

these final amendments may allow 

investors and other market participants 

to make better-informed decisions by 

accelerating the disclosure of 

information or expanding the amount of 

information disclosed. The final 

amendments also require that Schedule 

13D and Schedule 13G be filed using a 

structured, machine-readable data 

language, which may facilitate the 

extraction and analysis of information 

in the filings, and make technical 

changes to Regulation S–T associated 

with extending the filing ‘‘cut-off’’ time 

from 5:30 p.m. to 10 p.m., which may 

ease the compliance costs for filers. 

We are mindful of the costs and 

benefits of the final amendments.669

Below, we discuss in more detail the 

economic effects of the final 

amendments, including their 

anticipated costs and benefits and, 

integrated into that discussion, the 

likely effects of the final rules on 

efficiency, competition, and capital 

formation.670 We also analyze the 

potential costs and benefits of 

significant alternatives to the final 

amendments. 

B. Baseline 

The baseline against which the costs, 

benefits, and the effects on efficiency, 

competition, and capital formation of 

the final amendments are measured 

consists of the current state of the 

market and the current regulatory 

framework. The economic analysis 

considers existing regulatory 

requirements, including recently 

adopted rules, as part of its economic 

baseline against which the costs and 

benefits of the final amendments are 

measured.671


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economic attributes of the relevant market and the 

existing regulatory structure.’’). The best assessment 

of how the world would look in the absence of the 

proposed or final action typically does not include 

recently proposed actions, because that would 

improperly assume the adoption of those proposed 

actions. 672Other disclosure requirements may also apply 

to significant shareholders. For example, persons 

deemed beneficial owners of more than 10% of any 

class of equity securities (other than certain 

exempted securities) registered under Exchange Act 

section 12 are also considered to be insiders for the 

purpose of Exchange Act section 16 and subject to 

the associated disclosure requirements. For 

example, these persons must file with the 

Commission an initial report on Form 3 either 

within 10 days after becoming an insider of an 

issuer that already has a class of equity securities 

registered under section 12, or upon the issuer’s 

initial registration of the class of equity security 

under section 12. 15 U.S.C. 78p(a)(2)(A)–(B). Also, 

acquisitions of ownership stakes exceeding certain 

dollar thresholds trigger the premerger notification 

requirements of the Hart-Scott-Rodino Antitrust 

Improvements Act of 1976. Public Law 94–435, 90 

Stat. 1383 (1976), as administered by the Federal 

Trade Commission and Department of Justice. In 

general, we do not expect these additional 

disclosure requirements to significantly affect the 

costs and benefits of the final rules. 

673As noted supra in section II.A.3 the 

Commission has expressed that under the current 

standard, ‘‘[a]ny delay beyond the date the filing 

reasonably can be filed may not be prompt’’ and an 

amendment to a Schedule 13D reasonably could be 

filed in as little as one day following the change 

(citing In re Cooper Laboratories, Release No. 34– 

22171 (June 26, 1985)). Some commenters indicated 

that the requirement for Schedule 13D amendments 

to be made ‘‘promptly’’ has generally been 

understood to mean within two business days. See 

letters from EIM I; IAA. 

674See Proposing Release at 13851. Several 

commenters identified trends that were not 

discussed in the Proposing Release or indicated that 

the economic analysis in the Proposing Release 

could have been enhanced by considering 

additional evidence regarding changes over time. 

See letters from Charlie Penner and Bob Eccles 

(Apr. 12, 2022) (‘‘C. Penner and Prof. Eccles’’); 

CIRCA I; CIRCA IV; ICM; Prof. Gordon; PSCM; SCG; 

Lewis Study I (exhibit to letter from EIM I) 

(requesting ‘‘evidence that efficiency enhancements 

have increased the pace at which investors build 

beneficial ownership positions’’). In response to 

these comments, this discussion has been expanded 

relative to the discussion in the Proposing Release 

with respect to changes since the enactment of the 

Williams Act. See supra notes 138–141 and 

accompanying text. 

675See infra notes 866–867 and accompanying 

text. 

676See letter from CIRCA IV. 

677See letter from SCG. A dark pool is a private 

forum for trading securities. See also Order 

Competition Rule, Release No. 34–96495 (Dec. 14, 

2022) [88 FR 128 (Jan. 3, 2023)] (for further 

discussion on dark pools). 

678See letter from ICM. 

679Researchers have found that the increased use 

of low-threshold poison pills within the last decade 

or two could increase the difficulty of accumulating 

an equity stake beyond a certain size. See, e.g., Ofer 

Eldar et al., The Rise of Anti-Activist Poison Pills 

(Working Paper, Jan. 2023), available at https://

ssrn.com/abstract=4198367; Nicole Boyson & 

Pegaret Pichler, Hostile Resistance to Hedge Fund 

Activism, 32 Rev. Fin. Stud. 771 (2019) (‘‘Boyson 

& Pichler 2019 Study’’). Commenters discussed an 

increased use of poison pills as well as a more 

general increase in anti-takeover or ‘‘anti-activist’’ 

defenses. See letters from CIRCA I; EIM III; ICM; 

Prof. Gordon; PSCM. 

1. Current Schedule 13D and 13G Filing 

Requirements 

The current Schedule 13D and 

Schedule 13G filing requirements are 

discussed in detail in section II.A 

above.672 Briefly, an initial Schedule 

13D is currently required to be filed 

within 10 days after any acquisition of 

beneficial ownership of a covered class 

that results in a person directly or 

indirectly being the beneficial owner of 

more than five percent of the covered 

class. Among other disclosures, the 

reporting person must describe, 

pursuant to Item 6 of Schedule 13D, any 

contracts, arrangements, 

understandings, or relationships among 

the reporting persons or between the 

reporting persons and any other person 

with respect to any securities of the 

issuer. In addition, a Schedule 13D 

amendment must be filed ‘‘promptly’’ 

upon any material change in the facts 

reported in the Schedule 13D filing, 

inclusive of any amendments thereto.673

The initial filing deadline for the 

initial Schedule 13G varies by investor 

category. QIIs and Exempt Investors 

must file an initial Schedule 13G within 

45 days after the end of the calendar 

year in which their beneficial 

ownership exceeds five percent of a 

covered class at the end of the last day 

of that calendar year. Further, if a QII 

beneficially owns more than 10 percent 

of a covered class as of the last day of 

any month, then the initial Schedule 

13G must be filed within 10 days after 

the end of that month. Passive Investors 

must file an initial Schedule 13G within 

10 days of acquiring beneficial 

ownership of more than five percent of 

a covered class. 

For all Schedule 13G filers, if, as of 

the end of the calendar year, there are 

any changes in the information 

previously reported in a Schedule 13G 

filing, a Schedule 13G amendment must 

be filed within 45 days after the end of 

that calendar year. In addition, QIIs 

must file a Schedule 13G amendment 

within 10 days after the end of the first 

month in which their beneficial 

ownership either exceeds 10 percent of 

a covered class, or, once across that 

threshold, increases or decreases by 

more than five percent of the covered 

class. Similarly, Passive Investors must 

‘‘promptly’’ file a Schedule 13G 

amendment upon acquiring beneficial 

ownership of more than 10 percent of a 

covered class, or, once across that 

threshold, if they increase or decrease 

their beneficial ownership by more than 

five percent of the covered class. 

2. Market Trends 

There have been significant changes 

in the technological, financial market, 

and regulatory environment since the 

enactment of the Williams Act.674 In 

particular, various new technologies 

developed over this time period 

facilitate the filing process, including 

both the preparation and submission of 

a filing. For example, communications 

have become easier and faster over this 

time, facilitating the gathering of 

information to be disclosed and any 

necessary coordination among parties. 

Further, information technologies used 

to compile the necessary data and 

prepare and transmit filings may have 

helped to reduce the time required to 

produce and submit filings. Also, 

electronic submission relieves filers of 

the need to mail or hand deliver filings. 

On the other hand, as some commenters 

noted, some of the tasks necessary for 

filers’ preparation and submission of 

filings have not been automated or 

otherwise accelerated.675 Further, as one 

commenter noted, information 

technologies have also facilitated easier 

and faster access to filings, which may 

reduce the time for the information in 

filings to reach market participants even 

under the same deadline.676 Modern 

information technologies and the faster 

pace of communication may also allow 

investors and other market participants 

to react more quickly to disclosures, 

such that they may benefit more from 

disclosures being made a few days 

earlier than they might have in earlier 

decades, when decision-making may 

have proceeded at a slower pace. 

In addition to the ease of 

communication, the introduction of 

electronic trading, new types of 

financial contracts and instruments, and 

advances in order-splitting and other 

trade execution optimization 

techniques, as well as the rise of dark 

pools,677 may facilitate an investor 

accumulating a large equity stake more 

quickly than at the time of the 

enactment of the Williams Act. On the 

other hand, we also recognize that 

accumulating significant ownership 

could instead be more difficult in the 

face of modern algorithmic and highfrequency trading, more sophisticated 

surveillance of equity trading and 

ownership by other traders, market 

participants, and issuers,678 and the 

defenses and tactics currently used by 

issuers with respect to potential 

unsolicited takeover bids or shareholder 

activism.679

At least one study presents evidence 

that, despite variations in the number of 

filings from month to month and from 

year to year, the absolute number of 

initial or total Schedule 13D filings 


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680See, e.g., Ulf von Lilienfeld-Toal & Jan 

Schnitzler, What is Special About Hedge Fund 

Activism? Evidence from 13–D Filings, Swedish 

House of Fin. Rsch. Paper No 14–16 (June 4, 2014), 

available at https://ssrn.com/abstract=2506704 

(‘‘Lilienfeld-Toal and Schnitzler 2014 Study’’) 

(plotting, in Figure 1 therein, the number of initial 

and total Schedule 13D filings per month from 1985 

through 2012, and demonstrating substantial 

month-to-month variation and a slight overall 

downward trend overall in initial and total 

Schedule 13D filings). 

681Staff reviewed the number of Schedule 13D 

and 13D/A filings on EDGAR each year from 1997 

(the first full year after the phase-in of electronic 

filing was complete) through 2022, available at 

https://www.sec.gov/dera/data/dera_

edgarfilingcounts, and found no clear trend in the 

number of these filings per year over the last 

decade, but found that the rate of Schedule 13D 

filings over the last decade was somewhat lower 

than the rate in the earlier part of the sample 

period. For example, for the years 1997 through 

2010, the average number of filings per year were 

approximately 2,800 and 5,200 for initial and 

amended Schedule 13D filings respectively, which 

are generally consistent with the monthly rates of 

filings reported for 1985 through 2012 in the 

Lilienfeld-Toal and Schnitzler 2014 Study. In 

contrast, for the years 2011 through 2022, the 

average number of filings per year were roughly 

1,400 and 4,100 for initial and amended Schedule 

13D filings respectively. This decline is roughly 

commensurate with the decline in the number of 

publicly listed companies. Staff also reviewed the 

number of Schedule 13G filings on EDGAR each 

year from 1997 through 2022, from the same source, 

and found no clear trend in the number of such 

filings per year over this period. 

682See, e.g., Lilienfeld-Toal and Schnitzler 2014 

Study (based on data from all Schedule 13D filings 

from 1985 through 2005, including data from paper 

filings obtained via Thomson Research); Lucian 

Bebchuk et al., Pre-Disclosure Accumulations by 

Activist Investors: Evidence and Policy, 39 J. Corp. 

L. 1, 14–17 (2013) (‘‘Bebchuk et al. 2013 Study’’) 

(based on data from Schedule 13D filings by hedge 

funds from 1994, the advent of electronic trading, 

through 2007). Subsequent research on more recent 

samples of Schedule 13D filings by hedge funds 

shows reported average ownership levels consistent 

with the Bebchuk et al. 2013 Study. See, e.g., Alon 

Brav et al., Governance by Persuasion: Hedge Fund 

Activism and Market-Based Shareholder Influence, 

Oxford Rsch. Encyclopedia of Econ. and Fin. (2022) 

(‘‘Brav et al. 2022 Study’’) (based on data from 

Schedule 13D filings by hedge funds from 1994 

through 2018). 

683See sections IV.B.3.a.i and ii below for details 

on the filings analyzed by staff. 

684Proxy advisory firms (or proxy voting advice 

businesses) provide voting services that can help 

shareholders, primarily investment advisers and 

institutional investors, manage their substantive 

and procedural proxy voting needs with respect to 

the public companies they own, including assisting 

these shareholders in making their voting 

determinations on behalf of their own clients and 

handling other aspects of the voting process. See, 

e.g., Exemptions from the Proxy Rules for Proxy 

Voting Advice, Release No. 34–89372 (July 22, 

2020) [85 FR 55082 (Sept. 3, 2020)]. 

685See, e.g., John C. Coffee, Jr. & Darius Palia, The 

Wolf at the Door: The Impact of Hedge Fund 

Activism on Corporate Governance, 41 J. Corp. L. 

545, 553–71 (2016); see also letter from SCG (stating 

that ‘‘activists today have more resources, often win 

the support of highly influential proxy advisors, can 

readily share their views on financial news 

networks, and have access to . . . modern financial 

instruments that they can use to postpone 

disclosure’’). 

686See, e.g., Ian Appel et al., Standing on the 

Shoulders of Giants: The Effect of Passive Investors 

on Activism, 32 Rev. Fin. Stud. 2720 (2019) (‘‘Appel 

et al. 2019 Study’’). 

687 It is difficult to measure how the effectiveness 

of activist campaigns may have changed over time 

because, among other things, the outcomes of 

campaigns are heterogeneous and thus difficult to 

compare, the costs of most campaigns are not 

observable, and the threat of a campaign can have 

significant effects without being associated with an 

observable campaign. Commenters expressed mixed 

views on whether activist campaigns have become 

more or less effective over time. See, e.g., letters 

from WLRK II (describing an ‘‘increasing 

effectiveness of activist campaigns and their 

decreased cost’’); Profs. Bishop and Partnoy I 

(stating that ‘‘the impact that shareholder activists 

are having on corporate America is modest and in 

decline’’ and citing a practitioner study ‘‘describing 

the number of board seats secured by activists as 

‘lower than in recent years’’’ and ‘‘describing the 

number of activist campaigns in 2021 as ‘in line 

with 2020’s slower pace’’’). 

688See, e.g., Brav et al. 2022 Study; see also letter 

from Profs. Bishop and Partnoy I (stating that 

‘‘public company boards are no longer monitored 

by hostile takeovers, so activism is the remaining 

recourse’’). 

689Commenters specifically suggested the 

Commission consider the interaction between the 

final amendments and the Short Position Reporting 

Proposal, its proposal relating to the reporting of 

securities loans, and the security-based swap 

reporting portion of the Schedule 10B Proposal. See 

letters from Profs. Bishop & Partnoy I; EIM IV at 4– 

5; ICI II at 7 n. 13; see also Reporting of Securities 

Loans, Release No. 34–94315 (Feb. 25, 2022) [87 FR 

11659]. These proposals, or portions of proposals, 

have not been adopted and thus have not been 

considered as part of the baseline here. To the 

extent those proposals or portions of proposals are 

adopted in the future, the baseline in those 

subsequent rulemakings will reflect the regulatory 

landscape that is current at that time. 

690These estimates are based on staff analysis of 

EDGAR filings. The Proposing Release reported that 

the Commission received 10,542 Schedule 13D 

filings (2,288 initial filings and 8,254 amendments) 

in calendar year 2020. As noted in the DERA 

Memorandum, based on further staff review of these 

reported statistics, we believe they included 

duplicate records, and that the actual number of 

unique Schedule 13D filings received in 2020 was 

5,288 filings (1,148 initial filings and 4,140 

amendments), which is similar to the counts 

provided for 2022 above. One commenter 

addressing the DERA Memorandum questioned 

whether data pertaining to other filing years used 

in the analyses in that memorandum include 

‘‘similar double counting.’’ See letter from EIM IV. 

Staff reviewed to verify that duplicate records were 

Continued 

made per year did not increase overall 

from 1985 to 2012.680 Commission staff 

analysis of more recent filings supports 

the observation that the number of total 

filings made per year has not increased 

over recent decades; in fact, the number 

of Schedule 13D filings has decreased 

somewhat in the most recent decade.681

Further, according to academic research 

examining different time periods and 

subsets of filings from 1985 through 

2018, there has been no significant 

change in the average level of beneficial 

ownership of a covered class reported in 

individual initial Schedule 13D filings 

over that time horizon.682 Commission 

staff analysis of more recent filings 

supports the observation that the 

average level of beneficial ownership 

reported in initial Schedule 13D filings 

has not meaningfully changed in recent 

decades.683

There is also research that addresses 

whether other developments may have 

changed the significance of lower 

ownership stakes in an issuer’s 

securities over time. For example, some 

observers have stated that the increase 

in stock ownership by institutional 

investors, the rise of proxy advisory 

services,684 and regulatory and legal 

developments regarding shareholder 

communications may have made it 

easier for an investor with a lower 

ownership stake to influence other 

shareholders, and, ultimately, the 

issuer.685 On the other hand, others 

have stated that the increased presence 

of institutional investors may make it 

more difficult for an investor with a 

lower ownership stake to exert control, 

without the support of these 

institutional investors.686 Overall, it is 

unclear whether regulatory, legal, and 

market developments have led activist 

campaigns by investors with lower 

ownership stakes to become more or 

less effective over time.687 That said, 

researchers have noted that today’s 

market for corporate control, in contrast 

to that at the time of the enactment of 

the Williams Act and the Commission’s 

original adoption of the related rules, 

prominently features investors with 

minority interests in issuers who seek to 

influence these issuers’ governance or 

corporate policies by convincing other 

shareholders to support their causes 

instead of pursuing direct control of 

issuers through majority ownership.688

3. Affected Parties and Current Market 

Practices 689

The parties affected by the final 

amendments include: all investors that 

are required or potentially required to 

report their beneficial ownership of 

covered classes on Schedules 13D and 

13G; the issuers of covered classes; 

shareholders of these issuers who are 

not Schedule 13D or 13G filers; and 

other investors, market participants, and 

issuers. Below we provide information 

about the current nature of Schedule 

13D and Schedule 13G filings and filers, 

which has not changed markedly since 

publication of the Proposing Release. 

a. Schedule 13D Filings 

i. Number of Filings, Filer Types, and 

Time To File 

During calendar year 2022, the 

Commission received a total of 5,179 

Schedule 13D filings, including 1,161 

initial filings and 4,018 amendments.690


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not included in the statistics and analyses in the 

DERA Memorandum or in this economic analysis. 691This estimate is based on staff analysis of 

EDGAR filings. ‘‘Lead filer’’ indicates the filer that 

submits a filing to the Commission, though the 

same filing may include information about 

additional co-filers and their beneficial ownership 

of securities. 692These estimates are based on staff analysis of 

EDGAR filings. The ‘‘Prominent Activists’’ category 

is based on the classification of the filer as either 

(or both) (i) a member of the Insightia (previously 

Activist Insight) ‘‘Activist Top Ten’’ list in any of 

the 10 years (2014 to 2023) that this list has been 

published, which represent Insightia’s ranking of 

the most influential activists over the past year, 

based on the quantity, size, and performance of 

their activist investments; or (ii) a ‘‘Sharkwatch 50’’ 

activist in the FactSet SharkRepellent database as 

of 2021, which represents FactSet’s compilation of 

the 50 most significant activists based on, e.g., the 

number and impact of their campaigns as of that 

date. The ‘‘Other Institutions’’ category is based on 

filings by institutions (primarily partnerships, 

corporations, investment advisors, and banks) that 

do not fall in the ‘‘Prominent Activist’’ category. 

The ‘‘Other Individuals’’ category is based on filings 

that report holdings of individuals and no other 

filer type and that do not fall in the ‘‘Prominent 

Activist’’ category; filings that report holdings of 

individuals who are co-filing as affiliates or part of 

a group with institutions (none of whom fall in the 

‘‘Prominent Activist’’ category) are included in the 

‘‘Other Institutions’’ category. Information about the 

number of days from the trigger date to the filing 

date of the Schedule 13D and the beneficial 

ownership percentage reported in the Schedule 

13D, respectively, are based on a subset of filings 

(about 98% of the filings) for which we were able 

to extract the required information. The ‘‘median 

ownership reported in filing’’ row represents the 

median, across filings, of the maximum beneficial 

ownership percentage separately reported in a filing 

and may thus understate the aggregate ownership 

of a group of co-filers. Based on hand-collection of 

aggregate ownership in a random subsample of 

2021 filings, we estimate that this approach does 

not fully aggregate all of the ownership reported by 

a group of co-filers in approximately 7% of the 

filings. In contrast, alternative algorithms we 

considered to aggregate ownership reported in 

different fields in a given filing very often vastly 

overstated ownership due to the double-counting of 

shares whose beneficial ownership could be 

attributed to multiple affiliates. 

693See letter from EIM IV (stating that the 

categorization of filers by type in the DERA 

Memorandum implied that ‘‘activists (prominent or 

otherwise) warrant separate regulatory scrutiny’’). 

This commenter also raised concerns about the 

reliability of the FactSet SharkRepellent database 

used to identify ‘‘prominent activists,’’ including 

whether the data is ‘‘accurate and current.’’ We note 

that the FactSet SharkRepellent database including 

the ‘‘Sharkwatch 50’’ is used, currently, by both 

academics (see, e.g., Ian Appel & Vyacheslav Fos, 

Short Campaigns by Hedge Funds (Working Paper, 

Feb. 2023), available at https://ssrn.com/ 

abstract=3242516) and practitioners (see, e.g., the 

activist surveillance tool offered at Activist 

Surveillance, The Conference Board, https://

www.conference-board.org/proxyvoting) to identify 

prominent activists. We also note that the 

categorization ‘‘prominent activist’’ is used in the 

production of descriptive statistics that characterize 

Schedule 13D filings and the affected parties but 

does not contribute to key results or estimates of 

our analyses. Nevertheless, given this commenter’s 

concerns, staff revised its approach to identifying 

‘‘prominent activists’’ by supplementing the 

‘‘Sharkwatch 50’’ with an annual ranking of top 

activists published by Insightia (including a total of 

34 ‘‘top ten’’ activists over 10 years) to compile a 

broader list of ‘‘prominent activists.’’ See supra note 

692. This revision resulted in the addition of five 

Schedule 13D filers from our 2011–2021 sample to 

the category of ‘‘prominent activists.’’ 

694This figure is based on staff analysis of EDGAR 

filings and reflects the subset of filings (1,136 of the 

total 1,161 filings reported in Table 1) for which 

required information could be extracted. 

Overall, these initial filings and 

amendments involved 2,194 unique 

lead filers.691 Additional details specific 

to the initial filings, including their 

breakdown and characteristics by filer 

type, are presented in Table 1.692

TABLE 1—INITIAL SCHEDULE 13D FILINGS IN 2022 BY FILER TYPE

Prominent 

activists 

Other 

institutions 

Other 

individuals All filings 

Number of unique lead filers ........................................................................... 22 720 252 994 

Number of initial filings .................................................................................... 60 843 258 1,161 

Median calendar days from trigger date * to filing date ................................... 9 10 11 10 

Median ownership reported in filing ................................................................. 6.6% 15.0% 10.5% 13.0% 

* The trigger date is the date on which the investor has acquired beneficial ownership of more than 5% of a class of equity securities described 

in section 13(d)(1) of the Exchange Act and Rule 13d–1(i), or, for an investor previously eligible to file a Schedule 13G in lieu of a Schedule 13D 

pursuant to Rule 13d–1(b) or (c), the date on which the investor becomes ineligible to report on Schedule 13G. 

We present the breakdown of filer 

type in the initial Schedule 13D filings 

under the baseline in Table 1 to 

characterize the affected parties. We did 

not limit our analyses of costs and 

benefits to any of these categories.693

A detailed day-by-day breakdown of 

the percentage of the filings made each 

day after the trigger date is provided in 

Figure 1 below.694


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695We note that approximately 42% of the 

Schedule 13D filings in Figure 1 were made after 

the tenth day following the trigger date. However, 

not all of these filings are considered late by the 

Commission. By rule, the Commission accepts as 

timely any filing that, if the calendar due date falls 

on a weekend or holiday, is received by the next 

business day. 17 CFR 240.0–3(a) (‘‘[I]f the last day 

on which [a filing] can be accepted as timely filed 

falls on a Saturday, Sunday or holiday, such [filing] 

may be [made] on the first business day 

following.’’). Therefore, after accounting for 

weekends and holidays, we preliminarily estimate 

that about 29% of the filings (represented by the 

light grey bars) were late. 

696This statistic includes the 20.7% of initial 

Schedule 13D filings made on the 10th day after the 

trigger date (i.e., the dark gray bar for day 10 in 

Figure 1) as well as those filings made after the 10th 

day but still considered timely due to holidays or 

weekends (i.e., the dark gray portion of the bar for 

days 11–14 in Figure 1). See supra note 695. 

697See, e.g., letter from STB (stating that ‘‘the 

Commission should recognize that the investors 

who file on Schedule 13D are by no means all 

activist investors engaging in the types of activities 

the Williams Act seeks to regulate’’). 

698Staff analyzed initial Schedule 13D filings 

from EDGAR from calendar years 2011 to 2021 

through programmatic text analysis and manual 

review. In particular, programmatic search terms 

were designed to identify text or data associated 

with transactions or with beneficial ownership 

obtained through various kinds of events (such as 

initial public offerings (‘‘IPOs’’) and equity-based 

compensation awards). Programmatic text analysis 

was also used to extract transaction history data 

reported in tabular form. Manual review of the 

extracted text and data and of the filings was used 

to better understand the nature of different filings 

and to what extent the extracted text and data were 

systematically related to the different types of 

underlying filings. 

699See 17 CFR 240.13d–101, Item 5(c) (requiring 

reporting persons to ‘‘[d]escribe any transactions in 

the class of securities reported on that were effected 

during the past sixty days or since the most recent 

filing of Schedule 13D’’). 700We also note that the nature of transaction 

history disclosures affects staff’s ability, in practice, 

to include filings in certain analyses. In particular, 

data on the share accumulation patterns of the filer 

could only be systematically extracted from filings 

when it was presented in tabular form, and such 

data is required for the analyses presented in Tables 

5 and 6 below (in sections C.1.a.iii and C.1.b.i). 701This observation is based on staff review of 

initial Schedule 13D filings from EDGAR from 

calendar years 2011 to 2021 through programmatic 

text analysis and manual review. In particular, staff 

used programmatic text analysis to extract potential 

transaction dates outside of any tabular disclosure 

by searching for any text in the format of a date that 

seemed to be accompanied by a price and/or a 

quantity of shares. Among the filings for which a 

tabular history of transactions was not extracted, no 

more than two potential transaction dates were 

extracted for about 70% of the filings. Upon manual 

review of the remaining 30% of the filings for 

which a tabular history of transactions was not 

extracted, staff found that a large number of the 

additional potential transaction dates that were 

programmatically extracted do not actually reflect 

Continued 

About 71 percent of all of the initial 

Schedule 13D filings in 2022 were filed 

within the existing 10-day filing 

window (represented by the dark grey 

bars),695 with about 34 percent of the 

filings being made on the filing 

deadline.696 Approximately 29 percent 

of the initial Schedule 13D filings, 

representing about 41 percent of all of 

the initial Schedule 13D filings that 

were filed by the current filing deadline, 

were filed within the amended fivebusiness day deadline. 

ii. Types of Filings 

An initial Schedule 13D filing 

obligation is triggered by the acquisition 

of beneficial ownership of more than 

five percent of a covered class, which 

can be achieved through various means, 

including via the purchase of shares on 

the open market as well as the receipt 

of shares through events involving offmarket transactions. Initial Schedule 

13D filings are required in a number of 

different circumstances, only some of 

which reflect shareholder activism, as 

noted by commenters.697 As discussed 

further below, filings involving the 

acquisition of shares as a result of 

certain corporate actions and other offmarket transactions (e.g., compensatory 

equity grants to executives) are less 

likely to be characterized as 

announcements of activist campaigns. 

Based on staff review of over a decade 

of Schedule 13D filings,698 we believe 

that the nature of transaction history 

disclosures, which are required 

pursuant to Item 5(c) of Schedule 

13D,699 provide a reasonable means of 

distinguishing, in a large sample, those 

filings that are likely to reflect the 

acquisition of beneficial ownership 

through corporate actions or other offmarket transactions as opposed to those 

that are more likely to represent activist 

campaigns.700 In particular, for those 

filings for which we could not extract a 

history of transactions in tabular form, 

we found that most reported only one or 

two transactions, representing offmarket transfers of shares.701 We found 


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Figure 1. Days between trigger date and the filing of initial Schedule 13D filings in 2022 

0 1 2 3 4 5 6 7 8 9 10 11-14 15+ 

Number of days between the trigger date and the filing of an initial Schedule 13D 

On Time Filings Late Filings I 
76948 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

transactions. We therefore believe that a significant 

fraction of these remaining filings also reflect no 

more than two transactions. 702This observation is based on staff review of 

initial Schedule 13D filings from EDGAR from 

calendar years 2011 to 2021 through programmatic 

text analysis and manual review, including 

significant manual review of the disclosures 

pursuant to Item 3 of the Schedule 13D filings to 

confirm the source of the shares acquired. See supra 

note 698 for more detail on the analysis and review 

undertaken. 

703While we label all of these filings as 

‘‘corporate action filings’’ for simplicity, we 

acknowledge that some of these filings represent 

transfers that are not strictly related to corporate 

actions, such as bequests of shares, and that our 

classification methodology is subject to some 

possible error. For example, 3% of these filings 

reflected in Table 2 below are made by Prominent 

Activists, as described supra note 692, (representing 

28% of all of the filings by Prominent Activists in 

Table 1 above) and it is possible that such filings 

may represent activist campaigns incorrectly 

classified as corporate action filings. 

704This observation is based on staff review of 

initial Schedule 13D filings from EDGAR from 

calendar years 2011 to 2021 through programmatic 

text analysis and manual review, including 

significant manual review of the disclosures 

pursuant to Item 4 of the Schedule 13D filings 

regarding the purpose of the transaction. See supra 

note 731 for more detail on the analysis and review 

undertaken. Examples of plans and proposals that 

were considered characteristic of activist campaigns 

include potential discussions or recommendations 

with respect to board composition, other 

governance matters, business strategy, capital 

structure and dividend policies, and a potential sale 

process for the issuer or a segment of the issuer. 

705 In a manual review of these filings, our staff 

did observe many instances of beneficial ownership 

held for investment purposes, with no stated plans 

or proposals, which are nonetheless included in our 

category of non-corporate-action filings by virtue of 

their filing on Schedule 13D (rather than Schedule 

13G) and their inclusion of a tabular transaction 

history. In general, our classification methodology 

is subject to some possible error. Further, a filer 

might not consider itself an ‘‘activist investor’’ or 

be viewed as such even if it is involved in what we 

label as a non-corporate-action filing and 

characterize as a potential activist campaign for 

purposes of this memorandum. 

706These estimates are based on staff analysis of 

EDGAR filings, including programmatic text 

analysis to extract tabular trading histories. See 

supra note 692 regarding the filer type 

classifications. The classification of filings as late 

(in the notes accompanying the table) accounts for 

the effect of weekends and holidays. See supra note 

695. 

707See letter from Profs. Bishop and Partnoy III. 

708See, e.g., Pierre Collin-Dufresne & Vyacheslav 

Fos, Do Prices Reveal the Presence of Informed 

Trading?, 70 J. Fin. 1555 (2015) (‘‘Collin-Dufresne 

& Fos 2015 Study’’); Yu Ting Forester Wong, Wolves 

at the Door: A Closer Look at Hedge Fund Activism, 

66 Mgmt. Sci. 2347 (2020) (‘‘Wong 2020 Study’’). 

709See letter from EIM IV. That commenter also 

stated that the categorization of filings presented in 

the DERA Memorandum would, in some cases, 

result in ‘‘potential double counting’’ whereby 

‘‘Schedule 13D filings with respect to a single M&A 

transaction would likely end up in both categories.’’ 

Id. We do not believe there is a risk of doublecounting in this sample given that it is limited to 

initial Schedule 13D filings and each filing appears 

only in a single category. If a person that is a 

potential acquiror in an M&A transaction files an 

initial Schedule 13D while assembling an initial 

position, and then files a Schedule 13D amendment 

upon consummation of the acquisition of the issuer, 

only the initial Schedule 13D would appear (in a 

single category) in our analysis. 

that these filings are typically associated 

with beneficial ownership acquired in 

events such as the consummation of 

negotiated mergers and acquisitions, 

IPOs, other restructurings, private 

placements, or compensation awards.702

We therefore categorize these filings as 

‘‘corporate action filings.’’ 703 In 

contrast, we found that filings that 

report a transaction history pursuant to 

Item 5(c) in tabular form are typically 

associated with the accumulation of 

shares in open-market trading through a 

series of multiple transactions and are 

more likely to discuss potential plans 

and proposals that are commonly 

viewed as characteristic of activist 

campaigns.704 We therefore categorize 

the filings for which we are able to 

extract a transaction history in tabular 

form as ‘‘non-corporate-action filings,’’ 

which we view as more likely to involve 

activist campaigns, acknowledging that 

we may be somewhat over-inclusive in 

our application of the term ‘‘activist 

campaign.’’ 705 We present a breakdown 

of the percentages of initial Schedule 

13D filings in calendar years 2011 

through 2021 that we characterize as 

‘‘non-corporate-action filings’’ or 

‘‘corporate action filings’’ based on the 

nature of transaction histories extracted 

from the filings in Table 2.706

TABLE 2—TYPES OF INITIAL SCHEDULE 13D FILINGS IN 2011–2021 

Number of 

filings 

Percentage 

of all 

filings 

(%) 

Breakdown by filer type 

Prominent 

activists 

(%) 

Other 

institutions 

(%) 

Other 

individuals 

(%) 

Non-Corporate-Action Filings * ............................................. 3,067 20 28 65 7 

Corporate Action Filings ** ................................................... 12,657 80 3 67 30 

* Filings for which tabular trading histories were extracted are categorized as ‘‘Non-Corporate-Action Filings’’ due to the results of our staff’s 

programmatic and manual review of such filings. See note 705 regarding some of the limitations of this approach. About 11% of these filings 

were filed late relative to the current deadline (see note 706). 

** Filings for which tabular trading histories were not extracted are categorized as ‘‘Corporate Action Filings’’ due to the results of our staff’s 

programmatic and manual review of such filings. See note 703 regarding some of the limitations of this approach. About 34% of filings in this 

category were filed late relative to the current deadline (see note 706). 

The categorization of filings presented 

in Table 2 was also included by staff in 

the DERA Memorandum. One comment 

letter addressing the DERA 

Memorandum indicated that the 

analysis presented in that memorandum 

(which is similar to analysis included in 

this economic analysis) was not 

replicable because it is ‘‘not based on 

publicly available information,’’ citing 

staff’s references to programmatic text 

analysis and manual review.707 To 

clarify, the analyses in the DERA 

Memorandum and this economic 

analysis are based on publicly available 

filings and datasets. The reliance of the 

staff’s analysis on programmatic text 

analysis is limited primarily to the 

extraction of trigger dates, the reported 

level of beneficial ownership, and the 

tabular trading histories (as discussed in 

this section) from public initial 

Schedule 13D filings from EDGAR. This 

data or other data that would allow us 

to understand the share accumulation 

patterns of filers is not available from 

any third-party sources that we are 

aware of, and our extraction of this data 

is not novel; other researchers have 

extracted similar transaction history 

data from public Schedule 13D filings 

for the purpose of academic studies.708

Further, the manual review (as well as 

certain additional programmatic text 

analysis) discussed in this section and 

elsewhere in this economic analysis is 

used to validate our methodologies and 

not to generate the results of the 

analyses. 

Another commenter addressing the 

DERA Memorandum raised concerns 

about potential errors in the 

classification of filings as ‘‘noncorporate-action filings’’ category, as 

acknowledged by staff in the DERA 

Memorandum, and questioned why the 

magnitude of any overstatement of this 

category is not quantified.709 In the 


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710One commenter suggested that staff ‘‘could 

have alternately analyzed a set of Schedule 13D 

filed by prominent activists to avoid assignment 

errors.’’ See Craig Lewis, Review of the 

Supplemental Data and Analysis on Certain 

Economic Effects of Proposed Amendments 

Regarding the Reporting of Beneficial Ownership, 

exhibit to letter from EIM IV (‘‘Lewis Study II 

(exhibit to letter from EIM IV)’’). We note that 

prominent activists are responsible for a minority 

of non-corporate-action filings (per Table 2) and 

that we do not believe it would be appropriate to 

limit our assessment of costs and benefits to this 

subgroup of filers given that filings by less 

prominent activist investors and filers that do not 

consider themselves to be ‘‘activist’’ investors are 

also due consideration and may be associated with 

similar types of costs and benefits. Further, it is not 

necessarily the case that filings by prominent 

activists are misclassified as corporate action 

filings, as many of these filers engage in a variety 

of activities which could include involvement in 

corporate actions of the types listed above. 

711See letter from CIRCA IV (recommending the 

use of the 13D Monitor database). 

712See Tables 5 and 6 below (in sections C.1.a.iii 

and C.1.b.i). 

713For example, staff found that many filings by 

prominent activists that were categorized as 

‘‘corporate action filings’’ did not involve the 

accumulation of shares on the open market during 

the filing window, which is why staff could not 

extract a tabular transaction history. This finding 

also means that the risk that the filer’s acquisition 

of its beneficial ownership interest could be 

affected by the shortened filing deadline is limited. 

714See supra note 701. 

715This observation is based on staff review of 

initial Schedule 13D filings from EDGAR from 

calendar years 2011 to 2021 through programmatic 

text analysis (to extract potential transaction dates, 

as discussed supra note 701, and to extract trigger 

dates) and manual review. 

716References to the term ‘‘filer’’ in this economic 

analysis are inclusive of the beneficial owner before 

the person actually made a Schedule 13D filing. 

717References to a filer ‘‘crossing the five percent 

threshold’’ in this economic analysis mean that the 

filer just completed acquiring beneficial ownership 

totaling more than five percent of a covered class 

or otherwise triggered a responsibility to file an 

initial Schedule 13D. Based on staff analysis of 

EDGAR filings through programmatic text analysis 

(to extract potential transaction dates, as discussed 

supra note 701, and to extract trigger dates), we 

estimate that about 2% of the potential transaction 

dates extracted from the text of corporate action 

filings between 2011 and 2021 occurred between 

the fifth day after the filer crosses the 5% threshold 

and the subsequent filing date. However, upon 

manual review, we found that many of these dates 

do not actually reflect transactions (i.e., the dates 

were extracted because they seemed to relate to a 

number of shares and/or a price, but they reflect 

information other than specific transactions, as in 

the case of a summary of holdings as of the filing 

date that appears in the body of the filing). 

718When multiple filings were made on the same 

date and pertain to the same issuer, only the filing 

reporting the largest stake is included in the 

analysis. 

719These estimates are based on staff analysis of 

EDGAR filings through programmatic text analysis 

(to extract trigger dates, the reported levels of 

beneficial ownership, and transaction histories, 

which were all used to determine share 

accumulation patterns; and to categorize filings, as 

discussed in the previous section). See supra 

section IV.B.3.a.ii. 

discussion above, we acknowledge that 

some filings classified as non-corporateaction filings do not state plans and 

proposals typical of activist campaigns. 

That said, these filings are still due 

consideration. That is, to the extent the 

share accumulation patterns reported in 

these filings would be affected by a 

shortened deadline, and to the extent 

these filings are associated with 

abnormal stock returns, they may still 

be important to consider in evaluating 

the costs and benefits quantitatively 

analyzed in this economic analysis. We 

also acknowledge above that some noncorporate-action filings may be 

incorrectly categorized as corporate 

action filings.710 While we acknowledge 

the potential noise in our data, we 

believe that any large dataset or 

classification approach applied to a 

large dataset would be subject to some 

degree of error. Another commenter 

suggested that we consider using an 

alternative database, stating that it 

‘‘includes a more comprehensive dataset 

on non-corporate action filings and 

activist campaigns than that created by 

DERA.’’ 711 Our initial dataset includes 

all Schedule 13D filings on EDGAR, so 

we expect it to be fully comprehensive. 

As discussed above, the subset of these 

filings that are categorized as noncorporate-action filings may not include 

every filing that some may consider to 

represent an ‘‘activist campaign.’’ 

However, it is not practical to extend 

the key analyses conducted later in this 

economic analysis to additional filings 

because staff was, by definition, unable 

to systematically extract transaction 

history data for the filings classified as 

corporate action filings, and data on the 

share accumulation patterns of the filer 

are required for these analyses.712 We 

do not believe that potential 

misclassifications have a meaningful 

impact on the results or interpretation of 

the analyses in this economic 

analysis.713

iii. Timing of Share Accumulation 

Because the final amendments will 

shorten the window between the trigger 

date and filing deadline for an initial 

Schedule 13D filing, we also consider 

current practices under the baseline 

with respect to the timing of the filer’s 

accumulation of shares during the filing 

window. 

As discussed above, for those initial 

Schedule 13D filings that we classify as 

‘‘corporate action filings,’’ which 

represent about 80 percent of initial 

Schedule 13D filings (per the second 

row of Table 2), we found that most 

reported only one or two transactions 

representing off-market transfers of 

shares.714 These transfers typically took 

place on or very close to the trigger 

date.715 We found that very few of these 

transfers occur following the fifth day 

after the filer 716 crosses the five percent 

threshold.717

For initial Schedule 13D filings that 

we classify as ‘‘non-corporate-action 

filings,’’ we use data extracted from the 

filings to examine filers’ current 

patterns of share accumulation. We 

extracted such data from the 3,067 noncorporate-action filings from 2011 

through 2021 reflected in the first row 

of Table 2. We further refined the 

sample of filings to exclude late filers 

and filers with no beneficial ownership 

reported as of the filing date and to 

adjust for multiple filings on the same 

date.718 Our refinements resulted in a 

sample size of 2,370 non-corporateaction filings, which we use for Figures 

2, 3a, 3b, and Table 3 below. Figure 2 

displays the percentage of noncorporate-action filings for which filers 

completed acquiring the total beneficial 

ownership reported in their initial 

Schedule 13D filing by the specified day 

after the trigger date.719


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76950 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

720See supra note 695. 

721Typically, five business days translates to 

seven calendar days after weekends are accounted 

for. Occasionally, five business days includes more 

than seven calendar days because of federal 

holidays. For instance, if an investor crosses the 5% 

threshold on a Friday and the following Monday is 

a federal holiday, then five business days will 

equate to 10 calendar days. 

722These estimates are based on staff analysis of 

EDGAR filings through programmatic text analysis 

(to extract trigger dates, the reported levels of 

beneficial ownership, and transaction histories, 

which were all used to determine share 

accumulation patterns; and to categorize filings, as 

discussed in the previous section). See section 

IV.B.3.a.ii. As discussed above, we use the 

maximum ownership separately reported in a filing 

as our measure of the total reported ownership, and, 

in some cases (approximately 7% of all of the 

Schedule 13D filings in Table 2 above), this 

approach may understate the aggregate ownership 

of a group of co-filers. See supra note 692. Because 

this measure of total reported ownership is used as 

the denominator to determine the percentage 

accumulation by a given day in these figures, our 

estimate of the percentage of reported ownership 

that is accumulated after the fifth business day 

following the trigger date may be overestimated in 

some cases. For example, we manually reviewed all 

filings categorized in the light grey bars of Figure 

3b (those with 25% or more of their reported 

ownership accumulated after the amended 

deadline) and determined that 1 out of 16 filings in 

the light grey bars, or 6% of these filings, would not 

have been categorized in this group if our algorithm 

to extract total reported ownership from the filing 

was as precise as our manual review of the 

documents. 

The dark grey bars in Figure 2 

represent filers that completed acquiring 

their total reported stake by the 

amended deadline, i.e., five business 

days after their trigger date.720 Summing 

the dark grey bars of the figure,721 we 

find that about 80 percent of the filers 

completed acquiring their reported stake 

by the amended deadline. The 

remaining approximately 20 percent of 

filers (represented in the light grey bars) 

continued accumulating shares after the 

amended deadline. 

We next explore the significance of 

additional accumulations of shares after 

the amended deadline. Figures 3a and 

3b display, for the same sample of 

filings as in Figure 2, the percentage of 

filers that complete acquiring 90 percent 

and 75 percent, respectively, of their 

stake on the indicated day after the 

trigger date.722


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Figure 2. Percentage of non-corporate-action filings from 2011-2021 for which filers 

complete share accumulation as of a given day by calendar days after trigger date 

48:..-...----------------------

byO 1 2 3 4 5 6 7 8 9 10 

Calendar Days After Trigger Date 
Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 76951 

The dark grey bars in Figures 3a and 

3b represent filers that completed 

acquiring 90 percent or 75 percent, 

respectively, of their reported stake by 

the amended deadline. Summing the 

dark grey bars of Figure 3a, we find that 

about 97 percent of the filers completed 

acquiring 90 percent of their reported 

stake by the amended deadline, while 

the remaining three percent of filers 

(represented in the light grey bars) 

continued to accumulate shares 

constituting 10 percent or more of their 

reported stake after the amended 

deadline. Similarly, summing the dark 

grey bars of Figure 3b, we find that 

about 99 percent of the filers completed 

acquiring 75 percent of their reported 

stake by the amended deadline, while 

the remaining one percent of filers 

continued to accumulate shares 

representing 25 percent or more of their 

reported stake after that date. 

The number and percentage of noncorporate action filings with different 

degrees of accumulation from Figures 2, 


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Figure 3a. Percentage of non-corporate-action filings from 2011-2021 for which filers 

achieve 90% of their total reported share accumulation as of a given day by calendar days 

after trigger date 

74---

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byO 1 2 3 4 5 6 7 8 9 10 

Calendar Days After Trigger Date 

Figure 3b. Percentage of non-corporate-action filings from 2011-2021 for which filers 

achieve 75% of their total reported share accumulation as of a given day by calendar days 

after trigger date 

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C 

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byO 1 2 3 4 5 6 7 8 9 10 

Calendar Days After Trigger Date 
76952 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

723These estimates are based on staff analysis of 

EDGAR filings through programmatic text analysis. 

See supra notes 719 and 722. 

724The figures in Tables 3, 5, and 6 use the same 

methodology as in Table 2 and as discussed in 

section IV.B.3.a.ii for identifying non-corporate 

action filings. A different methodology, such as 

those proposed in some comment letters (see supra 

notes 710–711), would likely yield different 

campaign counts and percentages in Table 3. 

725These estimates are based on staff analysis of 

EDGAR filings. The Proposing Release reported that 

the Commission received 44,059 Schedule 13G 

filings (12,838 initial filings and 31,221 

amendments) in calendar year 2020. As noted in the 

DERA Memorandum, based on further staff review 

of these reported statistics, we believe they 

included duplicate records, and that the actual 

number of unique Schedule 13G filings received in 

2020 was 22,080 filings (6,436 initial filings and 

15,644 amendments), which are similar to the 

counts provided for 2022 above. 

726This estimate is based on staff analysis of 

EDGAR filings. ‘‘Lead filer’’ indicates the filer that 

submits a filing to the Commission, though the 

same filing may include information about 

additional co-filers. 

727These estimates are based on staff analysis of 

EDGAR filings. Information about the number of 

days from the trigger date to the filing date of the 

Schedule 13G and the beneficial ownership 

percentage reported in the Schedule 13G, 

respectively, are based on a subset of filings (about 

95% of the filings) for which staff was able to 

extract the required information. We note that 

staff’s methodology for identifying the filer type 

associated with a given filing has been refined since 

the publication of similar statistics for 2021 in the 

DERA Memorandum. The Proposing Release 

reported that, at that time, it was impracticable to 

produce statistics on the median days to file for 

different types of filers. Our staff has since 

structured the underlying data into a more readily 

analyzable format and we have included these 

statistics in the table. See supra note 692 for details 

on the extraction of percentage beneficial 

ownership data from filings. 

728Per the first row of the table, QIIs represent 

567 out of 2,633 unique lead filers, or about 22% 

(567/2,633) of the unique lead filers. Per the third 

row of the table, QIIs are responsible for 4,660 out 

of 8,433 initial filings, or about 55% (4,660/8,433) 

of the initial filings. 

729 Institutional investment managers that use the 

United States mail (or other means or 

instrumentality of interstate commerce) in the 

course of their business and that exercise 

investment discretion over $100 million or more in 

section 13(f) securities must file Form 13F. 

3a, and 3b are summarized in Table 

3.723

TABLE 3—DEGREE OF ACCUMULATION BY AMENDED DEADLINE NON-CORPORATE-ACTION FILINGS OF INITIAL SCHEDULE

13D 

[2011–2021] 

Percent of stake accumulated by amended deadline 

(1) 

100% 

(full stake) 

(2) 

<100% 

(3) 

<90% 

subset of (2) 

(4) 

<75% 

subset of (3) 

Number of campaigns in sample ..................................................................... 1,907 463 78 16 

Percent of campaigns in sample ..................................................................... 80% 20% 3% 1% 

Average number of campaigns/year ............................................................... 173 42 7 1 

Column 1 of Table 3 (representing the 

same filings as those in the dark grey 

bars of Figure 2) presents information 

about campaigns in which the filer 

completed accumulating their shares by 

the amended deadline (five business 

days after crossing the five percent 

threshold). Column 2 (representing the 

same filings as those in the light grey 

bars of Figure 2) presents information 

about the remainder of the campaigns, 

in which the filer continued 

accumulating shares after the amended 

deadline. Columns 3 and 4 (representing 

the same filings as those in the light 

grey bars of Figure 3a and 3b 

respectively) present the subsets of the 

campaigns in Column 2 in which the 

filer had accumulated less than 90 or 75 

percent, respectively, of their stake by 

the amended deadline (i.e., 10 percent 

or 25 percent, respectively, or more of 

their stake was accumulated between 

the amended deadline and their actual 

filing date).724

b. Schedule 13G Filings 

During calendar year 2022, the 

Commission received a total of 26,523 

Schedule 13G filings, including 8,433 

initial filings and 18,090 

amendments.725 Overall, the initial 

filings and amendments involved 4,321 

unique lead filers.726 Additional details 

specific to the initial filings, including 

their breakdown and characteristics by 

filer type, are presented in Table 4.727

TABLE 4—INITIAL SCHEDULE 13G FILINGS IN 2022 BY FILER TYPE

QII Exempt 

investor 

Passive 

investor Total 

Number of unique lead filers * ......................................................................... 567 1,340 793 2,633 

Number of initial filings * .................................................................................. 4,660 1,508 2,222 8,433 

Median calendar days from trigger date ** to filing date ................................. 40 45 10 39 

Median ownership reported in filing ................................................................. 6% 15% 6% 7% 

% filers also filing Form 13F ............................................................................ 84% 10% 31% 30% 

* The total numbers of unique lead filers and of initial filings reported in the table each differ from the sum across columns because the same 

filer may fall into multiple categories and filer type could not be determined for about 0.5% of the filings. 

** For Passive Investors, the trigger date is the date on which the investor has acquired beneficial ownership of more than 5% of a covered 

class. QIIs and Exempt Investors each have different initial Schedule 13G filing trigger dates and filing deadlines. See section II.A.2 above for 

more detail. 

Table 4 demonstrates that initial 

Schedule 13G filings are somewhat 

concentrated among QIIs, who represent 

about one fifth of the filers but are 

responsible for over half of the 

filings.728 Per the second row of the 

table, QIIs are also more likely to report 

their ownership of securities on a 

quarterly basis on Form 13F, with 84 

percent of QIIs filing a Form 13F 

(compared to 30 percent for all initial 

Schedule 13G filers).729


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730See infra section IV.C.1.a.iii, Table 5 and 

section IV.C.1.b.i, Table 6. 

731See infra sections IV.C.1.a.ii through iv. 

732About 71% of initial Schedule 13D filings are 

timely filed in accordance with the existing filing 

deadline. See section IV.B.3.a above. Our analyses 

of costs and benefits generally exclude the 

remaining roughly 29% of filings, which are filed 

late based on the existing filing deadline, because 

it is difficult to predict how filers that are not in 

compliance with the current filing deadline will 

react to a change in this deadline. 

733Throughout this subsection (and sections 

IV.C.1.a.iii and IV.C.1.b.i below, as well as 

statements in other sections referencing the results 

of the data analyses presented in these sections), an 

issuer’s ‘‘abnormal return’’ represents the difference 

between the issuer’s market stock return and the 

Center for Research in Security Prices (‘‘CRSP’’) 

value-weighted market index. We acknowledge that 

abnormal returns for a given issuer may be sensitive 

to the choice of benchmark and affected either 

positively or negatively by other market or issuer 

events during the horizon of the analysis, though 

the impact of such confounding effects may be 

reduced when looking at the average abnormal 

returns across many issuers. References in other 

subsections to ‘‘abnormal returns’’ in the context of 

academic studies reflect the definitions of this term 

in each individual study (which may use different 

models to compute benchmark or ‘‘normal’’ returns 

for the purpose of isolating the ‘‘abnormal’’ portion 

of the returns). 

734These estimates are based on staff analysis of 

EDGAR filings through programmatic text analysis 

as well as data from the CRSP database. 

735Figure 4 reflects a total of 534 filings, in all 

of which filers used the full 10-day filing window 

to file. To arrive at this figure from the total 3,067 

non-corporate-action filings in Table 2, we retained 

only one filing when multiple filings were made for 

the same issuer on the same day and limited the 

sample to filings for which stock return data is 

available. These restrictions led to a sample of 2,553 

non-corporate-action filings. The additional 

requirement that the filer used the full 10-day filing 

window to file results in the figure reflecting about 

21% of this sample of 2,553 filings. If we instead 

consider the subset of the 2,553 non-corporateaction filings that were filed after the amended 

filing deadline but not after the current filing 

deadline (i.e., the subsample that would be more 

likely to be affected by a change in the filing 

deadline), the figure reflects about 37% of this 

subsample of filings. Data on the abnormal returns 

between five business days after the trigger date to 

the actual filing date for additional subsets of noncorporate-action filings is presented in Table 5 

below. 

C. Economic Effects of the Final Rules 

In this section, we discuss the 

anticipated benefits and costs of the 

final rules, some of which cannot be 

quantified for reasons discussed below. 

We considered all of these costs and 

benefits in their entirety. We have 

integrated our discussion of potential 

effects on efficiency, competition, and 

capital formation within our discussion 

of the other benefits and costs of the 

final amendments. Our analysis of the 

economic effects includes certain 

quantifiable elements based on 

historical data.730 These elements may 

provide insights into certain benefits 

and costs—including with quantitative 

data and also with non-quantifiable 

benefits and costs—but those insights 

are conditional on, and constrained by, 

the reactions of market participants to 

the final amendments. Finally, we have 

indicated where quantitative data 

discussed in our analysis do not 

represent the Commission’s cost or 

benefit estimates of the final 

amendments. 

1. Shortened Initial Schedule 13D Filing 

Deadline 

The final amendment to Rule 13d– 

1(a) shortens the initial Schedule 13D 

filing deadline from 10 calendar days to 

five business days after the date of the 

acquisition that results in a person’s 

beneficial ownership of a covered class 

exceeding five percent of that class. The 

final amendments to Rule 13d–1(e), (f), 

and (g) similarly shorten the initial 

Schedule 13D filing deadline for 

investors who are no longer eligible to 

file Schedule 13G in lieu of Schedule 

13D. 

a. Benefits 

The disclosures required under 

Schedule 13D consist, among other 

matters, of information related to 

significant shareholders and potential 

changes of corporate control. An earlier 

filing deadline for Schedule 13D will 

allow information to be incorporated 

into securities prices sooner and allow 

market participants to make betterinformed investment decisions. 

Shortened filing deadlines may lessen 

the opportunity for what we have 

termed ‘‘informed bystanders’’ to gain 

advantages over the average selling 

shareholder, as further discussed below, 

which could ultimately enhance trust in 

markets and thereby capital formation. 

Finally, we expect that shortening the 

deadline will reduce overall 

informational asymmetries in the 

market, thereby improving liquidity, 

which benefits all market participants, 

including activists. While we think the 

benefits to market participants arising 

from the final amendments will be 

significant, these benefits are not 

quantifiable. 

i. Extent of Earlier Disclosure of 

Information 

This subsection provides some data 

about the extent of information that may 

be revealed to the market more quickly 

under the final amendments, as support 

for the discussion of benefits in the 

subsections that follow.731 As discussed 

in section IV.B.3 above, among initial 

Schedule 13D filings that were timely 

filed in 2022 in accordance with the 

existing filing deadline, roughly 41 

percent were already filed within the 

amended filing deadline.732 The final 

amendments may thus result in earlier 

filing for about 59 percent of timely 

Schedule 13D reports. 

For those initial Schedule 13D filings 

that would be filed earlier under the 

amended filing deadline, the amount of 

market-moving information that could 

be revealed more quickly under the final 

rules varies across filings. To better 

understand the extent of information 

that could be more quickly incorporated 

into market prices under a shortened 

filing deadline, we explore how the 

stock market reacts on and around 

Schedule 13D filing dates for different 

types of filings. Figure 4 presents the 

average pattern in abnormal returns 733

for filings from 2011 through 2021 that 

we classify as ‘‘non-corporate-action 

filings,’’ using the methodology 

described in section IV.B.3.ii.734 In 

order to align the trigger and filing dates 

across the filings reflected in the graph, 

we limit the filings included in the 

figure to those that used the full 10-day 

filing window to file.735


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76954 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

736The amended deadline corresponds to 

approximately 7.25 calendar days: (365.25 calendar 

days per year ÷ 252 business days per year) × (5 

business days). 

737One commenter stated that the DERA 

Memorandum included ‘‘no discussion of what may 

cause [the gains after the filing date in the figure], 

or, importantly, whether, if the filing period is 

shortened, the gains that the Commission labels as 

‘abnormal’ in the five-day window prior to filing 

will simply shift to the period after the amended 

filing deadline.’’ See letter from EIM IV. We note 

that the pattern of some additional positive price 

movement, or price drift, after the filing date is 

consistent with what has been found in academic 

studies and that researchers generally use an event 

window including a period after the filing date 

(such as from 20 days prior to 20 days after a 

Schedule 13D filing date) to capture what is 

believed to be the full abnormal return associated 

with a Schedule 13D filing. See, e.g., Brav et al. 

2022 Study. Such post-disclosure abnormal return 

patterns have been found to be associated with a 

wide variety of types of corporate news. See, e.g., 

David Hirshleifer et al., Driven to Distraction: 

Extraneous Events and Underreaction to Earnings 

News, 64 J. Fin. 2289 (2009) (stating that ‘‘[i]n 

several kinds of tests, there is on average a delayed 

price reaction to news that has the same sign as the 

immediate response’’). However, we continue to 

believe that it is reasonable to expect that, all else 

equal, an accelerated filing date would be likely to 

accelerate the returns between the amended filing 

date and the day after the current actual filing date 

(which, per Figure 4, is concentrated around the 

actual filing date itself) rather than the returns 

shifting to the period after the amended filing 

deadline because this abnormal return likely 

reflects the immediate market reaction to the filing. 

738These estimates are based on staff analysis of 

EDGAR filings. The estimates are based on the same 

sample of non-corporate-action filings from 2011 

through 2021 used in Figures 2, 3a, and 3b above 

(i.e., the sample refined to exclude late filers and 

filers with no beneficial ownership reported as of 

the filing date and to adjust for multiple filings on 

the same date). See supra note 718 and 

accompanying text. 

739These estimates are based on staff analysis of 

EDGAR filings through programmatic text analysis 

(to categorize filings, as discussed in section 

IV.B.3.a.ii above, and to extract the required dates) 

as well as data from the CRSP database. 

740Figure 5 reflects a total of 1,492 filings, in all 

of which filers used the full 10-day filing window 

to file. To arrive at this figure from the total 12,657 

corporate action filings in Table 2, as in the case 

of Figure 2, we retained only one filing in cases 

where multiple initial Schedule 13D filings were 

made on the same day for the same issuer. The 

figure is also limited to filings for which stock 

return data is available (generally, issuers listed on 

the NYSE, NYSE American, NASDAQ, and NYSE 

Arca exchanges). These restrictions led to a sample 

of 6,125 corporate action filings. The additional 

requirement that the filer used the full 10-day filing 

window to file resulted in the figure reflecting 

about 24% of this sample of 6,125 filings. If we 

instead consider the subset of the 6,125 corporate 

action filings that were filed after the amended 

filing deadline but not after the current filing 

deadline (i.e., the subsample that would be more 

likely to be affected by a change in the filing 

deadline), the figure reflects about 41% of this 

subsample of filings. 

Figure 4 demonstrates that the stocks 

of issuers that are the subject of these 

filings experience an abnormal return of 

roughly three percent from day seven— 

the approximate number of calendar 

days corresponding to five business 

days—following the trigger date to the 

day after the filing date.736 This pattern 

of returns suggests that, for this group of 

filings, there is market-moving 

information that is currently not fully 

incorporated into market prices as of the 

amended filing deadline, and which 

would be likely to be revealed earlier if 

similar filings were made under the 

amended filing deadline.737 We estimate 

that about 43 percent of timely noncorporate-action filings are currently 

filed by the amended filing deadline, 

such that the remaining 57 percent of 

timely non-corporate-action filings 

would be subject to earlier disclosure 

under the final amendments and are 

expected to generate the benefits 

discussed in the following 

subsections.738

We next consider the filings that we 

classify as ‘‘corporate action filings.’’ 

The average pattern in abnormal returns 

for these filings from 2011 through 2021 

is presented in Figure 5.739 In order to 

align the trigger and filing dates across 

filings reflected in the graph, we again 

limit the filings included in the figure 

to those that used the full 10-day filing 

window to file.740


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Figure 4. Cumulative abnormal return around filing date for "non-corporate-action 

filings" (from Table 2) from 2011-2021 that were filed 10 calendar days after trigger date 

I 

~ 

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-

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I I I I I I I 

-20 -15 -10 -5 0 5 10 15 20 

Calendar Days Relative to Filing Date 
Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 76955 

741Staff reviewed a small number of individual 

filings and confirmed the existence of such 

disclosures, such as a Form 8-K disclosure on or 

within a day of the trigger date of a merger 

agreement or a bankruptcy, in the cases that were 

reviewed. However, we did not conduct more 

comprehensive or systematic analysis of such 

disclosures or other potential explanations for why 

the vast majority of the market stock price reaction 

for this group of filings occurred close to the trigger 

date and before the Schedule 13D was filed. 

742One commenter stated that our use of the term 

‘‘market efficiency’’ to describe the earlier 

incorporation of information in market prices were 

in fact references to ‘‘strong-form market efficiency 

wherein share prices fully reflect all public and 

private information’’ which is viewed ‘‘as an 

idealized and unobtainable standard’’ in contrast to 

semi-strong market efficiency (wherein prices 

reflect all public information). The commenter 

noted that ‘‘defining mispricing in terms of private 

information that is not currently reflected in share 

price is a misleading characterization of price 

formation that serves as an impractical basis for 

regulation.’’ See Lewis Study I (exhibit to letter 

from EIM I). Some commenters similarly questioned 

whether a delay in market prices reflecting a 

significant shareholder’s investment constituted a 

mispricing that warranted correction. See letters 

from AIMA; CIRCA I; Dodge & Cox; EIM I; Prof. 

Gordon; Profs. Schwartz and Shavell I. To avoid 

confusion, we no longer use the term ‘‘market 

efficiency’’ in this context, focusing instead on the 

earlier updating of market prices and resulting 

effects on decision-making (and thereby efficiency 

of resource allocation). We also no longer refer to 

prices that do not yet reflect the information in a 

Schedule 13D filing before it is filed as 

‘‘mispricing.’’ 

743See letters from AFREF; Nasdaq; TIAA. 744See letters from AFREF; HMA I; Hoak; Nasdaq; 

TIAA. 

745See letters from NIRI; SCG. 

746See letters from AIMA; Dodge & Cox; EIM I; 

Rice Management. 

747See Lewis Study I (exhibit to letter from EIM 

I) (stating that ‘‘the Commission could have 

analyzed equity trading activity and abnormal 

returns around triggering and announcement dates 

to properly assess potential gains to market 

efficiency’’). 

748See supra section IV.C.1.a.i. 

Figure 5 demonstrates that, in contrast 

to the pattern observed for noncorporate-action filings, the vast 

majority of the market stock price 

reaction to corporate action filings 

occurred close to the day on which the 

filers crossed the five percent ownership 

threshold, triggering the requirement for 

a Schedule 13D filing. The limited 

market reaction between the amended 

deadline—five business days after the 

trigger date (or approximately seven 

calendar days)—and the day after the 

actual filing date implies that little 

market-moving information is revealed 

during this period. We did not conduct 

a systematic analysis to investigate 

potential explanations for this pattern of 

abnormal returns. However, it is 

possible that this pattern may reflect the 

existence of other disclosures about the 

associated events (outside of the 

Schedule 13D filing) that are made 

public on or close to the trigger date.741

To the extent that the most value-critical 

information contained in the filing is 

already known to the market prior to the 

amended filing date (through legal 

means, such as other disclosures made 

outside the Schedule 13D), we do not 

expect the amended filing deadline to 

result in the earlier revelation of 

significant new information for 

corporate action filings. 

ii. Improved Information Content of 

Stock Prices 

The amended Schedule 13D initial 

filing deadline will get material 

information to investors faster. This will 

allow new information contained in 

Schedule 13D filings to be incorporated 

into market prices earlier,742 allowing 

investors and issuers to make betterinformed decisions. 

Commenters agreed that the 

acceleration of filing deadlines would 

allow market prices to incorporate the 

information contained in a filing 

earlier,743 investors to make betterinformed decisions,744 and issuers to 

make better-informed decisions in 

responding to the presence of a new 

significant shareholder.745 On the other 

hand, some commenters questioned 

whether a shortened filing deadline 

would enhance market efficiency or 

requested further evidence or analysis of 

the effects on market efficiency.746

As suggested by a commenter,747 we 

have considered patterns in abnormal 

returns around Schedule 13D filings to 

better assess the potential effect of the 

accelerated filing deadline on market 

prices (and, thereby, on decisionmaking by market participants). We note 

that decision-making and the efficiency 

of resource allocation are unlikely to 

materially improve with a shortened 

deadline for corporate action filings 

because, as discussed in the previous 

section, the vast majority of any market 

price reaction around the time of these 

filings seems, on average, to occur well 

before the amended deadline.748

By contrast, we documented that for 

non-corporate-action filings there are, 

on average, meaningful abnormal 


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Figure 5. Cumulative abnormal return around filing date for "corporate action filings" 

(from Table 2) from 2011-2021 that were filed 10 calendar days after trigger date 

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-10 -5 0 5 10 15 20 

Calendar Days Relative to Filing Date 
76956 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

749See id. 

750See supra section IV.C.1.a.i. 

751See letters from CIRCA I; EIM I; Profs. 

Schwartz and Shavell I; Profs. Schwartz and 

Shavell II. 

752We use the term ‘‘transfer’’ to distinguish the 

trading losses and gains from costs and benefits that 

may result from rule. See Current Guidance on 

Economic Analysis in SEC Rulemakings (Mar. 16, 

2012) (available at https://www.sec.gov/divisions/ 

riskfin/rsfi_guidance_econ_analy_

secrulemaking.pdf) at n.32. 

753 In a similar analysis in the DERA 

Memorandum, staff used the term ‘‘opportunistic 

traders’’ to reference these parties. We have revised 

the term used in response to a comment that this 

term seemed pejorative as well as comment letters 

that appeared to presume that the term was 

inclusive of the filer. See, e.g., letters from CIRCA 

IV; EIM IV. 

754See, e.g., Simi Kedia et al., Institutional 

Investors and Hedge Fund Activism, 10 Rev. Corp. 

Fin. Stud. 1 (2021) (‘‘Kedia et al. 2021 Study’’) 

(finding that a one-standard-deviation increase in 

the pre-existing ‘‘activism-friendly’’ ownership is 

associated with an increase in the 36-month buyand-hold returns of 7.8% to 15.5%); Wong 2020 

Study (finding that a proxy for a dispersed group 

of investors aligned with the activist buying shares 

before the Schedule 13D filing, measured based on 

abnormal trading volume on the date the activist 

exceeds 5% ownership, is associated with an 

increase in the buy-and-hold return over the course 

of an activist campaign of 5.5% to 8.4%). 

755See, e.g., Luigi Guiso et al., Trusting the Stock 

Market, 63 J. Fin. 2557 (2008). 

756See Ryan Flugum et al., Shining a Light in a 

Dark Corner: Does EDGAR Search Activity Reveal 

the Strategically Leaked Plans of Activist Investors?, 

J. Fin. Quant. Analys. (forthcoming 2023), available 

at https://ssrn.com/abstract=3612507 (‘‘Flugum et 

al. 2023 Study’’). 

757See, e.g., Wong 2020 Study. 

758For example, the researchers found that 

institutions unusually accessing EDGAR filings for 

issuers prior to Schedule 13D filings each appeared 

to engage in this activity primarily for Schedule 

13D filings pertaining to a particular filer, rather 

than predicting Schedule 13D filings in general. See 

Flugum et al. 2023 Study. Also, both this study and 

the abnormal volume study discussed above found 

evidence of abnormal trading activity even in the 

case of Schedule 13D filings made by previous 

returns between the amended filing 

deadline and the day after the filing 

date. 749 These abnormal returns 

patterns suggest that market-moving 

information is revealed during this 

period. A shortened deadline will 

accelerate the remaining market price 

reaction with respect to non-corporateaction filings, as investors incorporate 

the new information into their buying 

and selling decisions. Investors and 

issuers, with earlier access to the 

information and an updated stock price, 

may then be able to make betterinformed investment and resource 

allocation decisions. At the level of the 

economy as a whole, better investment 

and resource allocation decisions by 

individual issuers and investors under 

the amended filing deadline may 

improve the efficiency of resource 

allocation overall. 

As discussed in the previous section, 

about 57 percent of timely noncorporate-action initial Schedule 13D 

filings, or about 122 filings of this type 

per year, are currently filed after the 

amended deadline.750 Based on this 

historical filing behavior, we expect the 

amended deadline may give rise to an 

earlier market reaction than would 

otherwise have been experienced for 

approximately this number of filings per 

year. Thus, investors, issuers, and other 

market participants may have access to 

updated stock prices and the 

information disclosed in a Schedule 

13D up to three days earlier for over 120 

such events per year according to 

current estimates, allowing them to 

make better-informed decisions in each 

of those periods. 

Some commenters stated that the 

market cannot impound new 

information into a price if that 

information has not been developed, or 

more generally indicated that the 

benefits of a shortened deadline were 

predicated on investors not forgoing 

investments that may give rise to a 

Schedule 13D filing in response to the 

amended deadline.751 We continue to 

believe that, holding the content of the 

filings constant, amending the deadline 

will allow for more informed decisionmaking and improve the information 

content of stock prices, with associated 

benefits for investors, issuers, and other 

market participants. We acknowledge 

that the improvement in the efficiency 

of resource allocation at the economy 

level could be mitigated to the extent 

that some of the research and/or 

investment activities giving rise to these 

filings are reduced or otherwise change 

after the adoption of the final 

amendments (see section IV.C.1.b). 

iii. Transfers From Selling Shareholders 

and Trust in Markets 

In the days between the trigger date 

for an initial Schedule 13D and the 

filing date of that Schedule 13D under 

the current 10-day deadline, various 

investors may buy and sell shares of the 

subject issuer. The resulting trading 

losses and gains (whether or not the 

trading is based on information from or 

about the Schedule 13D filer) generally 

represent wealth transfers 752 among 

individual investors, not net costs to 

investors (and market makers) as a 

group. However, the possession of an 

informational advantage regarding the 

future control or potential strategic or 

operational changes at an issuer, 

together with the knowledge of the 

precise date of informational revelation, 

creates a near-arbitrage opportunity. The 

incentives to gain access to such 

information, and thus profit from it, can 

be strong. An extended window of time 

between the trigger date and the date on 

which the filer’s beneficial ownership 

and plans are made public on Schedule 

13D may increase the likelihood of 

information leakage to ‘‘informed 

bystanders’’ 753 who may then buy 

shares during the window of time just 

before the filing of the Schedule 13D. 

Such informed bystanders can thus 

profit from access to this information 

rather than from their own fundamental 

research or effort to improve the issuer’s 

performance. We acknowledge, 

however, that some of these informed 

bystanders may be associated with 

shareholder value creation to the extent 

they may represent the entry of 

additional ‘‘activism-friendly’’ 

shareholders, which academic 

researchers have associated with greater 

returns to activism.754

Investors may possess information 

regarding activism for a variety of 

reasons. Some may emerge from 

fundamental research. For example, 

some investors may use research to 

identify companies that are likely to be 

targeted by activists. These investors 

may be able to glean information about 

the likelihood of an activist campaign 

from, for example, unexpected increases 

in trade volume. However, information 

leakage that creates a near-arbitrage 

opportunity for some investors (who 

themselves have not performed 

fundamental research to generate the 

information) is likely to erode trust in 

markets, reducing participation and 

capital formation.755 We would expect 

that amending the filing deadline would 

increase perceptions of fairness in the 

markets, which could, in turn, lead to 

benefits in participation and liquidity. 

These benefits cannot be quantified but 

are nonetheless important. 

Academic research provides evidence 

consistent with informed bystanders 

buying shares just prior to Schedule 13D 

filings. For example, studies have 

identified unusual EDGAR search 

activity during the 10 days prior to a 

Schedule 13D filing 756 and abnormally 

high trading volume on the same day 

the filer crosses the five percent 

threshold 757 as evidence of certain 

traders other than the filer being aware 

of the filer’s intentions. While the 

researchers note that some of the trading 

behavior investigated in these studies 

may simply reflect the reaction of 

sophisticated investors to unusual, 

public market data (such as that 

associated with the filer’s purchases) in 

advance of a Schedule 13D filing, 

further evidence led them to suggest 

that at least some of the increased 

trading is by informed parties.758


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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 76957 

Schedule 13G filers, which are less likely to be 

accompanied by unusual market activity associated 

with trades by the filer. See Flugum et al. 2023 

Study; Wong 2020 Study. 759See Marco Di Maggio et al., The Relevance of 

Broker Networks for Information Diffusion in the 

Stock Market, 134 J. Fin. Econ. 419 (2019) (finding 

that the ‘‘best clients’’ of the broker used by a filer, 

i.e., those generating a large share of the broker’s 

business, buy more of the target stock than other 

institutional investors in the 10 days prior to a 

Schedule 13D filing). 

760See Georgy Chabakauri et al., Trading Ahead 

of Barbarians’ Arrival at the Gate: Insider Trading 

on Non-Inside Information (Colum. Bus. Sch. Rsch. 

Paper, Jan. 2022), available at https://ssrn.com/ 

abstract=4018057 (finding a significant concurrence 

between purchases of stock by insiders of the issuer 

and purchases by an activist in the 60 days, and 

particularly in the last 10 days, preceding a 

Schedule 13D filing). 

761See, e.g., Lewis Study I (exhibit to letter from 

EIM I) (stating that the Commission could have 

attempted to quantify the intended benefits of the 

rule change to selling shareholders by 

‘‘[e]stimat[ing] losses to selling shareholders with 

one of the trading models used to estimate damages 

in shareholder 10b-5 actions,’’ wherein ‘‘[h]igh end 

estimates of costs could assume that all shares sold 

(after adjusting for estimates of dealer activity) 

during this period came from sales made by 

investors that would have benefited from having the 

information on Schedule 13D earlier’’); letter from 

Profs. Swanson, Young, and Yust (discussing 

investors that sell prior to a Schedule 13D filing and 

related statistics and stating that ‘‘the forgone 

returns seem too small in of themselves to justify 

a change’’); Profs. Bishop and Partnoy I (stating that 

‘‘an intuitive concern about investors who might be 

disadvantaged by selling during the window before 

such filings’’ is unsupported by evidence). 762For example, some commenters stated that any 

cost borne by selling shareholders is minor relative 

to benefits to other shareholders of the Schedule 

13D filer’s actions. See letters from AIMA; CIRCA 

I; EIM I; ICM; Profs. Schwartz and Shavell II; S. 

Lorne. We consider the potential benefits to 

shareholders from a filer’s actions in section 

IV.C.1.b.i below. 763We make the same exclusions from the full 

sample of non-corporate-action filings as in the case 

of Figures 2, 3a, 3b, and Table 3 above (excluding 

late filers and filers with no beneficial ownership 

reported as of the filing date and retaining only one 

filing among multiple filings on the same date), 

resulting in a sample of non-corporate-action filings 

consisting of 2,370 filings from 2011 through 2021. 

See supra note 718 and accompanying text for more 

information on the sample restrictions in the 

analysis. 

764See supra section IV.C.1.a.i. 

765We focus on abnormal trading volume rather 

than total trading volume because it is likely that 

the trades comprising the normal amount of trading 

volume represent investors making an exchange 

based on the same information set, even though ex 

post it may appear that the buyer turned out to be 

‘‘lucky’’ and the seller ‘‘unlucky,’’ as would be the 

case before the revelation of other positive news. 

766The estimates in the figure are based on staff 

analysis of EDGAR filings through programmatic 

text analysis (to categorize filings, as discussed in 

section IV.B.3.a.ii above, and to extract the required 

dates) as well as data from the CRSP database. The 

figure reflects the 1,686 non-corporate-action filings 

out of the total 2,370 filings in our analysis that had 

trading volume data available (generally reflecting 

issuers listed on the NYSE, NYSE American, 

NASDAQ, and NYSE Arca exchanges). Abnormal 

trading volume is computed as the excess of trading 

volume over the average daily trading volume in the 

60-day period beginning 120 days prior to the given 

date. 

Other research identifies specific 

types of informed bystanders or more 

direct evidence of those traders’ source 

of information. For example, one study 

presented evidence suggesting that the 

broker of a filer may leak information 

about the filer’s trades to other traders 

before the Schedule 13D filing.759

Another study observed a correlation 

between purchases by insiders and by 

the filer before the Schedule 13D filing, 

and suggested this trading reflected 

inside information and insiders’ 

surveillance of trading volume and 

ownership data for the issuer’s stock.760

Several commenters indicated that the 

economic analysis in the Proposing 

Release lacked evidence or quantitative 

analysis with respect to potential effects 

on selling shareholders under the 

current Schedule 13D filing deadline.761

Others questioned the magnitude of any 

effects with respect to selling 

shareholders.762 To better understand 

the potential effects of a shortened 

deadline on the type of activity 

discussed in these studies, we designed 

a quantitative analysis intended to 

estimate the wealth transfers, under the 

current rules, from selling shareholders 

to potential informed bystanders 

between the amended filing deadline 

and the actual filing dates. 

Our analysis focuses on those initial 

Schedule 13D filings that we classify as 

‘‘non-corporate-action filings,’’ which 

represent about 20 percent of initial 

Schedule 13D filings (per the first row 

of Table 2).763 For filings that we 

classify as ‘‘corporate action filings,’’ we 

found that there was limited stock price 

movement, on average, between the 

amended deadline and the day after the 

actual filing date.764 We therefore 

expect that it is unlikely that there 

would have been material wealth 

transfers from selling shareholders to 

informed bystanders just prior to the 

actual filing date of these filings. 

For the sample of non-corporateaction filings, we first examine 

abnormal 765 trading volumes in the 

days prior to an initial Schedule 13D 

filing to identify trading activity that 

could be curtailed by a shortened filing 

window. We focus on trading before the 

filing date to exclude trading in reaction 

to the information in the filing and use 

information on the filer’s trades from 

Schedule 13D to exclude their trading 

activity from this analysis. 

For non-corporate-action filings from 

2011 to 2021, Figure 6 compares the 

average trading volume excluding the 

filer’s accumulations (‘‘Total Non-Filer 

Trading Volume’’) to the filers’ average 

pattern of accumulations (‘‘Filer Trading 

Volume’’).766 Both measures are scaled 

by the normal level of daily trading 

volume in the issuer’s stock such that a 

value of one for ‘‘Total Non-Filer 

Trading Volume’’ would mean there is 

zero abnormal trading volume outside of 

the filer’s trades while a value of two for 

‘‘Total Non-Filer Trading Volume’’ 

would mean that trading volume is 

double the usual level (i.e., there is an 

amount of abnormal trading volume 

equal to the amount of normal trading 

volume). Because we exclude trading on 

or after the filing date, the graph ends 

before day 10. 


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76958 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

767 Given that the measured abnormal trading 

volume trends down over the filing window, as 

demonstrated in Figure 6, we expect that the effect 

of excluding this potential intra-day abnormal 

trading volume is relatively small. 

768As discussed above, throughout this section 

(as well as section IV.C.1.a.i above and section 

IV.C.1.b.i below), an ‘‘abnormal return’’ represents 

the difference between an issuer’s market stock 

return and the CRSP value-weighted market index. 

See supra note 733. 

769Besides the sample restrictions described 

supra note 763, Figures 7a and 7b are also limited 

to filings for which stock return data is available 

(generally, issuers listed on the NYSE, NYSE 

American, NASDAQ, and NYSE Arca exchanges). 

This restriction leads to a sample of 2,097 noncorporate-action filings. Filers of 1,669 of these 

filings completed acquiring their reported stake by 

the amended deadline, while the filers of the 

remaining 428 filings continued to accumulate part 

of their reported stake afterwards. The additional 

requirement in Figure 7a that the filer used the full 

10-day filing window to file results in Figure 7a 

reflecting 294 non-corporate-action filings, or 18% 

of the subsample that completed acquiring their 

stake by the amended deadline. The similar 

requirement in Figure 7b results in this figure 

reflecting 205 non-corporate-action filings, or 48% 

of the subsample that continued to accumulate part 

of their reported stake after the amended deadline. 

Abnormal trading volume in an 

issuer’s stock by traders other than the 

filer peaks on the same day the filer’s 

trading peaks (i.e., on the trigger date, 

when the filer crosses the five percent 

threshold). However, abnormal trading 

volumes continue to remain elevated for 

the rest of the 10-day filing window, 

including after the amended filing 

deadline, which occurs at 

approximately day seven after the 

trigger date, which may represent 

purchases by informed bystanders that 

were aware of the impending campaign. 

We note that there is also abnormal 

trading well in advance of the trigger 

date, and that this and other abnormal 

trading volume in the graph could 

reflect trading by informed bystanders, 

but could also reflect other traders 

simply reacting to the same news, 

market conditions, or trends in issuer 

performance that may have attracted the 

filer to engage in its transactions. 

To understand the potential transfers 

from selling shareholders to informed 

bystanders that may be prevented or 

reduced by a shortened deadline, we 

focus on abnormal trading volume by 

traders other than the filer in the days 

between the fifth business day after the 

filer crosses the five percent threshold 

and the actual filing date. As in the case 

of Figure 6, we exclude trading on the 

actual filing date because there is 

typically significant trading volume in 

reaction to the filing on that date. While 

it is possible that there is additional 

trading by informed bystanders on the 

actual filing date but before the actual 

time that the filing becomes public, we 

are unable to distinguish any such 

trading from trading in reaction to the 

filing. For this reason, we exclude this 

trading, and our analysis will not 

include the transfers between informed 

bystanders and selling shareholders on 

the filing date.767

In order to estimate potential transfers 

from selling shareholders to informed 

bystanders, we also collected 

information on abnormal returns to 

understand the amount of appreciation 

obtained by potential informed 

bystanders by trading prior to the filing 

becoming public information. The 

pattern of abnormal returns 768 varies 

across scenarios in which the filer 

completed accumulating their reported 

stake by five business days after the 

trigger date but submitted their 

Schedule 13D filing later, and those in 

which the filer was still accumulating 

shares after five business days. Figures 

7a and 7b present the average pattern of 

abnormal returns for these two scenarios 

separately. In order to align the trigger 

and filing dates across filings in the 

graph, we limit the filings in the figure 

to those that used the full 10-day filing 

window to file.769

BILLING CODE 8011–01–P 


khammond on DSKJM1Z7X2PROD with RULES2ER07NO23.007</GPH>

Figure 6. Trading volumes around trigger date for non-corporate-action filings from 2011-

2021, excluding trading volume on or after actual Schedule 13D filing date 

Q) 

E 

:, 

o~---------------------------- > I I I 

j I= I 

-0 ., ; ' - ~ ,, ...... , .,,,,,,,,,,.., : ...... .,,, '-"" - , _____ ,,,,- ........... -..... _ .......... __ ----,.,,,,,.- : '--

~o --------------------------

-30 -25 -20 -15 -10 -5 0 5 10 

Days Relative to Trigger Date 

--- Total Non-Filer Trading Volume - - - - - Filer Trading Volume 
Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 76959 

BILLING CODE 8011–01–C 

The transfers from a selling 

shareholder to a potential informed 

bystander between the amended filing 

deadline and the current filing date 

would consist of the stock return 

between the day that they sell and the 

day after the filing date, when the 

information previously known to their 

trading counterparty is known to the 

whole market. Based on Figures 7a and 

7b, there are meaningful abnormal 

returns between the amended filing 

deadline (which occurs around day ¥3 

in the figure, as five business days 

generally corresponds to seven calendar 

days) and the day after the actual filing 

date for both subsamples of the filers in 

our analysis, with a greater abnormal 

return when the filer is still 

accumulating shares after five business 

days (i.e., Figure 7b). 

To estimate transfers from selling 

shareholders to informed bystanders 

that may be occurring between the 

amended filing deadline and actual 

filing dates, and thus might be avoided 


khammond on DSKJM1Z7X2PROD with RULES2ER07NO23.008</GPH> ER07NO23.009</GPH>

Figure 7a. Cumulative abnormal return around filing date for non-corporate-action filings 

from 2011-2021 filed 10 days after trigger date, and without filer purchases after amended 

filing deadline 

-

-

/ 

r - ~ I 

l-1 ~ Filing Date 

J . 

~" Trigger Date 

0 

I I I I I I I 

-20 -15 -10 -5 0 5 10 15 20 

Calendar Days Relative to Filing Date 

Figure 7b. Cumulative abnormal return around filing date for non-corporate-action filings 

from 2011-2021 filed 10 days after trigger date, and with filer purchases after amended 

filing deadline 

(I) (X) eq-----------------------·--- ::i 

Q) 

0:: 

-co ~q---------------------------

6 

C 

.0 

~~--------------·--------------

i 

"5 N ---Filing Date Eo-+--·-----------------=-------- ::1 • 

u 

,w..------+---Trigger Date 

-20 -15 -10 -5 0 5 10 15 20 

Calendar Days Relative to Filing Date 
76960 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

770The estimates in the table are based on staff 

analysis of EDGAR filings through programmatic 

text analysis (to categorize filings, as discussed in 

section IV.B.3.a.ii above, to extract the data 

necessary to determine share accumulation 

patterns, as discussed supra note 719, and to extract 

the required dates) as well as data from the CRSP 

database. Estimates of abnormal returns and 

abnormal trading volumes (Rows 2 and 3) are based 

on the campaigns for which the required data was 

available. The estimate of transfers assumes trades 

on a given day are executed at the average of the 

closing price on that day and the closing price on 

the previous day and that the wealth transfer per 

share traded is the abnormal return experienced 

based on that starting price until one day after the 

filing date. For the aggregate estimate of the 

transfers from selling shareholders, the estimated 

average transfers from selling shareholders per 

campaign (in Row 5) is used as a proxy for the 

transfers from selling shareholders in campaigns for 

which the data required to produce this estimate 

was unavailable (about 19% to 49% of campaigns 

in any given category). Abnormal trading volume is 

computed as the excess of trading volume over the 

average daily trade volume in the 60-day period 

beginning 120 days prior to the given date. We note 

that one commenter stated that, based on the 

description of the estimate of transfers in the DERA 

Memorandum, a more accurate estimate would 

‘‘account for abnormal price changes by adjusting 

for overall stock market variations.’’ See Lewis 

Study II (exhibit to letter from EIM IV). The 

description in the DERA Memorandum was 

imprecise on this point. The estimates of transfers 

in the memorandum as well as the estimates 

presented here are based on abnormal returns that 

do in fact adjust for market variations. See supra 

notes 733 and 768. Another commenter stated that 

‘‘CRSP volume is known to be inaccurate for NYSElisted stocks because the CRSP data source rounds 

volume to the nearest hundred.’’ See letter from 

Profs. Bishop and Partnoy III. We acknowledge this 

potential issue in CRSP volume data but note that 

the average and aggregate statistics that we present 

in the table should not be meaningfully affected by 

such rounding error. 

771The columns of Table 5 reflect the same 

subsamples of filings as the corresponding columns 

of Table 3 with the additional restriction that filings 

are only included if there would have been an 

opportunity to trade on a day between the amended 

deadline and the actual filing date. 

772We acknowledge that the estimates in Row 5 

of Table 5 are approximate and may be sensitive to 

the methodology for estimating abnormal returns. 

See supra note 733. 

773Similarly, if we assume that filers 

accumulating 10 percent or more of their stake after 

five business days forgo such campaigns, the 

aggregate estimate of potential wealth transfers that 

could be avoided would be about $36 million per 

year ($49 million, as computed above, minus $13 

million from Column 3). 

under the final rules, we used the data 

discussed above to conduct the analysis 

presented in Table 5.770 As discussed in 

detail in section IV.C.1.b below, the 

extent of filer share accumulation after 

the amended deadline may be 

associated with the likelihood that filers 

may modify or forgo these types of 

campaigns after the effective date of the 

final amendments. We therefore 

estimate the transfers separately for 

filings with the different patterns of filer 

share accumulation from Table 3.771

TABLE 5—ANALYSIS OF POTENTIAL TRANSFERS FROM SELLING SHAREHOLDERS TO INFORMED BYSTANDERS BY DEGREE

OF FILER ACCUMULATION BY AMENDED FILING DEADLINE, ANNUALIZED

[2011–2021] 

Percent of stake accumulated by filer by amended deadline 

(1) 

100% 

(full stake) 

(2) 

<100% 

(3) 

<90% subset of 

(2) 

(4) 

<75% subset of 

(3) 

(1) Average number of campaigns/year with potential transfers 

between amended deadline and filing date* ............................... 54 41 7 1 

Filer/Campaign Characteristics: 

(2) Median abnormal return from amended deadline to day 

after filing .............................................................................. .5% 1.9% 3.1% 6.9% 

Analysis of Transfers: 

(3) Average total abnormal trading volume other than filer’s 

trades between amended deadline and filing date (% 

shares outstanding) .............................................................. .8% .7% 1.5% 2.6% 

(4) Average transfers from selling shareholders, per campaign ** .................................................................................. $425K $640K $1.8M $5.1M 

(5) Aggregate transfers from selling shareholders for this category ..................................................................................... $23M/year $26M/year $13M/year $7M/year 

* These campaigns represent the subset of the filings in Table 3 for which there are trading days between the fifth day after the trigger date 

and the filing date. 

** Transfers are computed as the sum across days of the abnormal trading volume (less the filer’s trades) in shares on a given day between 

the amended and actual filing date times the abnormal return from that day to the day after the filing date. See note 770 for additional details. 

Rows 2 and 3 of Table 5 present 

information on the abnormal returns 

and abnormal trading volume between 

five business days after the trigger date 

(the amended deadline) and the filing 

date in each subset of campaigns. Both 

the abnormal returns (which would 

drive the extent of wealth transferred by 

trading with an informed bystander in 

this timeframe) and the abnormal 

volume (which characterizes the 

potential number of such trades) are 

higher for campaigns in which the filer 

is still accumulating a significant 

portion of their stake after five business 

days following the trigger date. 

The estimates in Row 5 of Table 5 

represent potential transfers from selling 

shareholders to informed bystanders 

after five business days following the 

trigger date for each subset of campaigns 

based on a day-by-day analysis of the 

abnormal volume and the potential 

forgone return for each underlying 

campaign.772 For example, the aggregate 

estimate of potential transfers to 

informed bystanders that could be 

avoided by shortening the filing 

deadline to five business days if no 

filers forgo campaigns (and filers do not 

adapt in such a way that these transfers 

may still occur) is about $49 million per 

year ($23 million from Column 1 plus 

$26 million from Column 2). 

Alternatively, if we assume that filers 

accumulating 25 percent or more of 

their stake after five business days forgo 

such campaigns, the aggregate estimate 

of potential transfers to informed 

bystanders that could be avoided would 

be about $42 million per year ($49 

million, as computed above, minus $7 

million from Column 4).773 We note that 

the wealth transfer estimates in Table 5 

do not represent estimates of the benefit 

of the final rule amendments. Rather, 

the estimates provide insight into an 

informational disparity that could 

weaken trust in the market and 


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774One commenter addressing a similar analysis 

in the DERA Memorandum stated that ‘‘there is no 

attempt to exclude from this analysis any returns 

that accrued because the Schedule 13D filer 

publicly disclosed its intent after the trigger date 

but before filing the Schedule 13D—which is not an 

uncommon occurrence.’’ See letter from EIM IV; see 

also Lewis Study II (exhibit to letter from EIM IV). 

We acknowledge that a press release by a filer 

disclosing a campaign in advance of a Schedule 

13D filing could provide an alternate explanation 

for abnormal trading volume (and/or abnormal 

returns) between the trigger date and filing date of 

an initial Schedule 13D. However, staff reviewed 

one year of filings and concluded that such 

disclosures are relatively rare and are thus not 

likely to meaningfully affect the estimates presented 

in Table 5. In particular, staff used EDGAR’s full 

text search function to identify initial Schedule 13D 

filings made in 2021 that included the term ‘‘press 

release,’’ and then reviewed the resulting filings to 

determine whether the filer disclosed its plans or 

proposals between the trigger date and filing date 

of the initial Schedule 13D. (The instructions to 

Item 7 of Schedule 13D specify that the filer shall 

file as exhibits to the Schedule 13D, among other 

things, ‘‘copies of all written . . . plans or 

proposals relating to . . . the acquisition of issuer 

control, liquidation, sale of assets, merger, or 

change in business or corporate structure, or any 

other matter as disclosed in Item 4 [of Schedule 

13D].’’) Staff identified three initial Schedule 13D 

filings in 2021 for which the filer disclosed the 

campaign in a press release between the trigger date 

and filing date (all of which involved a press release 

made by the filer on the trigger date). None of these 

filings was included in the sample of Schedule 13D 

filings analyzed in Table 5 (which includes 101 

filings from 2021) based on the sample restrictions 

that apply to this analysis. Specifically, in two 

cases, the filings were made on or before the first 

business day after the amended filing deadline, and 

in one case the requisite financial information to be 

included in the analysis was not available for the 

filing. Overall, given the limited number of filings 

for which earlier disclosure was identified, we do 

not believe that identifying and removing such 

filings from the full eleven-year sample would 

meaningfully affect the results. 

775See, e.g., Nickolay Gantchev & Chotibhak 

Jotikasthira, Institutional Trading and Hedge Fund 

Activism, 64 Mgmt. Sci. 2930 (2018) (‘‘Gantchev & 

Jotikasthira 2018 Study’’) (finding that the timing of 

Schedule 13D share accumulations is closely tied 

to institutional liquidity shocks, in that activist 

purchases closely track institutional sales at the 

daily frequency). 

776See section IV.C.1.b.i below for a discussion 

of how filers may adapt to the amended deadline. 

777See letters from AFREF II; Better Markets II; 

SCG & NIRI. 778See letters from CIRCA IV; EIM IV; Profs. 

Bishop and Partnoy III. In the economic analysis of 

the Proposing Release, the Commission made 

somewhat broader statements about effects on 

selling shareholders, suggesting that all investors 

who sell their shares during the 10-day window 

may be harmed. Commenters addressing the 

Proposing Release made similar statements 

regarding the characterization of ‘‘harm’’ being 

inappropriate and selling shareholders benefiting 

from the activity underlying the filing. See letters 

from AIMA; CIRCA I; EIM I; ICM; Pershing Square; 

Profs. Schwartz and Shavell I; Profs. Schwartz and 

Shavell II; Profs. Swanson, Young, and Yust; S. 

Lorne; TRP. Further, some commenters asserted 

that the notion that these selling shareholders 

should be able to sell at prices that reflect 

information in the Schedule 13D filings would 

entail an unjustified windfall to those selling 

shareholders, and a transfer of valuable information 

from the Schedule 13D filer, who expended the 

effort to research and develop that information. See 

letters from Dodge & Cox; EIM I; ICM; Prof. Gordon. 

779See letter from CIRCA IV. 

780See letters from EIM IV (stating that the 

presence of harmful conduct is assumed, not 

demonstrated); Profs. Bishop and Partnoy III 

(stating that the memorandum provides no support 

‘‘for the assertion that purchasers other than the 

13D filer are more informed than sellers during the 

relevant period’’). 781See letter from EIM IV; see also Lewis Study 

II (exhibit to letter from EIM IV) (stating that the 

analysis ‘‘assumes that the activist has informed 

select investors about the upcoming campaign 

before its public announcement’’). 

782See supra notes 756–760 and accompanying 

text. 

783See Lewis Study II (exhibit to letter from EIM 

IV) (stating that ‘‘DERA could have used 

consolidated audit trail (‘CAT’) data that contains 

information on which traders were participating in 

the market to estimate a precise measure of the 

impact but did not do so’’ and that ‘‘the analysis 

of ‘informed’ trading is an obvious setting to utilize 

CAT data’’); letter from EIM IV. 

consequently market participation and 

capital formation. 

The estimates in Table 5 assume that 

abnormal trading volume on the days 

between the amended deadline and the 

actual filing date, other than that 

representing the filer’s own trades, 

represents trades by informed 

bystanders. It is possible that the 

abnormal trading volume represents 

other traders’ reactions to similar news, 

market conditions, and trends as those 

to which the filer was reacting.774 For 

example, researchers have found that 

filers time their accumulations to 

coincide with significant selling by 

institutions, so it is possible that some 

of this abnormal volume may represent 

the extent of the institutional selling 

pressure.775 We also acknowledge that 

informed bystanders, like filers,776 may 

adapt to the final amendments by 

condensing their trades to five business 

days following the trigger date. 

Staff presented a similar quantitative 

analysis with respect to potential 

transfers from selling shareholders to 

informed bystanders under the current 

rule in the DERA Memorandum. Some 

commenters stated that the analysis in 

the DERA Memorandum demonstrated 

that a shortened filing window would 

reduce ‘‘harms’’ or ‘‘costs’’ to selling 

shareholders.777 Others stated that the 

DERA Memorandum’s characterization 

of selling shareholders as ‘‘harmed’’ was 

inappropriate and did not account for 

the benefits these selling shareholders 

experienced in terms of, for example, 

price improvement and improved 

liquidity as a result of the impending 

activist campaign.778

We acknowledge, as mentioned by 

commenters, that most investors selling 

shares during the filing window seem to 

benefit from the impending activist 

campaign. In particular, as 

demonstrated in Figures 7a and 7b, we 

observe a meaningful amount of stock 

price appreciation during the filing 

window for non-corporate-action filings, 

some of which would accrue to selling 

shareholders. Despite the assertions of a 

commenter,779 the analysis in the DERA 

Memorandum and the similar analysis 

in this economic analysis do not 

characterize the trading between the 

Schedule 13D filer and a selling 

shareholder as harmful; in both cases, 

the analyses focus only on trading 

between informed bystanders (who are 

not the filer) and selling shareholders. 

We also acknowledge concerns that it 

may be inappropriate to construe the 

failure to benefit from future stock 

appreciation when selling shares to the 

filer as a harm to the selling 

shareholders, given that the stock 

appreciation in question results from 

the actions of the filer and, if there is a 

more limited opportunity to receive 

some of the economic benefits resulting 

from their actions, the filer may have a 

more limited incentive to initiate a 

campaign. We do not include sales to 

the filer in this analysis. Our analysis 

quantifies the transfer between selling 

shareholders and informed bystanders 

that results from the price change 

between the day of the sale and the day 

after the filing date. That is, an earlier 

deadline would potentially benefit these 

selling shareholders to the detriment of 

the informed bystanders. 

Some commenters addressing the 

DERA Memorandum indicated that staff 

provided insufficient evidence of the 

existence of informed bystanders.780

One of these commenters added that 

activists have significant incentives to 

maintain the confidentiality of their 

strategies until they are ready to make 

a public disclosure.781 We believe the 

academic studies discussed above 

support the conclusion that informed 

bystanders purchase shares in issuers 

shortly before the filing of Schedule 13D 

reports pertaining to such issuers. Some 

of the researchers suggest that filers 

themselves, in some cases, may leak 

information about their impending 

filing; others specifically identify other 

channels for information leakage 

unbeknownst to the activist.782

However, the methodologies used in 

these studies to identify informed 

bystanders in specific cases cannot be 

expanded to reliably identify trades by 

all informed bystanders in a broad 

sample. One comment letter suggested 

that we use Consolidated Audit Trail 

(‘‘CAT’’) data in the analysis of 

‘‘informed’’ trading but did not specify 

what methodology we should use.783

We do not believe this data would allow 

us to identify which trades may involve 

a counterparty that benefited from 

information leakage. We recognize that 


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76962 Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 

784See letters from CIRCA IV (stating that ‘‘it is 

possible that any such shareholder is selling 

because it needs cash and thus may be helped and 

not harmed by the availability of activist buyers’’); 

Profs. Bishop and Partnoy III; see also Lewis Study 

II (exhibit to letter from EIM IV) (stating that the 

analysis ‘‘overlook[s] market makers and day 

traders (trading participants who open and close 

their position between the proposed deadline and 

the filing date)’’ and that such traders ‘‘would not 

be impacted’’). 

785See letters from Profs. Bishop and Partnoy I; 

CIRCA III; see also letter from 65 Professors 

(suggesting that the Commission could examine 

whether particular categories of investors are net 

sellers, and therefore are not harmed in aggregate, 

during the period prior to the filing of Schedule 

13Ds). 

786See letter from Profs. Bishop and Partnoy I; see 

also Ekkehart Boehmer et al., Tracking Retail 

Investor Activity, 76 J. Fin. 2249 (2021) (introducing 

the algorithm for identifying retail order flow used 

in the cited comment letter). We note that questions 

have recently been raised as to the reliability of this 

algorithm for producing an unbiased estimate of 

retail order flow. See, e.g., Yashar Barardehi et al., 

Uncovering the Liquidity Premium in Stock Returns 

Using Retail Liquidity Provision (Working Paper, 

2023), available at https://ssrn.com/ 

abstract=4057713. 

787Studies have found that Schedule 13D filer 

accumulations are timed, on average, coincident 

with institutional selling pressure. See, e.g., 

Gantchev & Jotikasthira 2018 Study. 

788See letters from CIRCA IV; EIM IV. 

789See letter from EIM IV. 

790See letter from CIRCA IV. 

791See L. Guiso, P. Sapienza, and L. Zingales, 

Trusting the Stock Market, J. of Fin., 63 (6) (Dec. 

2008), at 2557–2600. 

792These commenters used an algorithm from 

academic studies to categorize trades in the New 

York Stock Exchange Trade and Quote (‘‘NYSE 

TAQ’’) dataset as either seller-initiated or buyerinitiated. They then computed abnormal net selling 

(seller-initiated volume minus buyer-initiated 

volume, scaled by total trading volume and 

converted into a percentage by adjusting for lagged 

net selling volume and the logarithm of market 

capitalization) for the days around Schedule 13D 

filing for a sample of activist events from 2011 to 

2021. See letter from Profs. Bishop and Partnoy III 

(further explaining that ‘‘if, for every seller-initiated 

trade, there is an equal and opposite sized buyerinitiated trade, then we cannot meaningfully infer 

that any alleged ‘harm’ has occurred. However, if 

there is a net order imbalance, with more selling 

activity than buying activity, then we may be able 

to infer alleged ‘harm.’ ’’). 

793This analysis in the comment letter focused on 

the proposed amendment to the filing deadline— 

five calendar days—rather than five business days. 

We note that this analysis appears to focus on the 

five days before a Schedule 13D filing date 

regardless of the number of days that have elapsed 

since the trigger date. As such, the window 

analyzed varies relative to the trigger date rather 

than consistently representing the sixth to tenth 

days after the trigger date. 

794That is, we would interpret a lack of 

systematic net selling in the days before a Schedule 

13D filing to indicate that there are no significant 

transfers between investors demanding liquidity 

and those providing liquidity as a result of trades 

during this period and the subsequent price 

changes. The commenters describe the analysis as 

identifying the effect on ‘‘natural buyers’’ as 

opposed to market makers. See letter from Profs. 

Bishop and Partnoy III. We note that the positive 

but statistically insignificant abnormal net selling 

these commenters identified on nine out of the 10 

days preceding a filing is consistent with academic 

research cited above finding that Schedule 13D 

filers time their accumulations coincident with 

institutional selling pressure. See supra note 775. 

our own analysis does not directly 

identify informed bystanders, and may, 

for example, represent buyers who have 

learned of the probability of activism 

through fundamental research. 

However, we acknowledge those 

limitations and are unaware of 

approaches that would allow us to 

obtain a better estimate of trades by 

informed bystanders. 

Some commenters criticized the 

DERA Memorandum for failing to 

describe the likely characteristics or 

nature of the selling shareholders and 

their reasons for selling.784 Some 

commenters responding to the 

Proposing Release indicated that it was 

likely that the selling shareholders were 

not retail investors but rather 

sophisticated institutions who could 

appropriately weigh the possibility that 

an activist investor may be buying up 

shares,785 with one providing an 

analysis supporting this assertion.786

We acknowledge that the potential 

effects of reducing transfers from selling 

shareholders may be tempered 

somewhat to the extent the 

counterparties of the potential informed 

bystanders are, for example, institutions 

with liquidity needs, and that there is 

some evidence that this may be 

common.787 However, gains by 

informed bystanders may be viewed by 

some market participants as unfair 

regardless of the counterparties bearing 

the other side of these transfers. 

Some commenters raised concerns 

related to the statement in the DERA 

Memorandum that lessening an 

informational advantage that some 

market participants may perceive to be 

unfair could enhance trust in the 

securities markets and promote capital 

formation.788 In particular, one 

commenter indicated a lack of evidence 

that activism is contributing to an 

erosion of trust in the markets,789 while 

another requested evidence that the 

acceleration of filing deadlines in other 

contexts changed the investors’ behavior 

or enhanced their level of trust in the 

market.790 This commenter did not 

suggest how we might gather such 

evidence, however, and trust has been 

shown to be an important determinant 

of participation.791

One comment letter presented an 

alternative analysis of the effects on 

selling shareholders based on the 

computation of abnormal net selling 

activity, which they state better 

‘‘separates any allegedly ‘harmed’ 

selling . . . from other trading’’ than the 

analysis in the DERA Memorandum.792

In particular, these commenters 

categorize trades as either sellerinitiated or buyer-initiated in order to 

compute abnormal net selling. The 

commenters concluded that there is no 

statistically significant evidence of 

systematic net selling during the five 

days preceding the filing 793 such that 

they ‘‘cannot meaningfully infer that 

any alleged ‘harm’ has occurred.’’ 

We note that signing trades as sellerand buyer-initiated is generally 

intended to reflect which side of the 

trade is demanding liquidity, as 

opposed to providing liquidity. Net 

order imbalances therefore provide 

information about which type of traders 

(sellers or buyers) are demanding 

liquidity on a given day, while the 

opposite side of any order imbalance is 

borne by liquidity providers 

(historically, these would be market 

makers, but today other investors 

including high-frequency traders 

typically play this role). An analysis of 

net order imbalances in the days around 

Schedule 13D filings can therefore 

provide information about wealth 

transfers on these days between those 

investors that are demanding liquidity 

versus those providing liquidity.794

However, we do not believe that trades 

that are signed as seller-initiated versus 

buyer-initiated provides sufficient 

information about which trades are 

more likely to involve a buyer that has 

a one-sided informational advantage 

because of their knowledge of another 

investor’s share accumulations, which is 

the focus of our analysis. 

In summary, informed bystanders 

may profit, as a result of information 

leakages rather than from their own 

fundamental research or effort to 

improve the issuer’s performance, from 

a near-arbitrage opportunity during the 

window of time between the trigger date 

and the date on which the filer’s 

beneficial ownership and plans are 

made public on a Schedule 13D. In this 

section, we have presented a 

quantitative analysis based on historical 

data that, subject to certain assumptions 

and limitations, provides a reasonable 

basis to believe that wealth transfers 

from selling shareholders to potential 

informed bystanders can be significant 

under the current rules. 


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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 76963 

795See letters from ABA; AFREF; Better Markets 

I; FreeportMcMoRan; NIRI. 

796See letters from Profs. Bishop and Partnoy; 

Profs. Schwartz and Shavell II (referring to 

Lawrence Glosten and Paul Milgrom, Bid, Ask, and 

Transaction Prices in a Specialist Market with 

Heterogeneously Informed Investors, 14 J. FIN. 

ECON. 71–100 (1985)). 

797See Lewis Study I (exhibit to letter from EIM 

I); letters from 65 Professors; AIMA; Profs. Bishop 

and Partnoy. 

798See, e.g., Albert S. Kyle, Continuous Auctions 

and Insider Trading, 53 Econometrica 1315 (1985) 

(theoretically modeling a market with informed 

trading to investigate, among other things, the 

liquidity characteristics of a speculative market); 

David Easley et al., Liquidity, Information, and 

Infrequently Traded Stocks, 51 J. Fin. 1405 (1996) 

(investigating, empirically, the economic 

importance of information-based trading on bid-ask 

spreads); see also Order Competition Rule, Release 

No. 34–96495 (Dec. 14, 2022) [88 FR 128 (Jan. 3, 

2023)] (for further discussion and analysis on the 

relationship between adverse selection risk and bidask spreads). 

799 Id. 

800See supra section IV.C.1.a.iii. 

801See Kerry Back et al., Activism, Strategic 

Trading, and Liquidity, 86 Econometrica 1431 

(2018) (presenting a model of a specialist market 

with an activist trader and finding that the 

association between liquidity and a reduced 

number of days for the activist to trade based on 

their asymmetric information—which in their 

model is equivalent to reducing the rate of ‘‘noise 

trading’’ or uniformed trading during the same 

trading window—may be indeterminate during the 

filing window because of competing effects related 

to, for example, the potentially increased 

proportion of informed to uninformed trades in a 

shorter filing window versus the decreased 

information asymmetry regarding the activist’s 

shareholding resulting from less noise trading). 

802See Collin-Dufresne & Fos 2015 Study (finding 

that illiquidity and measures of adverse selection 

are lower on days that the activist trades, due to 

market timing and the use of limit orders—i.e., 

liquidity provision—by activists). 

803See supra note 798. 

804See letters from AIMA; CIRCA I; Dodge & Cox; 

EIM I; ICM; Prof. Gordon; Profs. Schwartz and 

Shavell I; Profs. Schwartz and Shavell II; S. Lorne. 

805See letters from EIM I; Profs. Schwartz and 

Shavell I. 

806See, e.g., Sanford Grossman & Oliver Hart, 

Takeover Bids, the Free-Rider Problem, and the 

Theory of the Corporation, 11 Bell J. Econ 42 (1980) 

iv. Information Asymmetries and 

Liquidity 

Shortening the Schedule 13D filing 

deadline and thereby more quickly 

resolving an information asymmetry 

between some market participants and 

the rest of the market is likely to 

enhance liquidity. 

Some commenters to the Proposing 

Release agreed that a shortened filing 

deadline would reduce information 

asymmetries.795 Others stated that the 

academic paper cited in the Proposing 

Release to support the relation between 

information asymmetry and liquidity is 

not applicable to the setting at hand,796

or more generally questioned the basis 

of statements in the economic analysis 

of the Proposing Release indicating that 

the shortened deadline would result in 

increased liquidity.797 In response to 

these comments, we have expanded the 

literature that we review. We continue 

to believe that the amendments will 

reduce information asymmetries and 

improve liquidity. 

Specifically, empirical and theoretical 

work point to a linkage between 

information asymmetry and measures of 

liquidity such as bid-ask spreads and 

price impact.798 Generally, a greater 

proportion of strategic informationbased trading (i.e., trading based on 

private, or non-public, information) in 

contrast to ‘‘noise trading’’ (i.e., trading 

based on, for example, liquidity needs 

rather than private information) lowers 

liquidity in an issuer’s securities, as 

other market participants adjust their 

behavior in light of the risk of adverse 

selection (i.e., a situation in which the 

buyer of an issuer’s security has more 

information than the seller, or vice 

versa, about the true value of the 

security).799 In contrast, liquidity 

should generally increase when there is 

a lower proportion of information-based 

trading to noise trading. For example, a 

reduced risk of trading with the 

informed bystanders discussed in the 

previous section may lead liquidity 

providers to charge lower bid-ask 

spreads, resulting in higher liquidity.800

We would expect the amended 

deadline to improve liquidity by 

lowering information asymmetry. While 

one study finds theoretically mixed 

results of shortening the filing deadline 

with respect to liquidity and efficiency 

during the period prior to the filing, this 

study does not address the period 

subsequent to the now-earlier date.801

Another study shows that empirical 

proxies for liquidity are higher than 

otherwise on days that the activist is 

accumulating shares, concluding that 

this is so both because activists submit 

limit orders and because activists 

strategically trade when liquidity is 

higher.802 This study also does not 

address the period subsequent to the 

now-earlier filing date. Reducing the 

number of days prior to the filing 

should reduce information asymmetry 

in the period after the filing (through the 

date the disclosure would otherwise 

have been made) because after the filing 

is made the information about a filer’s 

holdings and intentions is public. Thus, 

liquidity should improve in this 

period.803

We expect that liquidity benefits are 

more likely to be associated with the 

types of filings that we classify as ‘‘noncorporate-action filings,’’ and not with 

‘‘corporate action filings.’’ Indeed, the 

abnormal stock return patterns 

presented in Figures 4 and 5 above 

demonstrate that the latter are, on 

average, not associated with a 

meaningful stock price reaction between 

the amended deadline and the day after 

the actual filing date. Because only the 

non-corporate-action filings seem to be 

associated with significant new 

information that is not already 

incorporated in market prices earlier in 

the filing window, these are the filings 

that are likely to be associated with 

meaningful information asymmetries 

whose duration could be reduced by the 

shortened filing deadline. As noted 

above, about 68 percent of timely noncorporate-action filings, or about 152 

initial Schedule 13D filings of this type 

per year, are currently filed after the 

amended deadline. Based on this 

historical filing behavior, we expect that 

the amended filing deadline to result in 

earlier public disclosure, and thus an 

earlier stock price reaction and 

resolution of the related asymmetric 

information than would otherwise have 

been experienced, for approximately 

this number of filings per year, thus 

enhancing liquidity. 

Some commenters stated that an 

information asymmetry between the 

filer and the market should not be 

viewed as problematic,804 with some 

referring to such information 

asymmetries as simply a feature of a 

functioning market.805 Some 

commenters responding to the DERA 

Memorandum raised similar concerns 

about the usage of ‘‘information 

asymmetries’’ in that document and a 

potential implication that these 

information asymmetries were 

problematic. 

We acknowledge that benefits may 

stem from the information asymmetry 

between a Schedule 13D filer and the 

market. The informational advantage of 

Schedule 13D filers results, in general, 

from their own expenditures on 

research and analysis or from their 

efforts and expenditures to pursue 

changes at the issuers in which they 

accumulate these shareholdings. With a 

reduced ability to receive some of the 

economic benefits of their actions, the 

filer may have reduced incentives to 

initiate a campaign.806 Consistent with 

this view, we have expanded our 

analysis of the potential costs with 

respect to reduced activism in section 

IV.C.1.b below. We have also narrowed 

the consideration of selling shareholders 

in the previous section vis-a`-vis the 

Proposing Release to focus on those 

trading with informed bystanders who 

are not the filer and yet may profit from 

the advance knowledge or suspicion of 

a filer’s potential actions, rather than 

from their own fundamental research or 


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807See supra section IV.C.1.a.iii. 

808See supra note 801 and accompanying text. 

809See Lawrence Glosten & Paul Milgrom, Bid, 

Ask, and Transaction Prices in a Specialist Market 

with Heterogeneously Informed Investors, 14 J. Fin. 

Econ. 71 (1985) (presenting a theoretical model of 

a specialist market with trading by insiders, and 

describing generally how a specialist must recoup 

the losses suffered in trades with the well informed 

by gains in trades with noise traders, and that these 

gains are achieved by setting a spread). 

810See letters from ABA; AFL–CIO; Better 

Markets I; Labor Unions; SCG; Sen. Baldwin, et al.; 

see also infra note 818 and accompanying text. 

811See letters from AIMA; C. Penner and Prof. 

Eccles; CIRCA I; Dodge & Cox; EIM I; ICM; M. 

Frampton; MFA; Prof. Gordon; Profs. Schwartz and 

Shavell II; Profs. Swanson, Young, and Yust; Profs. 

Eccles and Rajgopal; Rep. Torres, et al.; Rice 

Management; S. Lorne; STB; TRP. 

812See, e.g., letter from AIMA (stating that the 

fact that some filers already file within five days 

‘‘does not justify accelerating the reporting 

timeline’’ because it may merely reflect variation in 

when filers happen to satisfy their ‘‘aggregate 

purchasing goal’’). 

813See letters from 65 Professors; AIMA; B. 

Sharfman; EIM I; ICM; MFA; Profs. Bishop and 

Partnoy I; Prof. Hu; Prof. Webber; Rep. Torres, et 

al.; SIFMA; SIFMA AMG; STB. 

814We also considered investigating the effects of 

alternate deadlines for reporting the acquisition of 

meaningful ownership stakes in other countries, as 

suggested by several commenters. See, e.g., Lewis 

Study I (exhibit to letter from EIM I); and letters 

from Sen. Baldwin, et al.; WLRK II. However, we 

concluded that significant differences in rules and 

practices in other countries as compared to the 

United States limit our ability to draw direct 

inferences from the experience of these other 

countries. Further, we found that confounding 

events would limit our ability to draw conclusions 

about the effects of rule changes in these other 

countries. For example, revisions to Japan’s 

substantial shareholding reporting rules took effect 

in 2006 and 2007, coincident with the rise of poison 

pills and the emergence of bear market conditions 

in Japan. Thus, while activist engagements in Japan 

declined after 2007, it is difficult to identify the 

specific role any one of these factors played in this 

decline. See, e.g., Yasushi Hamao & Pedro Matos, 

U.S.-Style Investor Activism in Japan: The First Ten 

Years?, 48 J. Jpn. Int. Econ. 29 (2018). 

815As discussed in section IV.B.3.a.iii above, we 

found that corporate action filings typically reflect 

one or two off-market transfers of share ownership, 

very few of which currently occur after the fifth day 

following the trigger date. We also anticipate that 

the terms of these transfers are likely agreed upon 

in advance. We therefore believe that a shortened 

filing deadline would not significantly impact the 

investment activities of the filers of corporate action 

filings. As discussed in section IV.C.1.viii below, 

we acknowledge that adjusting to an accelerated 

deadline could somewhat increase the compliance 

costs for such filers under the final amendments. As 

discussed in section IV.C.1.a, the benefits of a 

shortened initial Schedule 13D filing deadline are 

expected to be relatively limited for corporate 

action filings. 

816We exclude late filers from this analysis 

because it is difficult to predict how filers that are 

not in compliance with the current filing deadline 

will react to a change in this deadline. See supra 

note 718 and accompanying text for more detail on 

the sample refinements. 

817These estimates are based on staff analysis of 

EDGAR filings through programmatic text analysis 

(to categorize filings, as discussed in section 

IV.B.3.a.ii above, to extract the data necessary to 

determine share accumulation patterns, as 

discussed supra note 719, and to extract the 

required dates) as well as data from the Audit 

Analytics, CRSP, and Compustat databases. 

Estimates of average issuer characteristics (Rows 2 

through 5) and campaign-level profit and value 

measures (Rows 9 through 11) are based on the 

campaigns for which the required data was 

available. While data availability varies by row and 

column of the table, every statistic in the table 

reflects data for at least 81% of the respective 

sample of filings. The Amihud illiquidity ratio (in 

Row 4) is computed as in the Gantchev & 

Jotikasthira 2018 Study. See supra note 692 

regarding how we identify the ‘‘Prominent 

Activists’’ category (for the purpose of computing 

Row 6). A filer’s unrealized gains on the reported 

equity stake (used to compute the percentages in 

Row 9) are based on information on their actual 

purchases and purchase prices for the 60 days prior 

to the filing as reported in the Schedule 13D filing, 

as well as the remainder of ownership acquired 

before those 60 days, which is assumed to be 

acquired at the average purchase price reported in 

the Schedule 13D filing excluding any purchases 

after the trigger date. Unrealized gains are estimated 

by comparing these purchase prices to the share 

price the day after the filing from the CRSP 

database. Abnormal returns (in Row 10) are 

computed as the difference between an issuer’s 

stock market return and the CRSP value-weighted 

market index and are presented for the period 

extending from 20 business days prior to 20 

business days after the filing date. Basing the 

horizon over which the abnormal returns are 

computed on business days, rather than calendar 

days, is consistent with existing studies but differs 

from the graphs presented in Figures 7a and 7b, 

which present returns based on calendar days 

around the filing date (and which thus reflect 

slightly different estimates). For the aggregate 

estimate of the increase in shareholder value (in 

Row 12), the estimated average increase in 

shareholder value per campaign (in Row 11) is used 

as a proxy for the shareholder value impact of 

campaigns for which the data required to produce 

this estimate was unavailable (about 10% to 19% 

of campaigns in any given category). We may 

slightly overestimate the number of campaigns 

falling in Columns 3 and 4 due to the algorithm by 

which total reported ownership is extracted from 

filings. See supra note 722. As discussed above, we 

reviewed all of the filings categorized in Column 4 

(i.e., in the light grey bars of Figure 3b) manually 

and determined that 6% of the filings in this 

column would not have been categorized in this 

group if our algorithm to extract total reported 

ownership from the filing was as precise as our 

manual review of the documents. However, because 

the average increase in shareholder value for these 

filings was relatively low, excluding these filings 

from Column 4 would not have a meaningful 

impact on our estimate of the aggregate increase in 

shareholder value for this category. 

effort to improve the issuer’s 

performance.807 We have also expanded 

our consideration of the literature 

regarding liquidity beyond what was 

considered in the Proposing Release to 

reflect additional findings pertinent to 

the setting of activist campaigns.808 We 

believe that the literature cited in the 

Proposing Release still has relevance in 

considering, for example, the potential 

impacts of trading by informed 

bystanders.809

b. Costs 

An earlier filing deadline for 

Schedule 13D may affect significant 

shareholders seeking to affect control of 

an issuer. There may be indirect effects 

as well, as we describe below. We also 

expect the final amendments to impose 

relatively minor compliance costs on all 

Schedule 13D filers. 

i. Potential Effects on Activism 

By shortening the initial Schedule 

13D filing deadline, the final 

amendments may increase costs of 

activist campaigns. Commenters 

expressed mixed views as to whether a 

shortened filing deadline would reduce 

activism. Some commenters stated that 

a shortened filing deadline would not 

significantly impair activism.810 Others, 

however, stated that a shortened filing 

deadline was likely to reduce the 

number of activist campaigns,811 and 

expressed disagreement with statements 

in the Proposing Release as to why such 

a reduction or the impact of any 

reduction would be limited.812 Some 

commenters indicated that the 

economic analysis in the Proposing 

Release could have been enhanced by 

further consideration of the potential 

effects on activist campaigns, including 

a quantitative analysis.813

A Quantitative Analysis of Historical 

Activist Campaigns: Assumptions, 

Findings, and Limitations 

We use the data presented in section 

IV.B.3.a.iii above on filers’ current 

patterns of share purchases to provide 

some insight into the number and type 

of filings that have historically involved 

trading between the amended deadline 

and their actual filing date.814

Our analysis focuses on those 3,067 

Schedule 13D filings from 2011 through 

2021 that we classify as ‘‘non-corporateaction filings’’ (as opposed to ‘‘corporate 

action filings’’),815 which represent 

about 20 percent of initial Schedule 13D 

filings during the sample period, per the 

first row of Table 2. 

As in Figures 2, 3a, and 3b and Table 

3 above, we further refine the sample of 

non-corporate-action filings to exclude 

late filers and filers with no beneficial 

ownership reported as of the filing date 

and to adjust for multiple filings on the 

same date, resulting in a sample size of 

2,370 non-corporate-action filings.816

Our analysis, presented in Table 6, 

provides information about the 

characteristics of current campaigns 

delineated by filers’ degree of 

accumulation of shares as of the 

amended deadline.817


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818See letter from Better Markets II. 

819See letter from CIRCA IV. 820 Id. 

821See Lewis Study II, at 8 (exhibit to letter from 

EIM IV observing that, historically, ‘‘the average rise 

in shareholder value for a campaign that requires 

more than five days to develop a position is $128 

million’’); letters from CIRCA IV; EIM IV. 822See letter from CIRCA IV. 823The values also do not account for the costs 

activists incur to conduct the campaigns. 

TABLE 6—CAMPAIGN CHARACTERISTICS BY DEGREE OF ACCUMULATION BY AMENDED FILING DEADLINE, ANNUALIZED

[2011–2021] 

Percent of Stake accumulated by amended deadline 

(1) 

100% 

(full stake) 

(2) 

<100% 

(3) 

<90% 

subset of (2) 

(4) 

<75% 

subset of (3) 

(1) Average number of campaigns/year .......................................... 173 42 7 1 

Targeted Issuer Characteristics: ............................ ............................ ............................ ............................

(2) Average issuer size (market cap.) ...................................... $916M $1.5B $1.8B $1.8B 

(3) Average issuer liquidity (turnover) * .................................... 1.2% 1.2% 1.5% 1.5% 

(4) Average issuer illiquidity (Amihud illiquidity ratio) ** ........... 0.13 0.11 0.09 0.08 

(5) Percent issuers in S&P 1500 .............................................. 9.7% 14.3% 15.6% 12.5% 

Filer/Campaign Characteristics: ............................ ............................ ............................ ............................

(6) Percent by a Prominent Activist .......................................... 29.8% 36.3% 43.6% 56.3% 

(7) Average beneficial ownership reported in filing .................. 9.1% 7.3% 8.7% 9.5% 

(8) Average percentage of reported ownership stake accumulated after amended deadline ............................................... 0% 5.9% 19.2% 35.3% 

(9) Average percentage of filer’s unrealized gains on reported 

equity stake, as of day after filing date, attributable to 

shares accumulated after amended deadline *** .................. 0% 4.1% 9.1% 22.6 

Campaign Value Implications: 

(10) Average return around filing date (cumulative abnormal 

return, day –20 to 20) ........................................................... 5.7% 8.1% 17.2% 14.4% 

(11) Average increase in shareholder value per campaign ..... $36M $151M $222M $208M 

(12) Average aggregate increase in shareholder value across 

all campaigns combined (based on average number of 

campaigns per year) ............................................................. $6.3B/yr $6.3B/yr $1.6B/yr $302M/yr 

* Turnover is the average daily trading volume as a percentage of the issuer’s shares outstanding, computed over the six-month period before 

the trigger date. 

** The Amihud illiquidity ratio is intended to capture the stock price impact of trading and is computed over the six-month period before the trigger date. See note 817 for more details. 

*** Unrealized gains estimated for this purpose reflect estimated gains only on the equity stake reported in the Schedule 13D filing (i.e., excludes unrealized gains from any cash-settled derivative instruments, including swaps, to the extent such instruments did not result in beneficial 

ownership) and are computed as of the day after the filing (i.e., excludes any impact of changes in stock price or additional stock purchases 

thereafter). See note 817 for more details. 

The columns of Table 6 reflect the 

same subsamples of filings as the 

corresponding columns of Table 3 

above. A similar analysis with respect to 

the potential effects of a shortened 

initial Schedule 13D filing deadline on 

activism was presented in the DERA 

Memorandum. Whereas the analysis in 

the DERA Memorandum was based on 

the proposed five-calendar day 

deadline, the analysis summarized in 

Table 6 is based on the five-business 

day deadline. One commenter stated 

that the analysis demonstrated that 

‘‘shortening the deadline should not 

significantly impede activist 

campaigns’’ because ‘‘[t]he 

overwhelming majority of past filers 

have acquired at least 75% of their 

reported stake’’ by the amended 

deadline.818 Another commenter 

questioned whether the data supporting 

the findings with respect to the 

percentage of past filers that completed 

their share accumulations by the 

amended deadline is ‘‘representative of 

the broader market.’’ 819 This 

commenter recommended that the 

analysis be expanded to focus on 

campaigns where the activist filer 

continued its purchases throughout the 

10-day window and reported initial 

beneficial ownership of 10 percent or 

more.820

We acknowledge that the campaigns 

in our non-corporate-action sample are 

heterogeneous, and that the percentage 

of filers that continued to accumulate 

shares after the amended deadline 

would vary across subsamples. For 

example, Row 6 of Table 6 demonstrates 

that ‘‘prominent activists’’ were 

somewhat more likely than others to 

continue to accumulate a significant 

fraction of their reported beneficial 

ownership after the amended deadline. 

Per the commenter’s suggestion to focus 

on filers reporting beneficial ownership 

of 10 percent or more, we note that Row 

7 of Table 6 indicates that the reported 

initial beneficial ownership was not 

systematically higher for filers that 

continue to accumulate shares after the 

amended deadline in comparison to 

those that do not. Per the commenter’s 

other suggestion, we note that both 

Table 6 and Table 5 above do isolate (in 

Column 2 of each table) the results for 

those filings that continue to 

accumulate shares after the amended 

deadline. 

Other commenters, referencing the 

dollar estimates in the DERA 

Memorandum, asserted that the 

analyses demonstrated that the costs of 

the proposed Schedule 13D filing 

deadline amendments related to effects 

on activist campaigns exceed the 

benefits of the proposed 

amendments.821 One commenter stated 

that the DERA Memorandum ‘‘fail[ed] to 

adequately quantify the benefits to longterm shareholders of the target issuer in 

the form of substantially higher share 

prices.’’ 822 In response to these 

commenters, we note that the dollar 

campaign values in rows 11 and 12 of 

Table 6 do not represent cost estimates 

of the final amendments. Rather, the 

values reflect the value creation from 

the historical campaigns.823 Interpreting 

these figures as a cost would require 

assuming all of these campaigns would 

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824See, e.g., letters from CIRCA IV; EIM IV. 

825See supra note 724. 

826See letters from 65 Professors; MFA; Rep. 

Torres, et al. 

827Measurement windows in most studies range 

from five to 40 days around the announcement date, 

with many also considering longer horizons to 

address concerns about a potential reversal of the 

returns. See, e.g., Lucian Bebchuk et al., The LongTerm Effects of Hedge Fund Activism, 115 Colum. 

L. Rev. 1085 (2015) (‘‘Bebchuk et al. 2015 Study’’) 

(estimating an announcement return of about 6% to 

initial Schedule 13D filings by activist hedge funds 

from 1994 through 2007, with, on average, no 

reversal in returns over the following five years); 

Kedia et al. 2021 Study (demonstrating, in Table 

IA2 of the internet Appendix, no reversal over five 

years of the positive one-year buy-and-hold returns 

for different subsamples of initial Schedule 13D 

filings by activist hedge funds from 2004 through 

2012, based on a variety of models of benchmark 

returns); Boyson & Pichler 2019 Study (estimating 

a buy-and-hold return of about 12% over a holding 

period averaging 2.7 years to campaigns by hedge 

fund activists from 2001 through 2012); Martijn 

Cremers et al., Hedge Fund Activism and LongTerm Firm Value (Working Paper, Dec. 13, 2018), 

available at https://ssrn.com/abstract=2693231 

(‘‘Cremers et al. 2018 Study’’) (estimating a return 

of about 6% around the start of activist hedge fund 

campaigns from 1995 through 2011, with, on 

average, no reversal in returns over the following 

five years); Edward Swanson et al., Are All Activists 

Created Equal? The Effect of Interventions by Hedge 

Funds and Other Private Activists on Long-Term 

Shareholder Value, 72 J. Corp. Fin. 102144 (2022) 

(‘‘Swanson et al. 2022 Study’’) (estimating returns 

of 5% to initial Schedule 13D filings in 1994 

through 2014, with, on average, no reversal in 

returns over the following three years); Ed deHaan 

et al., Long-Term Economic Consequences of Hedge 

Fund Activist Interventions, 24 Rev. Acc. Stud. 536 

(2019) (‘‘deHaan et al. 2019 Study’’) (estimating, on 

an equally weighted basis, returns of 5% to initial 

Schedule 13D filings by activist hedge funds from 

1994 through 2011, with, on average, no reversal in 

returns over the following two years); Brav et al. 

2022 Study (estimating an announcement return of 

about 5% to blockholdings by hedge fund activists 

from 1994 to 2018, with, on average, no reversal in 

returns over the following three years). While much 

of the academic research has focused on 

blockholdings by activist hedge funds, other studies 

have found similar stock returns related to 

Schedule 13D filings by other types of investors. 

See, e.g., Ulf von Lilienfeld-Toal & Jan Schnitzler, 

The Anatomy of Block Accumulations by Activist 

Shareholders, 62 J. Corp. Fin. 101620 (2020) 

(‘‘Lilienfeld-Toal & Schnitzler 2020 Study’’) 

(estimating returns of 7% to 8% around initial 

Schedule 13D filings by external shareholders in 

2001 through 2016, irrespective of filer type); 

Swanson et al. 2022 Study (estimating returns of 

5% around initial Schedule 13D filings in 1994 

through 2014, with no statistically significant 

difference in the returns around filings by hedge 

funds versus those by other private activists). 828See Proposing Release at 13885 and supra note 

827. Several commenters cited a different study 

than those cited above, with one stating that it 

‘‘shows the stock price increase is temporary and 

in fact the company is often in a weaker economic 

position post-activist intervention.’’ See letter from 

Sen. Baldwin, et al; see also letter from Labor 

Unions. The cited study presents results showing 

that a measure of firm valuation increases for firms 

targeted by hedge fund activists relative to a 

matched sample of similar, non-targeted firms in 

the year after activists report their ownership, but 

that there is no statistically significant difference in 

this metric across the targeted and matched firms 

over a longer horizon. However, this study does not 

investigate stock price or stock returns, but instead 

measures firm valuation as Tobin’s Q, which the 

authors define as ratio of a firm’s market value of 

assets to the replacement value of assets. This 

metric may therefore reflect changes in a number 

of factors beyond stock returns, such as changes in 

debt values and changes in book assets, and cannot 

be interpreted equivalently to the studies cited 

above. Further, the results of the matched sample 

analysis demonstrate that the differential in Tobin’s 

Q diminishes over longer horizons, but not that the 

improvement among targeted firms is necessarily 

temporary; it is possible that the gap narrows due 

to a similar but delayed improvement in the 

matched control firms. It is also unclear how the 

study treats targets that are later acquired, which is 

a common outcome for targeted firms and could 

bias the long horizon results. Finally, the longerhorizon tests use a different baseline than the 

shorter-horizon tests (Tobin’s Q one year after 

activists report their ownership is compared to the 

same metric one year before activists report their 

ownership, while Tobin’s Q five years after activists 

report their ownership is compared to the same 

metric five years before activists report their 

ownership), which may affect the interpretation of 

the results. See Mark DesJardine & Rodolphe 

Durand, Disentangling the Effects of Hedge Fund 

Activism on Firm Financial and Social 

Performance, 41 Strateg. Mgmt. J. 1054 (2020) 

(‘‘DesJardine and Durand 2020 Study’’) (with 

matched sample results presented in Table 7). One 

commenter noted additional concerns with this 

study. See letter from Profs. Bishop and Partnoy II. 

A different study using a larger sample of hedge 

fund activist campaigns finds differing results 

under multiple matched-sample approaches, with a 

statistically significant increase in Tobin’s Q for 

targeted firms, including over a five-year horizon. 

See Brav et al. 2022 Study (at Table 9, Panel A). 

829See, e.g., deHaan et al. 2019 Study (finding 

that the average long-term returns around hedge 

fund activism on an equally weighted basis are 

driven by the smallest 20% of targets by market 

capitalization); Brav et al. 2022 Study (documenting 

a roughly 2–3% announcement return for the 

largest two terciles of targets of activist hedge funds, 

compared to a roughly 9% announcement return for 

the smallest tercile of targets, based on market 

capitalization). We note that a smaller percentage 

return for an issuer with a larger market 

capitalization may imply a larger total dollar impact 

on shareholder value than that associated with a 

larger percentage return for a smaller issuer. 

830See, e.g., Cremers et al. 2018 Study; deHaan 

et al. 2019 Study; Yvan Allaire & Franc ̧ois Dauphin, 

The Game of ‘Activist’ Hedge Funds: Cui Bono?, 31 

Int. J. Discl. Gov. 279 (2016). 

831See, e.g., Brav et al. 2022 Study (finding that 

the outperformance of issuers targeted by activists 

persists even when benchmarked against a variety 

of matched control samples, including a control 

sample of non-targeted issuers that are closely 

matched to the targeted issuers based on their 

condition at the time of targeting as well as changes 

in performance prior to that time); Rui Albuquerque 

et al., Value Creation in Shareholder Activism, 145 

J. Fin. Econ. 153 (2022) (‘‘Albuquerque et al. 2022 

Study’’) (estimating that only 13% of the total 

returns associated with activist campaigns could be 

attributed to stock-picking ability as opposed to the 

business day filing deadline. Instead, we 

expect that a five-business day deadline 

would not have deterred the vast 

majority of campaigns. Accordingly, we 

believe that the costs of the final 

amendments would be significantly less 

than any of the figures in Table 6 or 

identified by commenters because we 

expect that activists will adapt to the 

amended deadline rather than forgo 

campaigns. We acknowledge that some 

activist investors have indicated that the 

proposed amendments would make 

them less likely to carry out activist 

campaigns.824 Nonetheless, we expect 

that the vast majority of the value 

creation reflected in the table above 

would continue unabated. Results in 

Row 1 show that 80 percent of 

campaigns (173 out of 215 campaigns 

per year) over the period from 2011 to 

2021 would not have been affected by 

a five-business day filing deadline. 

While the remaining 20 percent (42 out 

of 215 campaigns per year) could have 

been affected to some degree, we expect 

most of these campaigns would still 

have occurred, as there are several ways 

activists can adapt to the amended 

deadline.825 In particular, as we discuss 

below in this section, activists can adapt 

to a shorter deadline using strategies 

such as (a) accumulating a smaller stake 

in the issuer’s shares; (b) accumulating 

shares more quickly; or (c) accumulating 

an economic stake using other 

instruments, such as cash-settled swaps 

or other derivatives. We expect that in 

most if not all cases, they will do so. 

A Literature Review 

In considering the implications of a 

potential reduction in activist 

campaigns, we have expanded our 

consideration of the existing literature 

on activist campaigns, as suggested by 

commenters.826 There is a large body of 

literature finding that activist campaigns 

are, on average, associated with an 

economically significant increase in 

shareholder value (i.e., positive 

abnormal stock returns) around the 

Schedule 13D filing or other 

announcement date.827 As noted in the 

Proposing Release, the literature does 

not find that these returns reverse in the 

long term, though the determination of 

long-term returns is inherently more 

complicated than measuring short-term 

returns.828 Researchers have also found 

that the degree of impact that these 

activities have on shareholder value 

varies significantly with an issuer’s 

market capitalization, with smaller-cap 

issuers experiencing significantly larger 

returns (expressed as a percentage) 

around the disclosure of an activist 

campaign than larger-cap issuers.829

Researchers have debated whether the 

activists’ actions are responsible for any 

of this increase in value. Some 

researchers argue that any stock price 

reaction may instead reflect activists’ 

ability to select issuers that are likely to 

be taken over or to recover from 

underperformance for other reasons.830

However, broader evidence supports the 

hypothesis that activists’ actions are 

responsible for the vast majority of the 

increase in value.831


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campaigns themselves); Robin Greenwood & 

Michael Schor, Investor Activism and Takeovers, 92 

J. Fin. Econ. 362 (2009) (finding that returns 

associated with Schedule 13D filings are driven by 

activists’ success at getting target firms acquired, 

and not just selecting targets that are likely to get 

acquired); Nicole Boyson et al., Activism Mergers, 

126 J. Fin. Econ. 54 (2017) (finding that even 

Schedule 13D targets with failed acquisition bids 

experience improvements in operating 

performance, financial policy, and positive longterm abnormal returns); Swanson et al. 2022 Study 

(finding significant abnormal returns associated 

with the subsets of Schedule 13D filings presenting 

a variety of non-sale demands, such as demands 

associated with corporate strategy, and not just for 

those presenting demands for a sale of all, or part, 

of the company). Various studies have also 

associated activist campaigns with operational 

improvements. See, e.g., Nicole M. Boyson & Robert 

Mooradian, Corporate Governance and Hedge Fund 

Activism, 14 Rev. Derivatives Res. (2011) (finding 

an increase in return on assets for issuers that are 

the subject of hedge fund activist campaigns, 

relative to similar non-targeted issuers); Alon Brav 

et al., The Real Effects of Hedge Fund Activism: 

Productivity, Asset Allocation, and Labor 

Outcomes, 28 Rev. Fin. Stud. 2723 (2015) (‘‘Brav et 

al. 2015 Study’’) (finding an increase in 

productivity at the plant level for issuers that are 

the subject of hedge fund activist campaigns, but 

not for similar plants at non-targeted issuers); 

Nickolay Gantchev et al., Activism and Empire 

Building, 138 J. Fin. Econ. 526 (2020) (finding that 

issuers that are the subject of hedge fund activist 

campaigns reduce value-destructive acquisition 

activity relative to similar, non-targeted issuers). 

832See, e.g., Nikolay Gantchev et al., Governance 

Under the Gun: Spillover Effects of Hedge Fund 

Activism, 23 Rev. Fin. 1031 (2019) (‘‘Gantchev et al. 

2019 Study’’) (finding that an interquartile increase 

in the ‘‘threat’’ of an activist campaign is associated 

with operational and financial improvements and a 

2.4% positive stock return at the issuers with a high 

perceived ‘‘threat’’ of being targeted); Caroline 

Heqing Zhu, The Preventative Effect of Hedge Fund 

Activism: Investment, CEO Compensation, and 

Payout Policies, 17 Int. J. Man. Fin. 401 (2021) 

(finding that an increase in the likelihood of an 

activist campaign is associated with proactive 

corporate policy changes and improved operating 

performance in the form of an increase in return on 

assets). 

833See, e.g., Hadiye Aslan, Shareholders Versus 

Stakeholders in Investor Activism: Value for 

Whom?, 60 J. Corp. Fin. 101548 (2020) (finding 

reduced profit margins and stock prices reflecting 

a negative announcement return of about –1.5% for 

the suppliers of an issuer targeted by an activist 

hedge fund relative to suppliers of other issuers and 

finding that the economic effects on suppliers are 

stronger for the suppliers of target firms with high 

cost efficiency or operating margin improvements 

after the activist campaign); Hadiye Aslan & 

Praveen Kumar, The Product Market Effects of 

Hedge Fund Activism, 119 J. Fin. Econ. 226 (2016) 

(finding a negative announcement return for those 

close competitors of an issuer targeted by an activist 

hedge fund that do not themselves face the ‘‘threat’’ 

of activist hedge fund campaign, while those close 

competitors that do face such a ‘‘threat’’ experience 

positive announcement returns; and finding that the 

impact on competing firm performance is stronger 

for targets with, among other things, a greater 

improvement in productivity). 

834See Lewis Study II (exhibit to letter from EIM 

IV). Several other commenters also questioned the 

DERA Memorandum’s inclusion of a discussion of 

shareholders of a target’s suppliers and competitors. 

See letters from EIM IV; CIRCA IV. We acknowledge 

that effects on these shareholders represent 

transfers rather than market-level economic benefits 

or costs of activism (e.g., costs to these shareholders 

may result even when the market benefits as a 

whole from enhanced operational efficiency and 

competition). As noted, we refer to the impact on 

entities other than the target issuer here as evidence 

that activism can have beneficial competitive 

effects, rather than to place a primary emphasis on 

consideration of shareholders of issuers other than 

the target issuers in determining appropriate 

disclosure deadlines and related amendments. 

835See, e.g., April Klein & Emanuel Zur, The 

Impact of Hedge Fund Activism on the Target 

Firm’s Existing Bondholders, 24 Rev. Fin. Stud. 

1735 (2011) (estimating that bonds of targeted 

issuers experience, on average, a negative 

announcement return of about –4% to activist 

hedge fund campaigns); Hadiye Aslan & Hilda 

Maraachlian, Wealth Effects of Hedge Fund 

Activism (Working Paper, 2018), available at 

https://ssrn.com/abstract=993170 (estimating that 

bonds of targeted issuers experience, on average, a 

positive announcement return of about 2% to 

activist hedge fund campaigns, but with variation 

based on the type of campaign: bondholders benefit 

the most for those with governance-related goals, 

while those calling for restructuring the issuer lead 

to bondholder losses); Jayanthi Sunder et al., 

Debtholder Responses to Shareholder Activism: 

Evidence from Hedge Fund Interventions, 27 Rev. 

Fin. Stud. 3318 (2014) (examining changes in bank 

loan spreads upon activist hedge fund campaigns 

and finding that spreads increase in response to 

merger-related or restructuring campaigns but 

decrease in response to those that seek to address 

governance-related issues). 

836See letters from 65 Professors; AIMA; C. 

Penner and Prof. Eccles; CIRCA I; EIM I; M. 

Frampton; MFA; Profs. Swanson, Young, and Yust; 

PSCM; Profs. Eccles and Rajgopal; Rice 

Management; S. Lorne. One comment letter 

provided an analysis in which the commenters 

concluded that ‘‘net investors benefit significantly 

during the relevant time period,’’ estimating a $12 

million benefit to net investors per campaign based 

on their computation of the net order imbalance 

and stock returns from each day through 30 days 

after the Schedule 13D filing dates. See letter from 

Profs. Bishop and Partnoy III. 

837See supra note 831 for detail on studies that 

have associated activist campaigns with operational 

improvements. 

838See supra note 832. Reductions in operational 

efficiency and the associated weakening of 

competition could result in greater shareholder 

value at some supplier and competitor firms of 

potential targets, per the academic research cited 

above, but this would not represent a market-level 

benefit. See supra note 834. See also letters from 

65 Professors; AIMA; C. Penner and Prof. Eccles; 

CIRCA I; CIRCA IV; Dodge & Cox; EIM I; ICM; M. 

Frampton; MFA; Prof. Gordon; Profs. Schwartz and 

Shavell I; Prof. Webber; PSCM; Profs. Eccles and 

Rajgopal; Rep. Torres, et al. 

839See letters from AFREF; Better Markets I; 

HMA II; SCG; WLRK I. 

840See letters from AIMA; CIRCA I; Dodge & Cox; 

EIM I; ICM; M. Frampton; MFA; Prof. Gordon; 

Profs. Schwartz and Shavell I; Profs. Swanson, 

Young, and Yust; Profs. Eccles and Rajgopal; Rep. 

Torres, et al.; S. Lorne; STB; TRP. 

841See letters from AIMA; Dodge & Cox; EIM I; 

MFA; Profs. Swanson, Young, and Yust; Profs. 

Eccles and Rajgopal; Rice Management; STB. 

842See letters from 65 Professors; EIM I; Rep. 

Torres, et al.; TRP. 

843See letters from AIMA; EIM I. 

844See letters from C. Penner and Prof. Eccles; 

Dodge & Cox; EIM I. 

There is also academic research on 

the effect of activist campaigns on 

investors other than shareholders of the 

targeted issuers. Studies have associated 

activist campaigns with a positive effect 

on the operational and financial 

performance, as well as shareholder 

value, of issuers other than the targeted 

issuers, based on the perceived 

likelihood of a potential activist 

campaign targeting these other 

issuers.832 Other research has found that 

issuers that are the suppliers or close 

competitors of the targeted issuers, in 

certain circumstances, experience 

decreases in shareholder value around 

an activist campaign, which researchers 

have associated with cost-cutting and 

increased efficiency at the target 

issuer.833 These effects on suppliers and 

competitors of targeted issuers are 

consistent with activism having 

beneficial competitive effects related to 

improvements in operational efficiency, 

as noted by a commenter.834 Other 

academic studies have found that 

activist campaigns have a mixed impact 

on debtholders of the targeted issuer, 

depending on the nature of the 

campaign’s goals and how pursuing 

those goals would impact both 

performance and also the level of 

financial risk of the issuer.835

Considerations 

Commenters noted that if there are 

fewer activist campaigns under the 

amended deadline, there will be 

reduced shareholder value creation.836

Commenters also noted that a reduction 

in activist campaigns would result in 

decreased corporate accountability and, 

on average, a reduction in operational 

efficiency, both because of the reduced 

direct beneficial effect of activists (on 

average) on the operations of targeted 

issuers 837 and because of the reduced 

indirect beneficial effect of the 

possibility of becoming a future activist 

target (or of competition with targeted 

issuers) on the operational performance 

of non-targeted issuers.838 Some 

commenters indicated that activist 

investors would continue their activities 

despite reduced profitability.839 Others 

indicated that such reduced profitability 

and the acceleration of potential 

defensive responses by the target issuer 

would impede activism.840 Some 

commenters indicated that a reduction 

in the pursuit of activist campaigns and 

in the disciplining effect on corporate 

accountability of the possibility of such 

campaigns would result in reduced 

market efficiency,841 a less optimal 

allocation of resources,842 reduced 

liquidity,843 and reduced trust in 

markets because managers are not held 

accountable.844

We acknowledge that a reduction in 

investment research and in significant 

shareholdings by investors who 

undertake such campaigns could reduce 


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845See supra note 843. 846See supra section IV.B.3.a.iii, Table 3. 847Although we believe that activists whose 

campaigns are impacted by the shortened deadline 

are likely to adapt and continue with their 

campaigns, we note that there are costs likely 

associated with those adaptations, as discussed 

below. Thus, although the market is likely to benefit 

from an activist campaign that continues as a result 

of such adaptations, the costs associated with those 

adaptations may reduce the extent of such benefits. 

Nevertheless, because those campaigns would still 

proceed, the potential reduction in benefits 

resulting from the costs associated with an 

adaptation likely would be significantly less than 

the elimination of all the potential benefits if the 

campaign were abandoned outright. 

848See letters from AFREF; Better Markets I; 

Labor Unions; NIRI; R. Steel and Prof. Goshen; SCG; 

Sen. Baldwin, et al.; WLRK I. 

849See letters from AFREF; NIRI; SCG; Sen. 

Baldwin, et al. 

850See letter from SCG. 

851See, e.g., Bebchuk et al. 2015 Study; Kedia et 

al. 2021 Study; Boyson & Pichler 2019 Study; 

Cremers et al. 2018 Study; Swanson et al. 2022 

Study; deHaan et al. 2019 Study; Brav et al. 2022 

Study; Lilienfeld-Toal & Schnitzler 2020 Study; 

Swanson et al. 2022 Study. 

852See letters from CIRCA I; ICM; Prof. Gordon. 

853See letter from Profs. Swanson, Young, and 

Yust. 

854See Lewis Study I (Exhibit to letter from EIM 

I); letter from MFA. 

855As discussed in section IV.C.1.b.i above, we 

believe that the process of acquiring shares is 

unlikely to be significantly impacted in most other 

cases. 

856See letters from AIMA; CIRCA I; ICM; Prof. 

Gordon. 

market efficiency (and thereby the 

efficient allocation of resources) because 

of the role that investments based on 

such research and analysis play in 

moving stock prices closer to their 

fundamental values. A reduction in 

such activities could also reduce 

liquidity, as noted by commenters,845 by 

lessening liquidity provision in the 

securities market by these investors 

(through, e.g., limit orders) as they build 

their stakes. We acknowledge the 

beneficial effects of activism to the 

market. However, our analysis of 

historical data indicates that 80 percent 

of campaigns were completed by the 

amended deadline, with 97 percent of 

campaigns having completed 90 percent 

of their stakes by the amended 

deadline.846 We therefore expect the 

majority of campaigns will be largely 

unaffected by the deadline. In addition, 

for those campaigns that would be 

affected by the deadline, we expect the 

activists will adapt to the shortened 

deadline and continue to pursue the 

campaigns, thereby preserving the 

beneficial effects of their activism.847

Some commenters indicated that 

activist campaigns are not uniformly 

beneficial, and that the short-term price 

reaction to such campaigns may not 

translate into positive shareholder value 

impacts in the long-term.848 Some 

commenters stated that a reduction in 

such campaigns and the threat of such 

campaigns could be beneficial because 

it would reduce the pressure on issuers 

to make changes in governance, 

payouts, or investments that are not in 

the interest of long-term 

shareholders.849 One commenter stated 

that activist campaigns are a deterrent to 

going public,850 implying that a 

reduction in such activities could 

encourage more companies to enter the 

public markets. We acknowledge that 

activist campaigns are heterogeneous. 

While the average impact of activist 

campaigns on shareholder value is 

likely to be positive in the long-term as 

well as the short-term,851 some 

campaigns may have a negative impact 

on shareholder value either in the shortor long-term. It is possible that some of 

the activist campaigns that are less 

likely to occur after the adoption of the 

final rules would have decreased 

shareholder value, such that activists 

forgoing those campaigns could benefit 

shareholders. A lower risk of facing an 

activist campaign could, per the 

commenter cited above, also be a 

positive factor in the decision of 

additional companies to enter the public 

markets. That said, the final 

amendments are not intended to 

discourage activism. Instead, they 

reflect our attempt to ensure investors 

receive material information in a timely 

manner while, at the same time, 

maintaining the balance between issuers 

of securities and the shareholders who 

seek to exert influence or control over 

issuers that Congress sought when 

enacting section 13(d). 

Some commenters stated that certain 

types of activist campaigns were more 

likely to be forgone as a result of a 

shortened deadline. For example, some 

commenters stated that a reduction in 

campaigns was more likely among those 

campaigns targeting smaller issuers with 

lower trading volumes 852 or for certain 

types of activist campaigns (e.g., those 

pursuing changes at an issuer rather 

than a potential sale of the issuer).853

Some commenters noted that the final 

amendments may reduce competition 

among investors who pursue activist 

campaigns,854 as more sophisticated and 

experienced investors may be better able 

to adapt to the final amendments. We 

acknowledge that the final amendments 

may have differential impacts on 

different types of activist campaigns. 

For instance, it may be more costly for 

a filer to accelerate the completion of its 

stake under a shortened filing window 

for smaller, less liquid issuers. However, 

in Table 6 above, we find that the targets 

of filers who currently continue to 

accumulate a significant fraction of their 

stake after the five-business day 

deadline are, on average, slightly larger 

and more liquid than other targets. 

Further, studies cited earlier in this 

section find that the abnormal stock 

returns around the announcement of 

activist campaigns are lower for larger 

issuers. These lower expected gains 

from campaigns at larger issuers could 

make investors less likely to bear 

additional costs to conduct such a 

campaign by one of the adaptation 

strategies discussed (rather than 

forgoing the campaign) relative to 

potential campaigns at smaller issuers 

even if these costs of doing so are lower 

than they would be at smaller, less 

liquid issuers, as noted above. 

To summarize, while the amended 

filing deadline may make a minority of 

campaigns less profitable and, as a 

result, could potentially reduce 

shareholder value creation, we do not 

expect a substantial reduction in the 

extent of activism as most historical 

campaigns would not have been 

impacted by the amended filing 

deadline and since activists may adapt 

to accommodate the amended deadline 

and we expect that in most if not all 

cases, they will do so. 

Implications of Changes to Activist 

Campaigns 

As referenced above, filers have 

various ways to adapt to the amended 

filing deadlines and we expect that 

many filers will likely use these 

methods of adaption to the amended 

filing deadline where they remain 

incentivized to pursue their campaigns. 

For example, some filers may proceed 

with smaller stakes, other filers may 

accumulate shares more quickly during 

the amended filing window (or add to 

their stake after the filing date), while 

others may acquire an economic interest 

in the issuer, such as by using cashsettled swaps or other derivatives. We 

expect that such adaptations are most 

likely to arise in the context of noncorporate-action filings in which filers 

would otherwise have continued to 

accumulate shares on the open market 

after the amended filing deadline (i.e., 

campaigns like those represented in 

Columns 2, 3, and 4 of Table 6).855

Some commenters stated that investors 

have a target share accumulation that 

would be required to make a campaign 

worthwhile and that in some cases this 

target would not be achievable under 

the amended deadline.856 One of these 

commenters noted that investors may 

file early if they reach their target 

ownership before the filing deadline, 

but implied that one should not assume 


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857See letter from AIMA. 

858See letters from ABA; Better Markets I; 

NASDAQ; SCG; WLRK I. 

859See Table 3 and supra note 724. 

860 In the case of stock purchases after an earlier 

filing date, these shares would be purchased at the 

higher stock price that prevails after the filing date 

(i.e., the price reflecting the market’s knowledge of 

the filer’s intentions). Accumulating shares more 

quickly would generally entail purchases at higher 

prices because, all else equal, larger order sizes or 

more aggressive trading has greater price impact. 

See, e.g., Albert S. Kyle, Continuous Auctions and 

Insider Trading, 53 Econometrica 1315 (1985). 

861See letters from AIMA; EIM I; Rice 

Management; STB. 862Staff have noted that some Schedule 13D filers 

already make use of cash-settled derivatives 

referencing the issuer in which they report 

beneficial ownership. See, e.g., Memorandum of the 

Staff of the Division of Economic and Risk Analysis, 

Supplemental Data and Analysis Regarding the 

Proposed Reporting Thresholds in the Equity 

Security-Based Swap Market (June 20, 2023), 

available at https://www.sec.gov/comments/s7-32- 

10/s73210-207819-419422.pdf. Thus, it is plausible 

that at least some filers could adapt to the 

amendments by making greater use of these 

instruments. See Security-Based Swaps Release for 

a discussion of the circumstances in which a holder 

of a SBS currently may be deemed the beneficial 

owner of the class of equity securities referenced by 

the swap. 

863See letter from Profs. Swanson, Young, and 

Yust. 864See supra section II.B.3. 

from observing these filings that they 

can reach their target ownership with 

the same speed in all instances.857 We 

note also that some commenters stated 

that the proposed five-calendar day 

filing window would provide activist 

investors ample time to accrue a 

significant stake,858 implying that filers 

would be able to adapt to the revised 

deadline. While a filer’s adaptation 

strategy will ultimately be based on its 

assessment of the benefits and costs of 

various available strategies, which will 

likely vary across filers and specific 

situations, we expect that most of the 

profitable campaigns will continue to be 

profitable notwithstanding the fivebusiness day filing deadline. In these 

cases, we expect activists to use 

adaptation strategies rather than forgo 

the campaigns. And, we expect that 

most campaigns will not be constrained 

by the amended filing deadline as, 

historically, 97 percent of campaigns 

achieved 90 percent of their position by 

the amended deadline.859

The degree to which the benefits 

associated with earlier disclosure under 

a shortened filing deadline would be 

achieved also depends on how the filers 

respond to the shortened deadline. As 

an adaptation strategy, some filers may 

simply proceed with acquiring a smaller 

stake in an issuer, notwithstanding the 

reduced potential profits. 

Alternatively, filers could adapt to the 

amended filing deadline by 

accumulating shares more quickly 

during the modified filing window or 

adding to their stake after the filing date. 

Such approaches are likely to preserve 

more fully both the current shareholder 

value impact of the campaigns and the 

benefits of earlier disclosure. We 

acknowledge that these adaptations 

would entail greater costs to filers 

because the additional shares would 

likely be purchased at higher prices 

than under the current accumulation 

pattern.860 Further, in some cases postfiling purchases may be precluded 

because issuers could react to the 

disclosure by adopting low-threshold 

poison pills or other defensive 

measures. While some commenters 

suggest that adaptations that rely on 

accumulating shares more quickly could 

further reduce market efficiency should 

volatility increase as a result of 

aggressive purchasing,861 we do not 

believe that a temporary increase in 

volatility would be disruptive enough to 

override the benefits to price 

informativeness mentioned above. 

Filers could also adapt by instead 

acquiring an economic interest in the 

issuer, such as by using cash-settled 

swaps or other derivatives.862 Although 

these instruments would not replace the 

ownership of shares in the issuer, and 

generally do not provide voting rights, 

they may have the effect of providing 

economic exposure to the issuer without 

triggering the section 13(d) beneficial 

ownership reporting obligation. Such 

economic exposure would allow filers 

to remain financially incentivized to 

pursue campaigns that create 

shareholder value, as opposed to 

forgoing such campaigns solely due to 

the shortened filing deadline. 

Some commenters indicated that such 

a heavier reliance by activist investors 

on derivatives may be an unintended 

consequence of a shortened Schedule 

13D filing window.863 Adaptations 

involving the use of derivatives would 

generally entail some incremental costs 

to these investors because of the 

premiums charged by counterparties for 

these products, and, as noted, would not 

provide the investors with voting rights 

beyond those associated with any shares 

they otherwise beneficially own. That 

said, such approaches may often be the 

most cost-effective alternative for 

activist investors and may preserve the 

shareholder benefits associated with the 

campaigns. 

An increased reliance on these 

products may, in certain situations, 

reduce the overall benefits associated 

with a shortened filing deadline by 

reducing the likelihood that disclosure 

of economic interests would occur any 

earlier than under the status quo. In 

particular, cash-settled swaps and 

related derivatives do not generally give 

rise to beneficial ownership as they do 

not generally provide voting or 

disposition rights over the reference 

securities.864 They therefore generally 

fall outside the scope of the primary 

purpose of the Schedule 13D filings and 

the section 13(d) beneficial ownership 

reporting system, which are focused on 

disclosure of a filer’s accumulation of 

equity securities that provide rights that 

could allow the filer to control or 

influence control over an issuer. 

Nevertheless, it is possible that some 

market participants may look to 

Schedule 13D filings (in particular, Item 

6 of Schedule 13D) for information 

about a filer’s accumulation of economic 

interests, such as cash-settled swaps and 

derivatives without voting or 

disposition rights. Acquisition of these 

instruments could allow a filer to obtain 

more than five percent of economic 

interest in an issuer’s covered class and 

then, at a later point, cross the five 

percent beneficial ownership threshold 

through holding or acquiring equity 

securities of the covered class— 

triggering the requirement for a 

Schedule 13D filing in five business 

days—at a later date. In this scenario, 

there is no delay in the disclosure of the 

information that Schedule 13D filings 

and section 13(d) are intended to 

provide—the beneficial ownership of 

the equity securities that provide voting 

and disposition rights. However, the 

filer does delay disclosure relative to 

obtaining the purely economic exposure 

of more than five percent of the issuer 

represented by the cash-settled swaps or 

derivatives. As such, an investor’s 

pattern of accumulation of economic 

interest, relative to when their campaign 

is revealed to the market, may not differ 

from that under the status quo. In fact, 

depending on the degree of reliance on 

cash-settled derivative securities, 

complete disclosure of an investor’s 

total economic interest in an issuer may, 

under the final rules, be reduced or 

further delayed than under the baseline, 

such as in cases where, notwithstanding 

acquisition of these instruments, the 

investor beneficially owns five percent 

or less of a covered class and no 

Schedule 13D filing obligation is 

triggered. Still, we cannot predict the 

extent to which investors will adapt by 

accumulating cash-settled swaps or 

derivatives in lieu of equity securities, 

including because cash-settled swaps 

and derivatives generally represent only 

an economic interest in the issuer, with 

no voting rights or disposition rights 

with respect to the reference securities, 

and therefore cannot be presumed to be 


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865See letter from EIM IV (also stating that 

potential adaptations ‘‘would fundamentally alter 

how an activist assembles its exposure to a given 

company in ways that would impair the ability of 

an activist to pursue a particular campaign’’). 

866See letters from ABA; Dodge & Cox; IAA; 

MSBA; STB. 

867See letters from MSBA; STB. 

868See letters from A. Day; E. Fraser; Perkins 

Coie. 

869See letter from E. Fraser. 

870For the purpose of this economic analysis, we 

refer to an ‘‘increased frequency’’ of Schedule 13G 

filings under the final amendments because the 

frequency of Schedule 13G filings is generally 

expected to increase overall. However, the 

frequency of filings will not necessarily increase in 

all cases. If there is only one material change (or 

no such change) in the information reported in a 

Schedule 13G filing over the course of a year, then 

the reporting frequency generally will be the same 

as under the current regime. 

871See infra notes 883–885 and accompanying 

text. 

equivalents to equity securities that do 

provide such rights. 

Initial Schedule 13D filings signal to 

the market that an investor may intend 

to influence an issuer, often through 

activism. For market participants that 

value such signals, regardless of 

beneficial ownership, an increased 

reliance by activist investors on 

financial instruments that generally do 

not trigger the section 13(d) beneficial 

ownership reporting obligations, such as 

cash-settled swaps or derivatives, may 

reduce the overall benefits associated 

with a shortened filing deadline by 

reducing the likelihood that disclosure 

of such information would occur any 

earlier than under the status quo. 

We note that one commenter stated 

that potential adaptations presented in 

the DERA Memorandum are ‘‘neither 

cost-free nor viable,’’ 865 and we 

recognize that the amended filing 

deadline may make a minority of 

campaigns more costly, including as a 

result of the adaptations. Similarly, we 

acknowledge that there would be costs, 

and reduced benefits, to the extent 

activism is reduced as a result of the 

final rules. However, we do not expect 

a substantial reduction in the extent of 

activism as historical evidence suggests 

most campaigns would not be impacted 

by the amended filing deadline. 

ii. Compliance Costs 

A shortened initial Schedule 13D 

filing deadline may increase compliance 

costs for beneficial owners who have an 

obligation to file an initial Schedule 13D 

under the final rules. For example, 

beneficial owners who regularly make 

significant stock investments could 

incur a one-time cost to update their 

information technology systems to 

monitor securities transactions and 

generate alerts and reports in time to 

accommodate the rule change. They 

may also need to allocate more 

resources on an ongoing basis to 

monitor their holdings in accordance 

with the amended deadline so that they 

can meet their obligation to file an 

initial Schedule 13D. In addition, 

external service providers and advisers 

may charge higher fees for expedited 

processing and/or for weekend services, 

which may be more frequently required 

under the final amendments. 

Compliance costs may increase both in 

the context of non-corporate-action 

filings and corporate action filings. The 

compliance costs could be more 

significant for some filers (e.g., those 

with more complex affiliate structures 

or investment strategies) than others. 

Commenters identified additional 

compliance challenges that may arise as 

a result of the shortened initial 

Schedule 13D deadline. For example, 

some commenters noted aspects of the 

initial Schedule 13D filing process that 

have not become simplified as a result 

of technological advancements, 

including nuanced legal analysis, 

drafting of narratives, and certain data 

collection, determinations, and 

computations that are accomplished 

manually or with reliance on external 

resources.866 Others noted issues for 

first-time filers that may be hard to 

resolve within five business days, such 

as the processing time (including 

delays) for receiving EDGAR filing 

codes,867 or stated that compliance 

burdens would be greater for noninstitutional filers or smaller 

institutional filers lacking certain 

infrastructure or personnel,868 and that 

the accelerated filing deadline may 

require an increased reliance on third 

parties.869

We acknowledge that not all aspects 

of preparing and submitting an initial 

Schedule 13D have been simplified by 

technology, and that the amended filing 

deadline may increase certain 

compliance costs given the need to 

complete these tasks in a shorter 

timeframe. We also acknowledge that 

the incremental compliance burdens 

may be greater for smaller, less 

experienced filers than for other filers 

due to their more limited internal 

resources and expertise in preparing 

filings. In particular, these filers are less 

likely to have operational systems and 

processes in place to facilitate 

compliance with the revised filing 

deadline. They are also likely to be more 

reliant on external advisers and service 

providers, who may charge higher fees 

for expedited processing and/or for 

weekend services. 

2. Shortened Schedule 13G Filing 

Deadlines 

The final amendments to Rules 13d– 

1(b), (c), and (d) and 13d–2(b), (c), and 

(d) shorten the filing deadlines for both 

initial and amended Schedule 13G 

filings as well as, in certain cases, 

increasing their frequency.870 As 

discussed in more detail in section 

II.A.2 above, under the final 

amendments, QIIs and Exempt Investors 

will be required to file an initial 

Schedule 13G within 45 days after 

calendar quarter-end if, as of the end of 

that quarter, their beneficial ownership 

exceeds five percent (rather than the 

current deadline of 45 days after the 

calendar year-end at which beneficial 

ownership exceeds five percent). The 

filing obligation for QIIs will be 

accelerated from 10 days to five 

business days after month-end if, as of 

such month-end, their beneficial 

ownership exceeds 10 percent. Passive 

Investors will be required to file an 

initial Schedule 13G within five 

business days (rather than the current 

deadline of 10 days) after crossing the 

five percent beneficial ownership 

threshold. All three filer types will be 

required to file a Schedule 13G 

amendment within 45 calendar days 

after any calendar quarter-end at which 

there is a material change in the 

information previously reported in a 

Schedule 13G (rather than the current 

deadline of 45 days after any calendar 

year-end at which there are ‘‘any 

changes’’ in the information previously 

reported). For QIIs and Passive 

Investors, the requirement to file a 

Schedule 13G amendment upon 

exceeding 10 percent beneficial 

ownership or an increase or decrease in 

beneficial ownership thereafter of more 

than five percent will be accelerated. 

Specifically, QIIs will be required to file 

an amendment five business days 

(rather than the current deadline of 10 

days) after any month-end at which 

beneficial ownership meets one of these 

thresholds, while Passive Investors will 

be required to file an amendment within 

two business days (rather than the 

current deadline of ‘‘promptly’’) after 

beneficial ownership meets one of these 

thresholds. 

A. Benefits 

Academic research has provided 

evidence that at least some Schedule 

13G filings contain value-relevant 

information that is not already 

incorporated in market prices, as 

discussed in more detail below.871 The 

acceleration of such Schedule 13G 

filings under the final rules may thus 

benefit market participants. Specifically, 


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872See letters from ABA; AFREF; EEI; FedEx; 

Freeport-McMoRan; Nasdaq. 

873See letters from AFREF; HMA I; Nasdaq; SCG. 

874See letter from HMA I. 

875See letter from AFREF. 

876See letters from Nasdaq; SCG. 

877See letters from ICI I; MFA; MSBA; SIFMA; 

SIFMA AMG; SSC; TIAA; TRP. 

878See letters from ABA; MFA; TRP. 

879See letters from ICI I; MSBA; SIFMA; TIAA. 

880See letters from ABA; MFA; MSBA; STB. 

881Though a commenter referenced Form N–Q, 

we note that this form has been rescinded and 

similar information is now disclosed in Form N– 

PORT. 

882See letters from ABA; MFA; SIFMA AMG. 

883See, e.g., Albuquerque et al. 2022 Study 

(finding that Schedule 13G filings by hedge funds 

are associated with an average cumulative abnormal 

return of about 1.2% over the period from 30 days 

before to 10 days after the filing date); Alex Edmans 

et al., The Effect of Liquidity on Governance, 26 

Rev. Fin. Stud. 1443 (2013) (‘‘Edmans et al. 2013 

Study’’) (finding that Schedule 13G filings by hedge 

funds are associated with an average cumulative 

abnormal return of 0.8% over the period from one 

day before to one day after the filing date); and 

Christopher Clifford, Value Creation or Destruction? 

Hedge Funds as Shareholder Activists, 14 J. Corp. 

Fin. 323 (2008) (‘‘Clifford 2008 Study’’) (finding 

that Schedule 13G filings by hedge funds are 

associated with an average cumulative abnormal 

return of 1.6% over the period from two days before 

to two days after the filing date, and that there are 

similar positive cumulative abnormal returns 

around the filing date for filings submitted within 

10 days of the trigger date and for all Schedule 13G 

filings by hedge funds regardless of the timing of 

the filing). These researchers vary in their 

interpretation of these results, with some attributing 

the positive returns to a governance role of the filers 

(i.e., a contribution to the promotion of corporate 

accountability) and others asserting that the 

positive return may be a reflection of the market’s 

view of the filers’ stock-picking ability. There may 

be further potential explanations for the market 

reaction. For example, the presence of certain 

significant shareholders (e.g., an investor known to 

pursue activist strategies at some of the issuers in 

which they invest, or an institutional investor 

known to have voted in the past in favor of changes 

proposed by activists) could provide information 

about the likelihood of a future activist campaign 

or the likelihood of success of such a campaign. 

See, e.g., Kedia et al. 2021 Study (finding that the 

composition of institutional ownership of an issuer 

is associated with both the likelihood of being 

targeted by an activist campaign and the outcomes 

of such campaigns). 

884See Albuquerque et al. 2022 Study (finding, in 

a sample of all Schedule 13G filings from 1996 to 

2016, that Schedule 13G filings that are not made 

45 days after calendar year-end, but are instead 

made on any other day, experience a statistically 

significant cumulative abnormal return of 0.59% 

around the filing date). 

885See Albuquerque et al. 2022 Study (finding, in 

sample of all Schedule 13G filings from 1996 to 

2016, that the cumulative abnormal return around 

the filing date for all such filings made 45 days after 

calendar year-end is not distinguishable from zero). 

886See letters from MFA; NVCA; STB. 

887See letter from TRP. 

investors and issuers, with earlier access 

to the information and an updated stock 

price, may be able to make betterinformed investment and resource 

allocation decisions. At an economy 

level, this better-informed decisionmaking may improve the efficiency of 

resource allocation overall. 

Some commenters agreed that the 

proposed acceleration of beneficial 

ownership reporting as a whole, 

including the proposed revisions to 

Schedule 13G filing deadlines, would 

make material information available to 

all investors in a more timely 

manner.872 Some commenters also 

specified reasons that the information in 

Schedule 13G filings in particular is 

important to investors and issuers.873

For example, one commenter stated that 

there are ‘‘significant risks and impacts 

of large holdings on investors 

irrespective of the stated intentions of a 

large position holder,’’ such as the risk 

of stock price volatility if a large 

shareholding were to be sold.874

Another commenter stated that the 

disclosure of beneficial owners in 

Schedule 13G filings, together with 

Schedule 13D filings, ‘‘help inform the 

education and advocacy efforts of those 

with a stake in . . . important 

votes.’’ 875 Other commenters indicated 

that information about all large 

shareholders facilitates issuer efforts to 

identify and engage with these 

shareholders in order to elicit their 

views and ideas.876

On the other hand, some commenters 

stated that they do not believe there is 

a ‘‘harmful’’ information asymmetry or 

other problem that justifies an 

acceleration of the Schedule 13G 

deadlines,877 or indicated that the 

earlier disclosure of the information in 

Schedule 13G filings would be of 

limited, if any, benefit.878 For example, 

some indicated that the concerns that 

could justify accelerating Schedule 13D 

filings would not equally apply to 

Schedule 13G filings.879 Some 

commenters stated that the information 

in Schedule 13G filings is unlikely to be 

material because of the passive intent of 

the filers 880 or because of existing 

disclosures (such as Schedule 13F or 

Form N–PORT881 for some QIIs, or 

registration statements for some Exempt 

Investors) that provide similar 

information.882

Given commenters’ statements 

regarding a lack of material information 

in Schedule 13G filings and limited 

benefits from the acceleration of these 

filings, we reconsidered the evidence on 

the market impact of these filings. Initial 

Schedule 13G filings by hedge funds in 

particular have consistently been 

associated by multiple academic studies 

with, on average, a statistically 

significant positive stock price reaction 

around the filing date.883 Similarly, one 

study found that all initial Schedule 

13G filings that are not submitted 45 

days after the end of the calendar year 

(i.e., generally Schedule 13G filings by 

Passive Investors, including some hedge 

funds, which are required to be made 

within 10 days of the trigger date) are 

associated, on average, with a 

statistically significant stock market 

reaction.884 This study also finds that 

initial Schedule 13G filings submitted 

45 days after the end of the calendar 

year (i.e., generally Schedule 13G filings 

by QIIs and Exempt Investors, which 

include some hedge funds) are not 

associated with a meaningful stock 

market reaction on average.885 It is 

unclear whether this finding with 

respect to post-year-end filings, in 

contrast to the findings with respect to 

other Schedule 13G filings, is 

attributable to the different types of 

persons filing on a calendar-year-end 

filing schedule or by an effect of the 

year-end filing schedule itself on the 

significance of the information to the 

market by the time it is reported on 

Schedule 13G. Overall, this and other 

studies provide support for commenters’ 

assertions that at least some Schedule 

13G filings contain market-moving 

information. 

Some commenters stated that any 

benefits of the proposed filing deadlines 

would be limited due to an increase in 

inaccurate filings as a result of the 

accelerated preparation of filings or due 

to a risk of information overload from 

the increased number of filings.886 The 

filing deadlines we are adopting in the 

final amendments for Schedule 13G 

require, in many cases, less frequent 

filing, and provide longer windows 

prior to filing, than the proposed filing 

deadlines. Accordingly, the adopted 

filing deadlines, as compared to the 

proposed filing deadlines, may mitigate 

the risk of inaccurate filings or 

information overload suggested by 

commenters. 

One commenter stated that the 

Commission did not address ‘‘which 

investors stand to benefit’’ from the 

proposed accelerated filing deadlines, 

and indicated that, while retail and 

long-term investors would not benefit, 

‘‘sophisticated short-term professional 

investors’’ would profit at the expense 

of the investors filing Schedule 13G.887

While we are unable to predict with a 

reasonable degree of confidence which 

specific investors or categories of 

investors are likely to benefit most from 

the acceleration of disclosures, we note 

that the revisions to the final deadlines 

relative to the proposed amendments in 

many cases should mitigate the 

commenter’s concern that the benefits 


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888See letter from TRP. 889See section IV.C.2.b below for further 

discussion of ‘‘front-running’’ risks. 

890See Proposing Release at 13882. 

891See letters from ICI I; SIFMA; TIAA. 

892See supra note 885 regarding research finding 

no significant stock market return, on average, 

around year-end filings of Schedule 13G. See also 

supra note 883 regarding potential reasons for a 

significant stock market reaction around some 

Schedule 13G filings, all of which would be 

weakened in the case of a short-term or transient 

holding. 

893See letters from Anonymous 10; FreeportMcMoRan; J. Soucie. 

894See letter from Freeport-McMoRan. 

895See letters from ABA; ICI I; MFA; SIFMA 

AMG. 

896See letters from IAA; ICI I; MFA. 

897See letters from ICI I; SIFMA; SIFMA AMG. 

898See letters from E. Fraser; IAA; MSBA; STB; 

TIAA. 

899See letters from MSBA; STB. 

900See letters from MSBA; SSC; STB. 

901See letters from ABA; MFA; SSC; STB. 

902See letters from E. Fraser; ICI I; MFA; MSBA; 

STB. 

903See letters from IAA; ICI I; SIFMA; SIFMA 

AMG; SSC; TRP. 

would accrue primarily to short-term 

traders at the expense of Schedule 13G 

filers.888 In particular, as discussed 

below, the lower frequency of disclosure 

and increased filing windows being 

adopted, relative to the proposed 

amendments, should reduce the risk 

that parties (including short-term 

professional investors) profit by 

anticipating and ‘‘front-running’’ the 

trades of the filer.889 We also 

acknowledge that the benefits are likely 

to vary across filings, across filer types, 

and across issuers. For example, there 

may be lower benefits in cases where 

alternate, existing disclosures provide 

similar information on a similar 

timeframe, such as with respect to QIIs 

that also file Form 13F. 

The economic analysis in the 

Proposing Release also indicated that 

the proposed frequency of Schedule 13G 

filings could have particular 

informational benefits resolving a 

concern whereby, currently, QIIs and 

Exempt Investors may avoid beneficial 

ownership reporting by selling down 

their positions by the end of the 

calendar year.890 Some commenters 

indicated that statements in the 

Proposing Release that investors may 

currently avoid beneficial ownership 

reporting in this way were 

unsubstantiated or inconsistent with 

their experience.891 We acknowledge 

that it is unclear whether and to what 

extent investors sell down securities 

holdings before calendar year-end to 

avoid beneficial ownership reporting, as 

well as what motives would be likely to 

drive such behavior, particularly given 

that many filers would likely be 

required to disclose such holdings 

before year-end on other forms and 

schedules in any event. We are unable 

to undertake a systematic quantitative 

analysis of such behavior because we 

can only observe holdings that are sold 

before year-end when they are reported 

on Form 13F or through other 

disclosures, which are precisely the 

situations that present less of a concern 

with respect to the lack of a Schedule 

13G filing during that period. We also 

acknowledge that it is unclear how 

material any information about the 

filers’ beneficial ownership may be in 

these cases in light of the short-term or 

transient nature of this ownership and 

the academic research discussed 

above.892 That said, by requiring 

disclosure at the end of a quarter, the 

final amendments may reduce the 

opportunities to avoid a Schedule 13G 

filing, which could elicit incremental 

value-relevant information to the benefit 

of market participants as more filings 

are disclosed. 

b. Costs 

All Schedule 13G filers may incur 

one-time compliance costs to update 

their systems and processes to comply 

with the revised filing deadlines, such 

as updating any information technology 

systems used to monitor beneficial 

ownership and generate associated 

alerts and reports. All such filers are 

also likely to incur incremental ongoing 

compliance costs to review beneficial 

ownership on a more frequent basis and 

potentially (to the extent that there are 

material changes in the information 

previously reported) prepare more 

frequent Schedule 13G filings. These 

ongoing costs may include costs 

associated with gathering information 

from multiple sources, determining 

whether changes are material, and, if 

changes are deemed to be material, 

drafting a filing, validating its content, 

obtaining signatures, processing the 

filing into the required format (via 

internal personnel or an external 

EDGAR filing agent), and submitting it. 

In addition, filing agents (and 

potentially other external advisers) may 

charge higher fees for expedited 

processing and/or for weekend services, 

which may be more frequently required 

(particularly for Passive Investors) 

under the accelerated deadlines. 

Some commenters, although not 

expressly distinguishing between the 

Schedule 13D and Schedule 13G 

requirements, stated that they did not 

expect the proposed accelerated 

deadlines to be overly burdensome on 

filers,893 with one stating that filers are 

‘‘highly likely to be sophisticated and 

experienced investors with the proper 

resources to file promptly.’’ 894

Other commenters stated that they 

expected significant increases in 

compliance burdens from the proposed 

Schedule 13G filing deadlines which 

were not sufficiently accounted for in 

the Proposing Release, citing, for 

example, the significant increase in the 

required frequency of reporting and of 

monitoring holdings; 895 that many 

investors must file Schedule 13G for 

many different issuers; 896 and that filers 

may not already have the required 

systems in place or have access to the 

required infrastructure and personnel to 

comply.897

Some commenters also noted various 

practical challenges that would make it 

difficult to complete all of the required 

steps to submit an accurate Schedule 

13G within the proposed filing windows 

(i.e., five business days, five calendar 

days, or one business day), such as steps 

that require manual work or cannot be 

expedited through the use of 

technology; 898 constraints with respect 

to the availability and system capacity 

of any outside staff or services that are 

used; 899 issues related to the necessary 

involvement of multiple parties, 

entities, or signatories; 900 and a lack of 

sufficient time to validate the content of 

the filing.901 Some commenters noted 

that first-time, non-institutional, or 

smaller filers may face particular 

challenges in complying with the 

proposed filing deadlines.902

In response to the concerns about 

compliance costs and challenges related 

to the proposed amendments, we note 

that, for QIIs and Exempt Investors, the 

final amendments require a lower 

frequency of initial and amended filings 

(generally quarterly as opposed to 

monthly) and allow more time to 

prepare filings (45 calendar days as 

opposed to five business days) as 

compared to the proposed amendments. 

Many of these filers (about 84 percent of 

QIIs and 10 percent of Exempt Investors 

in 2022, per Table 4 above) already file 

Form 13F on a similar schedule. As 

indicated by some commenters,903 filers 

may thus be better equipped to assess 

their holdings and (potentially) prepare 

Schedule 13G filings on a quarterly 

schedule. Further, under the final 

amendments, QIIs should be able to 

monitor beneficial ownership that could 

exceed 10 percent of a covered class (or, 

thereafter, change by more than five 

percent) on a monthly basis, as they do 

now, rather than daily, as may have 

been required under the proposed 

amendments. Passive Investors will also 


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904See, e.g., Marno Verbeek & Yu Wang, Better 

than the Original? The Relative Success of Copycat 

Funds, 37 J. Bank. Fin. 3454 (2013) (studying 

potential free-riding behavior and finding that some 

funds duplicate the disclosed asset holdings of 

actively managed mutual funds, and that free-riding 

on the portfolios disclosed by ‘‘past winning funds’’ 

generates significantly better performance net of 

trading costs and expenses than the vast majority 

of mutual funds). 

905See, e.g., Sophie Shive & Hayong Yun, Are 

Mutual Funds Sitting Ducks? 107 J. Fin. Econ. 220 

(2013) (studying potential front-running behavior 

and finding that hedge funds trade on expected 

mutual fund flows, and that this type of 

anticipatory trading is stronger after 2004 when 

quarterly portfolio disclosure was required of 

mutual funds). 

906See, e.g., Edmans et al. 2013 Study (finding 

that initial Schedule 13G filings are followed by 

improvements in operating performance and 

associating this relation with the role of significant 

shareholders); see also Alex Edmans & Clifford 

Holderness, Blockholders: A Survey of Theory and 

Evidence, 1 Handb. Econ. Corp. Gov. 541 (2017); 

Andrei Shleifer & Robert Vishny, Large 

Shareholders and Corporate Control, 94 J. Pol. 

Econ. 461 (1986). 

907See Proposing Release at 13886. 

908For comments regarding the proposed 

frequency of reporting, see letters from Dodge & 

Cox; IAA; ICI I; SSC; TIAA; TRP. For comments 

regarding the proposed filing windows, see letters 

from Dodge & Cox; IAA; TRP. 

909For example, information about holdings in 

reportable securities that would reveal a filer’s 

ongoing program of acquisition or disposition of a 

reportable security, open risk arbitrage positions, 

and investment strategies that utilize block 

positioning may be eligible for confidential 

treatment with respect to Form 13F for the period 

of time necessary to effectuate the filer’s strategy. 

See Section 13(f) Confidential Treatment Requests, 

letter from staff of Division of Investment 

Management (June 17, 1998), available at https:// 

www.sec.gov/investment/ 

divisionsinvestmentguidance13fpt2htm. 

910See letters from MFA (stating that the 

proposed Schedule 13G filing requirements would 

‘‘create more substantial barriers to entry, thereby 

discouraging new potential entrants to the 

investment management market’’); TIAA (stating 

that the proposed Schedule 13G filing requirements 

would put ‘‘investment advisers—particularly 

active advisers—at a real competitive disadvantage’’ 

due to ‘‘competitors attempting to copy or trade 

ahead of QIIs’ investment strategies and engage in 

other manipulative trading practices’’). 

be permitted to submit most Schedule 

13G amendments on a quarterly cadence 

(rather than monthly, as proposed), with 

45 calendar days (rather than five 

business days, as proposed) after the 

end of the period to submit the filings, 

though their initial filings will be 

required within five business days after 

the trigger date (rather than five 

calendar days, as proposed). They will 

also be permitted to file a Schedule 13G 

amendment within two business days of 

their holdings exceeding 10 percent of 

a covered class (or, thereafter, for 

changes of five percent or more), rather 

than one business day, as proposed. 

Finally, to provide time to implement 

the new Schedule 13G filing deadlines, 

compliance is not required until 

September 30, 2024. 

We acknowledge that the incremental 

compliance burdens of the revised 

deadlines may be greater for smaller, 

less experienced filers than for other 

filers due to their more limited internal 

resources and expertise in preparing 

filings. In particular, these filers are less 

likely to have operational systems and 

processes in place that would facilitate 

compliance with the revised filing 

deadlines. The compliance burdens may 

be greatest for smaller, less experienced 

Passive Investors when filing an initial 

Schedule 13G, as these investors may, 

for example, be most likely to incur fees 

for expedited processing and/or for 

weekend services given the revised 

deadline for their filings (five business 

days after the trigger date) and their 

likely reliance on external advisors and 

service providers. That said, all of the 

changes relative to the proposed 

amendments should at least partially 

mitigate commenters’ concerns about 

compliance costs and challenges 

discussed above, including for firsttime, non-institutional, or smaller filers. 

For example, under the Proposed 

Amendments, Schedule 13G filers could 

have been required to file as many as 12 

amendments per year under the monthend filing deadline in Rule 13d–2(b). 

Under the final amendments, however, 

Schedule 13G filers’ burdens may be 

significantly lower, as the quarter-end 

filing deadline in amended Rule 13d– 

2(b) results in a maximum of four 

amendments per year pursuant to that 

rule. 

We also acknowledge that the 

accelerated Schedule 13G filing 

deadlines may give rise to incremental 

free-riding and front-running risks. That 

is, there is a risk that more frequent 

filings with a shorter filing window may 

reveal a filer’s proprietary information 

or trading strategies to other market 

participants, thus allowing those 

participants to ‘‘free ride’’ by copying 

the filer’s strategies without incurring 

the same cost as the fund to research, 

identify and devise profitable 

strategies.904 Further, more frequent 

filings with a shorter filing window 

could also allow other investors to 

better anticipate trades of the filers. 

These other investors may attempt to 

‘‘front run’’ or trade ahead of filers to 

capture any impact on the prices of 

traded securities.905 Any increase in 

free-riding and front-running may 

ultimately diminish a filer’s investment 

returns and thus harm the filer and any 

clients or investors of the filer. Such 

risks may also reduce incentives to 

engage in research and analysis about 

potential shareholdings or to pursue 

some investment opportunities, which 

may reduce market efficiency and the 

efficient allocation of capital to its most 

productive uses. Any related reduction 

in the number of significant 

shareholders of issuers may also reduce 

the operational efficiency of affected 

issuers, due to the role large 

shareholders may play in the promoting 

of corporate accountability either 

through direct monitoring of 

management or the threat of exiting an 

investment.906

Some commenters disagreed with the 

Commission’s statement in the 

Proposing Release that the risks of frontrunning and free-riding associated with 

the proposed Schedule 13G filing 

deadlines were likely to be low,907

raising concerns that both the proposed 

frequency of reporting and the proposed 

filing windows (i.e., five business days, 

five calendar days, or one business day) 

would lead to significant risks of 

revealing proprietary trading strategies 

and, because disclosure may be required 

while trades or trading strategies are 

still in progress, of facilitating predatory 

trading.908 We believe that the revised 

deadlines in the final amendments 

relative to the proposed amendments 

should reduce these risks, particularly 

for filers that are already reporting 

holdings on a similar timeframe on 

Form 13F. That said, confidential 

treatment requests for Form 13F filings 

that may allow some filers to defer 

disclosing some or all of their holdings 

on that form 909 are not available for 

Schedule 13G filings, so even Form 13F 

filers and their clients may bear some 

additional risk of free-riding and frontrunning when filing Schedule 13G. 

There could also be negative effects 

on competition in the market for 

investment management services from 

accelerated Schedule 13G filing 

deadlines, as noted by some 

commenters.910 In particular, the freeriding and front-running risks discussed 

above could reduce incentives for 

investment managers to construct 

proprietary investment strategies, and 

any increased compliance burdens may 

increase barriers to entry. However, for 

the reasons discussed above, we expect 

such risks and burdens, and therefore 

any resulting effect on competition, to 

be mitigated under the revised filing 

deadlines as compared to the proposed 

filing deadlines. 

3. Other Amendments 

a. Revised Filing Deadline for Schedule 

13D Amendments 

The final amendment to Rule 13d– 

2(a) revises the filing deadline for 

amendments to Schedule 13D to two 

business days after the date on which a 

material change occurs, as compared to 


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911See letter from EIM I. 

912See letters from AIMA; NVCA; STB. One of 

these commenters specified that, in the context of 

venture capital funds making distributions of shares 

to their limited partners, a one-business day filing 

deadline would risk ‘‘erroneously signaling a selloff to the market,’’ harming liquidity and market 

efficiency, particularly for thinly traded companies 

that are more likely to be dominated by retail 

investors. See letter from NVCA. 

913See letters from NVCA; STB. 

914See letter from AIMA. 

915See letters from ABA; AIMA; IAA; ICI I; EEI; 

EIM I; Hoak; MFA; MSBA; NVCA; Perkins Coie; 

STB. 

916See letters from AIMA; ICI I; STB. 

917See letters from IAA; EIM I; Hoak; NVCA; 

Perkins Coie. 

918See, e.g., Lilienfeld-Toal & Schnitzler 2020 

Study (suggesting that the percentage of beneficial 

ownership reported in Schedule 13D is an indicator 

of the types of actions the filer may be expected to 

take and finding that this percentage is a 

statistically significant predictor of the 

announcement returns around the filing date). 

919See letter from IAA; see also Schedule 10B 

Proposal. 

the baseline requirement that 

amendments be filed ‘‘promptly’’ after 

such date. 

We believe that replacing the 

‘‘promptly’’ requirement with a brightline, two-business day requirement will 

provide greater clarity as to when 

material changes are to be disclosed, 

which could reduce any current filer 

confusion. In addition, to the extent that 

the revised deadline results in earlier 

disclosure of some Schedule 13D 

amendments than under the baseline, 

this deadline may allow the information 

to be incorporated into market prices 

earlier, allow market participants to 

make better-informed investment 

decisions, and enhance the efficiency of 

resource allocation at the economy 

level. For those filers that would not 

otherwise have filed their amendments 

within two business days after a 

material change, the revised deadline 

for Schedule 13D amendments may 

somewhat increase compliance costs. 

In particular, these filers may bear 

greater costs due to the need to 

complete the necessary tasks (including 

gathering information from multiple 

sources, determining whether changes 

are material, drafting and validating the 

content of the filing, obtaining 

signatures, processing the filing into the 

required format via internal personnel 

or an external EDGAR filing agent, and 

submitting the filing) more quickly. In 

addition, filing agents (and potentially 

other external advisers) may charge 

higher fees for expedited processing 

and/or for weekend services, which may 

be more frequently required under the 

revised deadline. There may also be 

compliance challenges involved in 

accessing external advisers or 

coordinating among multiple signatories 

or parties in a short timeframe. Any 

such costs and challenges are likely to 

be more burdensome for small, noninstitutional, and less experienced filers 

with fewer in-house resources. In 

particular, these filers are less likely to 

have operational systems and processes 

in place that would facilitate 

compliance with the revised filing 

deadline and are likely to be more 

reliant on external advisers and service 

providers. The compliance costs and 

challenges are also likely to be greater 

for institutional filers with more 

complex business organizations, 

including those with sub-advisory 

relationships common in the investment 

management industry. 

One commenter asserted that the 

‘‘promptly’’ standard under Rule 13d– 

2(a) has ‘‘generally been understood’’ to 

mean within two business days.911

Accordingly both the benefits and costs 

of the revised deadline for Schedule 

13D amendments will likely be limited 

in the case of Schedule 13D 

amendments that would have been 

made within two business days even in 

the absence of the final amendments. 

Some commenters questioned whether a 

revised deadline for Schedule 13D 

amendments would materially improve 

the information available to investors 

and other market participants,912 with 

two commenters questioning the 

benefits with respect to specific subsets 

of filers 913 and one stating that ‘‘there 

have been very few, if any, abuses 

associated with the current ‘promptly’ 

regime and . . . it has worked well and 

effectively.’’ 914 We acknowledge that 

the extent of any benefits of the revised 

deadline are likely to vary across filers, 

types of filings, and issuers, with greater 

benefits associated with those Schedule 

13D amendments that have more of a 

market impact (e.g., because they report 

a more significant change in holdings or 

plans) and that also would otherwise 

have been filed a greater number of days 

after the material change. 

The proposed amendments would 

have required amendments to Schedule 

13D to be filed one business day after 

the date on which a material change 

occurs. Many commenters raised 

concerns about compliance challenges 

and costs associated with the limited 

time that would be available to consider 

the need for, prepare, and submit a 

filing under this proposed deadline.915

While some of the commenters raising 

such concerns indicated that more than 

two days may be required to complete 

the required tasks,916 some identified a 

two business day deadline as a more 

practicable period for compliance.917

We agree with these commenters and 

therefore expect that the revision of this 

filing deadline to two business days, 

rather than one business day, after the 

date on which a material change occurs 

will mitigate some concerns about 

difficulties in complying with the 

amended deadline. 

b. Amendments to Item 6 of Schedule 

13D 

The final amendment to Item 6 of 

Schedule 13D makes explicit that cashsettled derivative securities (including 

cash-settled SBS) that use the issuer’s 

securities as a reference security are 

included among the types of contracts, 

arrangements, understandings, and 

relationships that must be disclosed 

under that Item. This final amendment 

will not change the treatment of 

derivative securities for the purpose of 

determining beneficial ownership. To 

the extent that this final amendment 

elicits additional disclosure that may 

not otherwise have been provided, 

investors and the market may benefit 

from a more complete understanding of 

all of a filer’s interests in an issuer. In 

particular, this final amendment may 

provide more information about the 

overall economic exposure of the filer to 

the issuer, which may be associated 

with the actions the filer may be 

expected to take and thus the 

shareholder value impact associated 

with the filing.918 However, filers could 

incur additional compliance costs to the 

extent that they have not already been 

providing such disclosure. In particular, 

filers may need to expend additional 

internal resources and/or consult 

external advisors to draft the required 

disclosures and to monitor interests in 

cash-settled derivative securities in 

order to report any material changes. In 

section V.C below we estimate for 

purposes of the Paperwork Reduction 

Act of 1995 (‘‘PRA’’) that this final 

amendment will impose, on average, an 

additional 0.1 burden hour per filing. 

One commenter indicated that the 

inclusion of SBS in Item 6 would not 

provide incremental benefits beyond 

other disclosures, including disclosures 

that are under consideration in a 

different proposed rulemaking.919 We 

continue to believe that, given current 

disclosure requirements, the final 

amendment to Item 6 may elicit 

additional disclosure that may not 

otherwise have been provided. Further, 

to the extent some of this information 

may be made public in other 

documents, investors may benefit from 

being able to review all of a filer’s 

interests in an issuer in a single 

location. 


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920See, e.g., letters from ICI I; M. Slavens. 921See letter from A. Day. 922See letter from ICI I. 

923 Id. 

924See letters from IAA; ICI I. 

925Commission staff may grant the request if it 

appears that the adjustment is appropriate and 

consistent with the public interest and the 

protection of investors. See Rule 13(b) of Regulation 

S–T. 

926See supra Figures 2, 3a, and 3b for the 

percentage of filers that have completed 

accumulating all, 90%, or 75% respectively of their 

reported stake by each calendar day after the trigger 

date. 

c. Structured Data Requirement for 

Schedules 13D and 13G 

The final rules require all disclosures 

reported on Schedules 13D and 13G 

other than the exhibits to be submitted 

using 13D/G-specific XML. We continue 

to believe, as discussed in the Proposing 

Release, that requiring the disclosures in 

a structured, machine-readable data 

language will improve the public 

dissemination and accessibility of the 

information in these disclosures by 

facilitating its extraction and analysis. 

Some commenters agreed that a 

structured data requirement would 

enhance the benefits of the disclosures 

by making the information easier to 

access and analyze.920

We expect that the structured data 

requirement will impose some 

incremental compliance costs on filers. 

In section V.C below we estimate for 

purposes of the PRA that these 

requirements will impose, on average, 

an additional 0.5 burden hour per filing. 

One commenter expressed concern that 

structured data requirement would be 

unduly burdensome for small beneficial 

owners.921 Filers will have the option of 

using a fillable web form that converts 

inputted disclosures into 13D/G-specific 

XML, which should limit the 

incremental burden on filers that elect 

to use this approach. In particular, we 

expect that the availability of a fillable 

web form should, due to its ease of use, 

mitigate the concern raised by a 

commenter that the structured data 

requirement would be unduly 

burdensome for small beneficial owners. 

Filers who instead choose to submit 

filings directly in 13D/G-specific XML 

may bear implementation costs of 

establishing related compliance 

processes and expertise and/or, as one 

commenter indicated, ongoing costs of 

working with third-party vendors.922

Making submissions directly in 13D/Gspecific XML is an approach that may 

be more likely to be taken by filers 

expecting to submit larger numbers of 

Schedule 13D and Schedule 13G filings, 

such as QIIs. We expect the costs of 

submitting Schedule 13D/G directly in 

13D/G-specific XML will vary based on 

prior experience with encoding and 

transmitting structured disclosures. Per 

Table 4 in section IV.B.3.b above, 84 

percent of the QIIs filing initial 

Schedule 13Gs in 2022 were also 

Schedule 13F filers, and thus have such 

experience. 

One commenter, while supporting the 

proposed structured data requirement, 

raised concerns about the additional 

time necessary to comply with the 

structured data requirement within the 

shortened filing windows that were 

proposed.923 We acknowledge that the 

structured data requirement will 

increase the amount of time needed to 

submit filings. We believe the extended 

time permitted to file Schedule 13D and 

Schedule 13G amendments, and, for 

QIIs and Exempt Investors, to file initial 

Schedule 13G filings under the final 

rules as compared to the proposed 

deadlines should mitigate some of the 

concerns raised by this commenter 

about the time required to comply with 

the structured data requirement. 

d. Amendments to Regulation S–T 

The final amendments to Regulation 

S–T revise the time by which Schedule 

13D and 13G filings must be submitted 

in order to be deemed to have been filed 

on a given business day from 5:30 p.m. 

to 10 p.m. Eastern Standard Time or 

Eastern Daylight Saving Time, 

whichever is currently in effect, on that 

day. This change may, on the margin, 

mitigate the incremental compliance 

challenges and costs associated with the 

revised filing deadlines, particularly for 

filers located in a different time zone 

than the Commission’s principal office 

or those operating in multiple time 

zones. Some commenters agreed that 

these extended filing hours would 

benefit filers in light of the shortened 

filing deadlines.924

The final amendments to Regulation 

S–T also make temporary hardship 

exemptions under Rule 201 of 

Regulation S–T unavailable with respect 

to Schedule 13D and 13G filings. We 

expect this change to have no 

meaningful economic effects as filers 

will be able to request a filing date 

adjustment under existing Rule 13(b) of 

Regulation S–T under similar 

circumstances as a temporary hardship 

exemption.925

D. Reasonable Alternatives to the Final 

Rules 

We considered many alternatives to 

the final rules. Some of these are 

discussed earlier in this release. In this 

section, we present certain significant 

alternatives and a discussion of their 

benefits and costs relative to the final 

rules. 

1. Alternative Filing Deadlines 

We considered both earlier and later 

(and more and less frequent) filing 

deadlines relative to those that we are 

adopting. In general, earlier (or more 

frequent) filing deadlines may have 

increased the benefits, but also the 

costs, of the amendments, while later (or 

less frequent) deadlines would have 

decreased the costs but also the benefits 

of the amendments. The economic 

implications of some alternative filing 

deadlines (namely, those that were 

proposed but not adopted) are discussed 

in more detail above. 

With respect to the initial Schedule 

13D filing deadline, which will be five 

business days after the trigger date, we 

also considered a deadline of greater or 

fewer days after the trigger date. 

Additionally, we considered deadlines 

stated in calendar days as opposed to 

business days, which, when applied to 

the same number of days (i.e., five 

calendar days), would have the effect of 

decreasing the number of days a person 

would have to file an initial Schedule 

13D in cases where weekends or 

holidays fall in the middle of the filing 

window. In general, a shorter deadline 

and the resulting earlier disclosures may 

have increased the benefits discussed 

above for those non-corporate-action 

filings that would not already be 

considered timely with respect to such 

shorter deadline. A shorter deadline 

may also have further reduced the risk 

discussed above of shareholders selling 

to informed bystanders prior to a 

Schedule 13D filing (as demonstrated in 

Figure 6 above), which may have further 

enhanced trust in markets and capital 

formation. 

However, a shorter deadline may also 

have increased the number of activist 

campaigns forgone compared to the 

amended filing deadlines, due to two 

effects. First, a shorter deadline would 

mean that, given current share 

accumulation patterns, there would be a 

greater number of potential campaigns 

for which filers would have to consider 

whether or not to proceed and if so, 

how.926 Second, the likelihood of 

adapting may decrease if it is more 

difficult for filers to adapt to an even 

shorter deadline than that which we are 

adopting. An increase in forgone activist 

campaigns may have further reduced 

shareholder value creation. A reduction 

in the pursuit of activism may also have 

related negative effects on operational 

efficiency, market efficiency, liquidity, 


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927See, e.g., letter from Profs. Bishop and Partnoy 

III (recommending a five-business day deadline 

because it would be ‘‘consistent with other 

regulatory and trading practices,’’ and noting that 

‘‘the unit of analysis in examining trading should 

be trading days’’). 

928See Gantchev & Jotikasthira 2018 Study 

regarding the role of institutional selling demand on 

the timing of Schedule 13D trigger dates. 

929See, e.g., letters from IAA; MSBA. 

930See supra note 884. 

931See supra note 827. 

932See letter from ICM. 

933See letter from STB. 

934 Id. 

and capital formation, as discussed in 

the context of the adopted deadline 

above. 

In the case of a longer deadline, the 

implications for the incremental 

benefits and costs would have been the 

reverse of those for a shorter deadline. 

We note that there is no clear breakpoint 

in either the accumulation pattern of 

filers or in the abnormal trading volume 

prior to Schedule 13D filings that could 

help to support a particular filing 

deadline, including five-business day 

deadline we are adopting. 

A deadline expressed in calendar 

days would also have incremental 

effects beyond a direct effect on the 

length of the filing window. In 

particular, such a deadline would 

decrease the consistency in the total 

number of business hours that persons 

would have to continue accumulating 

shares and to draft and submit a filing 

after their trigger date.927 For example, 

a five-calendar day deadline may 

represent anywhere from two to five 

business days depending on the 

occurrence of weekends and holidays 

after the trigger date. This inconsistency 

may distort the campaigns that are 

pursued by activists or the timing of 

these campaigns. For example, an 

activist who crosses the five percent 

threshold on a Monday would generally 

have five trading days from the trigger 

date to accumulate further shares and 

potentially increase their profits prior to 

filing and informing the market of their 

activity. In contrast, an activist who 

reaches the same threshold on a Friday 

prior to a Federal holiday on the 

following Monday would only have two 

trading days after the trigger date to 

accumulate shares before making a 

Schedule 13D filing. Because investors 

who reach the threshold near a weekend 

or holiday would thus be at a relative 

disadvantage, activists may be relatively 

more incentivized to pursue campaigns 

at issuers where liquidity conditions 

(i.e., availability and ease of share 

purchase transactions) facilitate crossing 

the five percent threshold early in a 

week at a lower cost.928 Any effect of 

this kind, in turn, would have a 

detrimental effect on operational 

efficiency at the market level by 

influencing which campaigns are more 

likely to be pursued. 

A deadline expressed in calendar 

days could also increase compliance 

costs, given that external service 

providers and advisers may charge 

higher fees for weekend or holiday 

services, which may be more frequently 

required under a deadline expressed in 

calendar days. However, a deadline 

expressed in calendar days would 

increase the consistency in the total 

number of calendar days that persons 

would have to submit a filing. For 

example, five business days may 

represent anywhere from seven to 10 

calendar days. If a significant amount of 

investment, advisory, drafting, or other 

activities in preparation of a Schedule 

13D filing takes place on weekends and 

holidays, it is possible that this 

inconsistency in calendar days would 

advantage some filers over others (i.e., 

those who are better positioned to work 

over weekends and holidays versus 

those who are not). 

With respect to the initial Schedule 

13G filing deadline for Passive 

Investors, which will be five business 

days after the trigger date, we also 

considered longer and shorter deadlines 

(and the use of deadlines expressed in 

business as opposed to calendar days, 

which would have had the effect of 

lengthening the deadline for the same 

number of stated days). A longer 

deadline would have eased commenters’ 

concerns about the compliance costs 

and complications for Passive 

Investors.929 However, researchers have 

found that those Schedule 13G filings 

that are not made 45 days after year-end 

(i.e., generally Schedule 13G filings by 

Passive Investors) are associated, on 

average, with a statistically significant 

positive abnormal stock return,930 albeit 

smaller than that generally found for 

Schedule 13D filings.931 This result may 

imply that at least some of these 

disclosures contain material information 

whose earlier disclosure could benefit 

investors (and which may have 

enhanced the efficiency of resource 

allocation at the economy level). A 

longer deadline would have reduced 

any such benefits. In the case of a 

shorter deadline, the implications for 

the incremental benefits and costs 

would have been the reverse of those for 

a longer deadline. 

2. Tiered Approaches 

We considered ‘‘tiered’’ approaches to 

the initial Schedule 13D filing deadline, 

in contrast to the uniform approach to 

the filing deadline being adopted. We 

considered, for example, maintaining 

the current 10-day deadline for 

acquisitions of more than five percent 

but no more than 10 percent of a 

covered class while instituting an 

amended, shorter deadline in cases 

where beneficial ownership exceeds 10 

percent. We also considered whether 

the deadline for the initial Schedule 

13D filing should vary based on a 

specified characteristic of the issuer of 

the covered class, such as its market 

capitalization or trading volume. 

Finally, we considered maintaining the 

10-day deadline for those filers that 

elect to ‘‘stand still’’ by not acquiring 

additional beneficial ownership of the 

covered class once the five percent 

threshold has been crossed until the 

corresponding Schedule 13D is filed. 

One commenter stated that a tiered 

approach that would maintain a 10-day 

deadline for filing a Schedule 13D 

pertaining to beneficial ownership in 

micro-, small-, and mid-capitalization 

issuers ‘‘may serve to limit the impact 

that reforms to Rule 13d–1(a) have on 

shareholder engagement and 

monitoring,’’ particularly at micro-, 

small-, and mid-capitalization issuers 

where, in the commenter’s view, ‘‘such 

effective engagement and monitoring is 

most necessary.’’ 932 Another 

commenter suggested requiring persons 

who cross certain higher thresholds 

(e.g., a 10 percent beneficial ownership 

threshold) or who accumulate certain 

amounts after crossing the five percent 

threshold (e.g., an additional three 

percent) file their initial Schedule 13D 

on the proposed accelerated timeline, 

but ‘‘allowing investors who trigger 

Schedule 13D filings for more technical 

reasons and who are not accumulating 

stock in connection with a potential 

activist engagement (e.g., proxy contests 

or intended take-private activity) to 

continue filing under the current 

regime.’’ 933 This commenter also 

supported maintaining the 10-day 

deadline for ‘‘an investor who crosses 

the 5% threshold but acquires no 

additional stock after the initial crossing 

transaction,’’ stating that ‘‘there is no 

informational disadvantage for existing 

investors in such circumstances’’ and 

that in some cases there is ‘‘earlier 

disclosure by the issuer relating to the 

[crossing] transaction’’ and therefore 

‘‘little purpose [is] served by 

accelerating the timeline for the investor 

to prepare its disclosure.’’ 934

We acknowledge that there is 

significant heterogeneity in the benefits 

and costs of the amended filing deadline 

across different types of filers and 


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935See section IV.B.3.a.ii above for definitions of 

these terms and section IV.C.1 above for discussions 

in which we conclude that both the benefits and 

costs of the shortened initial Schedule 13D filing 

deadline are likely to be limited for corporate action 

filings. 936Academic research has associated smaller 

issuer market capitalization with a higher positive 

abnormal stock return around the filing of an initial 

Schedule 13D. See supra note 829. A higher 

positive abnormal stock return may imply higher 

costs if there is less such activism under an 

accelerated filing timeline but also higher benefits 

to investors from accelerating disclosure due to the 

greater importance of the information to the market. 

937Academic research has associated Schedule 

13D filers’ reputations (based on their financial 

clout, expertise, or aggressive style of engagement) 

with the size of the positive abnormal stock return 

around the filing. See, e.g., C. N. V. Krishnan et al., 

The Second Wave of Hedge Fund Activism: The 

Importance of Reputation, Clout, and Expertise, 40 

J. Corp. Fin. 296 (2016); and Travis Johnson & 

Nathan Swem, Reputation and Investor Activism: A 

Structural Approach, 139 J. Fin. Econ. 29 (2021). As 

discussed supra note 936, a higher positive 

abnormal stock return may imply both higher costs 

and higher benefits of accelerating the filing 

deadline. 

938See supra notes 936–937 for examples of some 

such subgroups. 

939See letter from XBRL US. 

940See supra section IV.C.3.c for a discussion of 

costs associated with the 13D/G-specific XML 

requirements. 

941See Securities and Exchange Commission, 

Office of Structured Disclosure, Insider 

Transactions Data Sets, available at https://

www.sec.gov/dera/data/form-345. 

942 44 U.S.C. 3501 et seq. 

943 44 U.S.C. 3507(d); 5 CFR 1320.11. 

issuers. For example, as discussed 

above, these benefits and costs are likely 

to vary across ‘‘corporate action’’ as 

compared to ‘‘non-corporate-action’’ 

filings,935 across issuers of different 

sizes,936 and by the identity of the 

filer.937 Ideally, a tiered approach would 

be used to accelerate disclosure 

specifically in circumstances where the 

benefits of accelerated disclosure are 

greater and the costs of accelerated 

disclosure are lower. However, there are 

many important dimensions across 

which the benefits and costs are likely 

to vary, complicating the task of 

designing a tiered approach. Further, 

the subgroups of filings that are 

associated with the greatest costs under 

an accelerated filing deadline (and 

where there thus could be significant 

advantages of maintaining the 10-day 

deadline) are also the same subgroups 

associated with the greatest benefits 

under an accelerated deadline, while 

those associated with lower costs are 

associated with lower benefits.938 This 

pattern mitigates our ability to improve 

the costs of the amendments by 

implementing a tiered approach. 

3. Modify Structured Data Requirement 

We considered modifying the 

proposed structured data requirement 

for Schedules 13D and 13G. We 

considered, for example, requiring only 

the quantitative disclosures reported on 

Schedules 13D and 13G to be provided 

in a structured data language. 

Narrowing the scope of the structuring 

requirement in this way could simplify 

the resulting dataset to include only the 

information that might be used most 

widely by market participants, analysts, 

and Commission staff for aggregation, 

comparison, and analysis, which may 

better suit those users who wish to focus 

their analysis on such information and 

forgo the additional step of filtering out 

other data. However, the nonquantitative disclosures on Schedules 

13D and 13G, such as textual narratives 

and identification checkboxes, are also 

likely to be valuable for many data 

users, including market participants, 

analysts, and Commission staff, to 

access and analyze in an efficient and 

automated manner. In addition, we 

expect that the incremental cost savings 

to filers of requiring only the 

quantitative disclosures to be structured 

would be low, because filers would only 

be forgoing the costs of inputting their 

textual and checkbox disclosures into 

fillable web forms (or of tagging those 

disclosures directly or by means of a 

filing agent) rather than broader costs 

associated with structured data 

implementation more generally. For 

these reasons, we have determined not 

to modify the scope of the structured 

data requirement. 

One commenter recommended that 

the Commission opt for the XBRL data 

language, rather than creating an XML 

schema designed specifically for 

beneficial ownership reporting.939 This 

commenter stated that using the XBRL 

standard, rather than the proposed 13D/ 

G-specific XML requirements, would 

result in significantly lower costs and 

greater efficiencies for filers, users of 

filings, and the Commission, while also 

enhancing the benefits of a structured 

data requirement by facilitating 

improved data quality and the ability to 

commingle the data with other datasets. 

We acknowledge that different 

structured data languages entail 

different costs and benefits for filers and 

data users.940 We believe that 13D/Gspecific XML is more suitable than 

XBRL for Schedules 13D and 13G 

because it facilitates the use of a fillable 

form that should result in a lower cost 

of complying with the structured data 

requirement compared to XBRL, 

particularly for smaller and infrequent 

filers. Under an XBRL requirement, 

filers (including smaller and infrequent 

filers) would incur costs and burdens 

associated with tagging the disclosures 

(e.g., software licensing costs, time 

spent applying tags) or with paying a 

third party to do so. Thus, although 

some Schedule 13D and Schedule 13G 

filers, such as those currently subject to 

Inline XBRL reporting requirements 

(e.g., filers that are Commission 

registrants) or that otherwise have 

experience with XBRL may realize some 

efficiencies under an XBRL alternative, 

we believe the cost savings expected to 

arise from having a fillable form option 

under the 13D/G-specific XML 

requirements would have a more 

substantial positive impact with respect 

to filers as a whole. 

In addition, while some Schedule 13D 

and Schedule 13G filers and data users 

may have familiarity with XBRL data 

and software, such filers and data users 

likely also have familiarity with data 

structured in form-specific XML 

languages on EDGAR. For instance, the 

Commission has found the use of formspecific XML on section 16 ownership 

reporting forms to have had positive 

impacts on filers (with respect to 

compliance costs) and users (in terms of 

data usability) of those disclosures 

without imposing significantly higher 

implementation costs on the 

Commission than other structured data 

requirements impose.941 For these 

reasons, we are requiring 13D/G-specific 

XML rather than Inline XBRL for 

Schedules 13D and 13G. 

V. Paperwork Reduction Act 

A. Summary of the Collections of 

Information 

Certain provisions of our rules, 

schedules and forms that will be 

affected by the final amendments 

contain ‘‘collection of information’’ 

requirements within the meaning of the 

PRA.942 The Commission published a 

notice requesting comment on changes 

to these collection of information 

requirements in the Proposing Release 

and submitted these requirements to the 

Office of Management and Budget 

(‘‘OMB’’) for review in accordance with 

the PRA.943 The hours and costs 

associated with maintaining, disclosing, 

or providing the information required 

by the final amendments constitute 

paperwork burdens imposed by such 

collection of information. An agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information requirement 

unless it displays a currently valid OMB 

control number. 

The title for the affected collections of 

information is ‘‘Regulation 13D and 

Regulation 13G; Schedule 13D and 

Schedule 13G’’ (OMB Control No. 3235– 

0145). These schedules contain item 


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944See 17 CFR 240.13d–101 and 240.13d–102. 

945Compare Proposing Release at 13892, n.273, 

with infra note 952. 

946 In calendar year 2020, there were 5,288 

Schedule 13D filings (comprised of 1,148 initial 

filings and 4,140 amendments) and 22,080 

Schedule 13G filings (comprised of 6,436 initial 

filings and 15,644 amendments) for a total of 27,368 

filings. See DERA Memorandum at nn.3 & 24. In 

addition, during calendar year 2021, there were 

5,434 Schedule 13D filings (comprised of 1,555 

initial filings and 3,879 amendments) and 24,874 

Schedule 13G filings (comprised of 8,676 initial 

filings and 16,198 amendments) for a total of 30,308 

filings. See id. at 1, 8. Finally, in calendar year 

2022, there were 5,179 Schedule 13D filings 

(comprised of 1,161 initial filings and 4,018 

amendments) and 26,523 Schedule 13G filings 

(comprised of 8,433 initial filings and 18,090 

amendments) for a total of 31,702 filings. See supra 

section IV.B.3. Taking the three-year average of 

these amounts results in an average of 29,792 

Schedule 13D and 13G filings per year, comprised 

of 1,288 initial Schedule 13D filings, 4,012 

Schedule 13D amendments, 7,849 initial Schedule 

13D filings, and 16,644 Schedule 13G amendments, 

when rounded to the nearest whole number. 

947See Proposing Release at 13894, n.280. 

948We recognize that the costs of retaining 

outside professionals may vary depending on the 

nature of the professional services, but for purposes 

of this PRA analysis, we estimate that such costs 

would be an average of $600 per hour. 

949See Listing Standards for Recovery of 

Erroneously Awarded Compensation, Release No. 

33–11126 (Oct. 26, 2022) [87 FR 73076 (Nov. 28, 

2022)]. 

and other requirements that outline the 

information a reporting person must 

disclose.944 The schedules were adopted 

under the Exchange Act. A description 

of the final amendments can be found 

in section II above, and a discussion of 

the economic effects of the final 

amendments can be found in section IV 

above. Compliance with the information 

collections is mandatory. Responses to 

the information collections are not kept 

confidential and there is no mandatory 

retention period for the information 

disclosed. 

B. Summary of Comment Letters on PRA 

Estimates 

In the Proposing Release, the 

Commission requested comment on the 

PRA burden hour and cost estimates 

and the analysis used to derive the 

estimates. We did not receive any 

comment letters in response to the 

request for comment on the PRA 

estimates and analysis included in the 

Proposing Release. 

C. Burden and Cost Estimates for the 

Final Amendments 

Below we estimate the incremental 

and aggregate effect on the paperwork 

burden as a result of the final 

amendments. As discussed in section II 

above, we have made a number of 

changes from the Proposed 

Amendments, and we have adjusted our 

estimates accordingly. For example, in 

the Proposing Release, the Commission 

estimated paperwork burden increases 

for Forms 3, 4, and 5 as well as 

Schedules 13D and 13G associated with 

proposed Rules 13d–3(e) and 13d– 

5(b)(1)(i) and (ii) and (b)(2)(i). Because 

we are not adopting those proposed 

rules, we have adjusted the paperwork 

burden estimates from the Proposing 

Release accordingly. In addition, rather 

than basing our PRA estimates on the 

actual number of Schedule 13D and 13G 

filings in calendar year 2020, as the 

Commission did in the Proposing 

Release, we base our PRA estimates 

with respect to the final amendment to 

Rule 13d–2(b), in part, on the actual 

number of Schedule 13G filings in 

calendar year 2022.945

At the outset, we note that the current 

OMB inventory for Regulation 13D–G 

reflects 8,587 annual responses. This 

number is based on the number of 

initial Schedule 13D and 13G filings 

made. We think that the better approach 

is for the PRA to reflect the burdens 

arising from both the initial Schedule 

13D and 13G filings and amended 

Schedule 13D and 13G filings. 

Accordingly, we first update the 

existing PRA burden estimates to reflect 

this new approach. Specifically, we are 

updating the current OMB inventory 

from 8,587 annual responses to 29,793 

annual responses to reflect the average 

number of initial and amended 

Schedule 13D and 13G filings per year 

that were made in calendar years 2020, 

2021, and 2022.946 We then estimate the 

PRA impact of the final amendments 

using the updated inventory numbers as 

the baseline. Table 1 below illustrates 

the resulting incremental change to the 

total annual compliance burden in 

hours and in costs. Additionally, we 

note that the current OMB inventory for 

the above-referenced collections of 

information reflect an average of hourly 

rate of $400 per burden hour borne by 

outside professionals. Similarly, in the 

Proposing Release, the Commission 

used an estimated cost of $400 per hour, 

recognizing that the costs of retaining 

outside professionals may vary 

depending on the nature of the 

professional services.947 The 

Commission recently determined to 

increase the estimated costs of such 

hourly rate to $600 per hour 948 to adjust 

the estimate for inflation from Aug. 

2006.949 Accordingly, we first update 

the existing PRA burden estimates to 

reflect this new cost estimate, as set out 

in the following Table 1. 

PRA TABLE 1—CHANGE IN PRA BURDEN DUE TO UPDATING INVENTORY NUMBERS

Current OMB inventory Updated inventory Increased burden due to update 

Current annual responses 

Current 

burden 

hours 

Current cost 

burden 

Updated 

annual 

responses 

Updated 

burden 

hours 

Updated cost 

burden 

Increase in 

number of 

responses 

Increase in 

burden hours 

Increase in 

cost burden 

(A) (B) (C) (D) ± (E) ±± (F) ±±± (G) = (D) ¥ (A) (H) = (E) ¥ (B) (I) = (F) ¥ (C) 

8,587 27,412 $32,894,000 29,792 40,329 $72,591,600 21,205 12,917 $39,697,000 

±See supra note 946. 

±± The current OMB inventory reflects an average of 14.5 burden hours for each Schedule 13D filing and an average of 12.4 burden hours for each Schedule 13G 

filing. As noted above, however, the current OMB inventory only included initial Schedule 13D and 13G filings, and so these average burden hours were estimates 

with respect only to initial filings. Because Schedule 13D and 13G amendments generally contain a fraction of the information contained in an initial filing and because of the likely efficiencies associated with preparing an amendment based on the information disclosed in an initial filing, we estimate average burden hours per 

filing of 3 hours per Schedule 13D amendment and 2 hours per Schedule 13G amendment. When applied to the updated average annual number of initial Schedule 

13D filings (1,288), Schedule 13D amendments (4,012), initial Schedule 13G filings (7,849), and Schedule 13G amendments (16,644), see supra note 946, this reflects a total of 161,315 burden hours (when rounded to the nearest whole number). In addition, the current OMB inventory assumes that 25% of the burden associated with a Schedule 13D or 13G filing is borne by the reporting persons and 75% is borne by outside professionals. Thus, assuming that 25% of the total burden 

hours associated with Schedule 13D and 13G filings (161,315) is borne by the reporting persons yields a total of 40,329 internal burden hours (when rounded to the 

nearest whole number). 

±±± The current OMB inventory reflects a total cost burden of $32,894,000 for Regulation 13D–G, reflecting an average of hourly rate of $400 per burden hour 

borne by outside professionals. As noted above, we are increasing this cost estimate to $600 per hour. Further, as noted above, assuming that 75% of the total burden hours associated with Schedule 13D and 13G filings (161,315) is borne by the reporting persons yields a total of 120,986 burden hours borne by outside professionals (when rounded to the nearest whole number). As such, we calculate the updated cost burden by multiplying (x) $600 by (y) 120,986. 


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950For example, Rule 13d–2(b) currently requires 

that a Schedule 13G be amended 45 days after the 

calendar year-end in which any change occurred to 

the information previously reported. Under our 

amendment to Rule 13d–2(b), a Schedule 13G will 

have to be amended within 45 days after the end 

of the calendar quarter in which a material change 

occurred to the information previously reported. 

Although an amendment under Rule 13d–2(b) 

currently is required for ‘‘any’’ change in the 

information previously reported, that rule only 

requires that one amendment be filed annually, if 

at all. Under the revisions we are adopting to that 

rule, although the standard for determining an 

amendment obligation would only arise upon a 

‘‘material’’ change to the information previously 

reported, the rule changes could theoretically result 

in numerous amendments being filed on an annual 

basis, with as many as four Schedule 13G 

amendments being filed annually pursuant to 

revised Rule 13d–2(b). 

951To the extent that a person or entity incurs a 

burden imposed by Regulation 13D–G, it is 

encompassed within the collection of information 

estimates for Regulation 13D–G. This burden 

includes the preparation, filing, processing and 

circulation of initial and amended Schedules 13D 

and 13G. 

952As discussed in section IV.B.3 supra, a total 

of 18,090 Schedule 13G amendments were filed in 

calendar year 2022. Upon further review of that 

data set, we note that 15,100, or 83.47% of those 

Schedule 13G amendments were made within the 

first 45 days of calendar year 2022. In addition, we 

note for calendar years 2020, 2021, and 2022, there 

were an average of 16,644 Schedule 13G 

amendments filed each year. See supra note 946. 

Because Rule 13d–2(b) currently has a Schedule 

13G amendment deadline of within 45 days after 

calendar year-end, we assume that 83.47% of the 

16,644 Schedule 13G amendments filed each year, 

or 13,893 filings (when rounded to the nearest 

whole number), were made pursuant to Rule 13d– 

2(b). As noted above, our amendment to Rule 13d– 

2(b) could result in a beneficial owner filing four 

Schedule 13G amendments annually pursuant to 

Rule 13d–2(b), as compared to the one annual 

amendment that currently may be required by Rule 

13d–2(b). See supra note 950. As such, for purposes 

of this PRA, we estimate that there will be 55,572 

Schedule 13G amendments filed annually pursuant 

to Rule 13d–2(b) as a result of our amendment 

(calculated by multiplying (x) the 13,893 annual 

responses currently attributable to Rule 13d–2(b) by 

(y) four), resulting in 41,679 additional responses to 

the collection of information under Regulation 

13D–G (calculated as the difference between (x) the 

55,572 annual responses estimated to be 

attributable to Rule 13d–2(b) as a result of the 

amendments and (y) the 13,893 annual responses 

currently attributable to Rule 13d–2(b)). We note, 

however, that this estimate likely reflects the upper 

limit of the potential increases in the number of 

annual Regulation 13D–G responses as a result of 

our amendment to Rule 13d–2(b) because (1) the 

amendment revises Rule 13d–2(b) to require a 

Schedule 13G be amended only for a ‘‘material’’ 

change to the information previously reported, as 

compared to the current requirement that an 

amendment be filed for ‘‘any’’ change to the 

information previously reported, (2) the information 

previously reported by many Schedule 13G filers 

may not change materially on a quarterly basis, and 

(3) some of the Schedule 13G amendments filed in 

the first 45 days of a given calendar year may not 

have been made pursuant to Rule 13d–2(b). 

953We further expect, however, that this potential 

increase may be offset in part by the amendment to 

Item 6 that deletes the ‘‘including but not limited 

to’’ proviso. 

We believe that the final amendments 

potentially could increase the number of 

responses to this updated collection of 

information for Schedules 13D and 13G. 

Specifically, although we do not 

anticipate an increase in this collection 

due to our final amendment to Rule 

13d–1, our final amendment to Rule 

13d–2(b) with respect to the standard 

that requires an amendment to Schedule 

13G could potentially increase the 

number of Schedule 13G amendments 

filed annually.950 For purposes of this 

PRA, therefore, we estimate that there 

could be an additional 41,679 annual 

responses to the collection of 

information under Regulation 13D–G 951

as a result of the final amendment to 

Rule 13d–2.952

In addition to a potential increase in 

the number of annual responses, we 

expect that the final amendments will 

change the estimated burden per 

response for Regulation 13D–G. For both 

Schedule 13D and Schedule 13G filers, 

we expect that the structured data 

requirement will increase the estimated 

burden per response by requiring that 

the disclosures in those schedules be 

made using the 13D/G-specific XML. In 

addition, for Schedule 13D filers, we 

expect that the final amendment to Item 

6 of Schedule 13D potentially could 

increase the estimated burden per 

response by specifying that disclosure is 

required under Item 6 for the use of 

cash-settled derivative securities with 

respect to an issuer’s securities.953

The burden estimates were calculated 

by estimating the number of parties we 

anticipate would expend time, effort, 

and/or financial resources to generate, 

maintain, retain, disclose or provide 

information in connection with the final 

amendments and then multiplying by 

the estimated amount of time, on 

average, such parties would devote in 

response to the final amendments. The 

following table summarizes the 

calculations and assumptions used to 

derive our estimates of the aggregate 

increase in burden corresponding to the 

final amendments. 

PRA TABLE 2—CALCULATION OF INCREASE IN BURDEN HOURS RESULTING FROM THE FINAL AMENDMENTS

Schedule 13D 

initial filings 

(A) 

Schedule 13D 

amendments 

(B) 

Schedule 13G 

initial filings 

(C) 

Schedule 13G 

amendments 

(D) 

Number of Responses a ................................................................... 1,288 4,012 7,848 58,323 

Burden Hours Per Response b ........................................................ 15.1 3.5 12.9 2.5 

Column Total c ................................................................................. 19,449 14,042 101,239 145,808 

Aggregate Increase in Burden Hours d ............................................ 119,223 

aAs noted in PRA Table 1 and supra note 946, the updated OMB inventory will reflect 29,793 total Schedule 13D and 13G filings, comprised 

of 5,300 Schedule 13D filings and 24,493 Schedule 13G filings (in each case comprised of both initial filings and amendments). When taking into 

account the potential effects of the amendment to Rule 13d–2(b) we estimate that the number of Schedule 13G filings could increase by 41,679, 

for a total of 66,172 annual Schedule 13G filings. See supra note 952. bAs noted in PRA Table 1, the current OMB inventory reflects an average of 14.5 burden hours for each Schedule 13D filing and an average 

of 12.4 burden hours for each Schedule 13G filing. We use these per filing burden hours as a baseline for estimating the burden impact of the 

final amendments. We estimate that the new structured data requirement will increase the burden per response for Schedule 13D and 13G filings (both initial and amended filings) by 0.5 burden hours. Our assumption is that the burden will be greatest in the first year after adoption, as 

filers adjust to the new requirements and update their Schedule 13D and 13G preparation and filing processes accordingly. We estimate that the 

burden of the structured data requirement will be 1 hour in the first year and 0.25 hours in each of the following two years for a three-year average of 0.5 burden hours. Further, for the amendments to Item 6 of Schedule 13D, we estimate they will increase the burden by 0.1 hours for 

each initial Schedule 13D filing. Although these amendments could, in some cases, substantially increase the amount of disclosure made pursuant to Item 6, we believe that this estimate accurately reflects that only a relatively small percentage of all Schedule 13D filers hold cash-settled 

derivative securities and, therefore, will be required to make additional disclosures. In addition, we also expect that any increased burden may be 

offset in part by the amendment to Item 6 that deletes the ‘‘but not limited to’’ proviso. Finally, because not every Schedule 13D amendment will 

respond to Item 6, we apply this increase only to initial filings. Taken together, we estimate that the amendments could increase the annual burden hours per initial Schedule 13D filing by 0.6 hours and increase the annual burden hours for each Schedule 13D amendment, and each initial 

Schedule 13G filing and Schedule 13G amendment by 0.5 hours. When added to the current averages, we estimate that, as a result of the final 

amendments, the new average per filing burden hours will be 15.1 hours for initial Schedule 13D filings, 3.5 hours for Schedule 13D amendments, 12.9 hours for initial Schedule 13G filings, and 2.5 hours for Schedule 13G amendments. 


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954 5 U.S.C. 601 et seq. 

955Section 601(b) of the RFA permits agencies to 

formulate their own definitions of ‘‘small entities.’’ 

See 5 U.S.C. 601(b). The Commission has adopted 

definitions for the term ‘‘small entity’’ for the 

purposes of Commission rulemaking in accordance 

with the RFA. Those definitions, as relevant to this 

rulemaking, are set forth in 17 CFR 240.0–10 and, 

with respect to investment companies, 17 CFR 

270.0–10. 

956See 5 U.S.C. 603(a), 604(a). 

957See 5 U.S.C. 605(b). 

958Proposing Release at 13895–96. 

959See 17 CFR 240.0–10(a). 

960See 17 CFR 240.0–10(c). 

961Business development companies are a 

category of closed-end investment company that are 

not registered under the Investment Company Act 

[15 U.S.C. 80a–2(a)(48) and 80a–53–64]. 

c Derived by multiplying the number of responses in each column by the burden hours per response, and rounded to the nearest whole number. d Derived by adding together the hours from ‘‘Column Totals’’ (280,538 hours) and subtracting from that total burden hours associated with 

Schedule 13D and 13G filings for Regulation 13D–G, as noted under PRA Table 1 (161,315). 

The table below illustrates the 

incremental change to the total annual 

compliance burden in hours and in 

costs as a result of the final 

amendments. The table sets forth the 

percentage estimates we typically use 

for the burden allocation for each 

response. 

PRA TABLE 3—CALCULATION OF AGGREGATE INCREASE IN BURDEN HOURS RESULTING FROM THE FINAL AMENDMENTS

Total number of estimated 

responses 

Total increase in burden 

hours 

Increase in internal 

hours 

Increase in outside 

professional hours 

Increase in outside 

professional costs 

(A) † (B) †† (C) ††† = (B) × 25% (D) ††† = (B) × 75% (E) = (D) × $600 

71,471 119,223 29,806 89,417 $53,650,200 

† This number reflects an estimated increase of 41,679 annual responses to the updated Regulation 13D–G collection of information set forth 

in PRA Table 1. See supra note 952 and accompanying text. PRA Table 1 reflects an updated baseline total of 29,792 responses filed annually 

for Regulation 13D–G. 

†† Calculated as the sum of annual burden hour increases estimated for Schedule 13D and 13G filings. See supra PRA Table 2, ‘‘Aggregate 

Increase in Burden Hours.’’ 

††† The estimated increases in Columns (C) and (D) are rounded to the nearest whole number. 

Below we summarize the requested 

paperwork burden for Regulation 13D– 

G that will be submitted to OMB for 

review in accordance with the PRA, 

including the estimated total reporting 

burdens and costs, under the final 

amendments. This table includes both 

the adjustments to the PRA inventory 

reflected in PRA Table 1 and the 

aggregate burden increase resulting from 

the final rules reflected in PRA Table 3. 

PRA TABLE 4—REQUESTED PAPERWORK BURDEN FOR REGULATION 13D–G UNDER THE FINAL AMENDMENTS

Current burden Program change Revised burden 

Current annual 

responses 

Current burden 

hours 

Current cost 

burden 

Increase in 

number of 

responses 

Increase in 

burden hours 

Increase in cost 

burden 

Annual 

responses Burden hours Cost burden 

(A) (B) (C) (D) ± (E) ±± (F) ±±± (G) = (A) + (D) (H) = (B) + (E) (I) = (C) + (F) 

8,587 27,412 $32,894,000 62,884 42,723 $93,347,200 71,471 70,135 $126,241,200 

± Calculated as the sum of (x) the 21,205 increase in the number of annual responses as a result of the update of the current OMB inventory (from Column (G) in 

PRA Table 1) and (y) the 41,679 increase in the number of annual responses as a result of the final amendments (see supra note 952 and accompanying text). 

±± Calculated as the sum of (x) the 12,917 increase in the number of burden hours as a result of the update of the current OMB inventory (from Column (H) in PRA 

Table 1) and (y) the 29,806 increase in the number of burden hours as a result of the final amendments (from Column (C) in PRA Table 3). 

±±± Calculated as the sum of (x) the $39,697,000 increase in the cost burden as a result of the update of the current OMB inventory (from Column (G) in PRA 

Table 1) and (y) the $53,650,200 increase in the cost burden as a result of the final amendments (from Column (E) in PRA Table 3). 

VI. Regulatory Flexibility Act 

Certification 

The Regulatory Flexibility Act 

(‘‘RFA’’) 954 requires Federal agencies, in 

promulgating rules, to consider the 

impact of those rules on small entities. 

Section 603(a) of the RFA generally 

requires the Commission to undertake 

an initial regulatory flexibility analysis 

of all proposed rules, or rule 

amendments, to determine the impact of 

the proposed rulemaking on ‘‘small 

entities,’’ 955 while section 604(a) 

requires that the Commission generally 

provide a final regulatory flexibility 

analysis of rules it is adopting.956

Section 605(b) of the RFA states that 

these requirements shall not apply to 

any proposed or final rule or rule 

amendment if the head of the agency 

certifies that the rule will not, if 

promulgated, have a significant 

economic impact on a substantial 

number of small entities.957 The 

Commission certified in the Proposing 

Release that the Proposed Amendments 

would not have a significant economic 

impact on a substantial number of small 

entities for purposes of the RFA.958

For purposes of Commission 

rulemaking in connection with the RFA, 

a small entity includes: (1) when used 

with reference to an ‘‘issuer’’ or a 

‘‘person,’’ other than an investment 

company, an ‘‘issuer’’ or ‘‘person’’ that, 

on the last day of its most recent fiscal 

year, had total assets of $5 million or 

less; 959 or (2) a broker-dealer with total 

capital (net worth plus subordinated 

liabilities) of less than $500,000 on the 

date in the prior fiscal year as of which 

its audited financial statements were 

prepared pursuant to 17 CFR 240.17a– 

5(d), or, if not required to file such 

statements, a broker-dealer with total 

capital (net worth plus subordinated 

liabilities) of less than $500,000 on the 

last business day of the preceding fiscal 

year (or in the time that it has been in 

business, if shorter); and is not affiliated 

with any person (other than a natural 

person) that is not a small business or 

small organization.960 An investment 

company, including a business 

development company,961 is considered 

to be a ‘‘small business’’ if it, together 


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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations 76981 

962 17 CFR 270.0–10(a). 

963Proposing Release at 13896. 

964See, e.g., letters from A. Day; E. Fraser; MFA; 

see also letters from B. Mason; S. Thornburg. 

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.962

A description of the final 

amendments can be found in section II 

above, and a discussion of the economic 

effects of the final amendments can be 

found in section IV above. Although the 

final amendments will apply to 

beneficial owners regardless of their 

size, we believe that the vast majority of 

the beneficial owners that will be 

subject to the amendments will not be 

‘‘small entities’’ for purposes of the 

RFA. For example, the amendments to 

the filing deadlines in Rules 13d–1 and 

13d–2, as well as the amendments to 

Rules 13 and 201 of Regulation S–T and 

the structured data requirement, only 

apply to persons who beneficially own 

more than five percent of a covered 

class of securities, thus providing a 

basis to conclude that such a person is 

unlikely to fall within the definition of 

‘‘small entity.’’ In addition, to the extent 

that the final amendments to the filing 

deadlines apply to members of a group, 

in addition to individual entities, we 

believe that members of a group 

generally would be larger investors and 

similarly are unlikely to fall within the 

definition of ‘‘small entity.’’ 

We did not receive any comment 

letters in response to the request for 

comment on the RFA certification in the 

Proposing Release.963 Although some 

commenters asserted that certain of the 

Proposed Amendments would be 

unduly burdensome for smaller and 

non-institutional beneficial owners,964

those commenters did not indicate (or 

provide data that would suggest) that 

those beneficial owners would be small 

entities for purposes of the RFA. Thus, 

those comments do not alter our belief 

that the vast majority of the beneficial 

owners that will be subject to the 

amendments will not be small entities 

for purposes of the RFA. In addition, the 

final amendments include some 

modifications to the Proposed 

Amendments. As discussed in more 

detail in section II above, we are not 

adopting proposed Rule 13d–3(e), nor 

are we adopting many of the proposed 

amendments to Rules 13d–5 and 13d–6. 

We also have adopted longer deadlines 

than proposed for initial and amended 

Schedule 13G filings. We believe these 

modifications generally would reduce 

any burdens of the final amendments in 

the event any small entity becomes 

subject to them. Moreover, we do not 

believe that these modifications alter the 

basis upon which the Commission made 

the certification in the Proposing 

Release. 

For the foregoing reasons, the 

Commission certifies, pursuant to 5 

U.S.C. 605(b), that the final amendments 

will not have a significant economic 

impact on a substantial number of small 

entities for purposes of the RFA. 

Statutory Authority 

We are adopting the rule amendments 

contained in this release under the 

authority set forth in sections 3(b), 13, 

and 23(a) of the Exchange Act. 

List of Subjects 

17 CFR Part 232 

Administrative practice and 

procedure, Reporting and recordkeeping 

requirements, Securities. 

17 CFR Part 240 

Reporting and recordkeeping 

requirements, Securities. 

Text of Amendments 

For the reasons set out in the 

preamble, the Commission is amending 

title 17, chapter II, of the Code of 

Federal Regulations as follows: 

PART 232—REGULATION S–T— 

GENERAL RULES AND REGULATIONS 

FOR ELECTRONIC FILINGS 

■ 1. The general authority citation for 

part 232 continues 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. 

* * * * * 

■ 2. Amend § 232.13 by: 

■ a. Revising paragraph (a)(4); and 

■ b. Designating the note following 

paragraph (a)(4) as note 1 to paragraph 

(a). 

The revision reads as follows: 

§ 232.13 Date of filing; adjustment of filing 

date. 

(a) * * * 

(4) Notwithstanding paragraph (a)(2) 

of this section, a Form 3, 4, or 5 

(referenced in §§ 249.103, 249.104, and 

249.105 of this chapter, respectively), a 

Schedule 14N (referenced in § 240.14n– 

101 of this chapter), a Form 144 

(referenced in § 239.144 of this chapter), 

or a Schedule 13D or Schedule 13G, 

inclusive of any amendments thereto 

(§§ 240.13d–101 and 240.13d–102 of 

this chapter), submitted by direct 

transmission commencing on or before 

10 p.m. Eastern Standard Time or 

Eastern Daylight Time, whichever is 

currently in effect, shall be deemed filed 

on the same business day. 

* * * * * 

§ 232.201 [Amended] 

■ 3. Amend § 232.201(a) introductory 

text by: 

■ a. Removing the word ‘‘or’’ that 

immediately precedes ‘‘an Asset Data 

File’’; and 

■ b. Adding after the phrase ‘‘Asset Data 

File (as defined in § 232.11),’’ the phrase 

‘‘or a Schedule 13D or Schedule 13G 

(§§ 240.13d–101 and 240.13d–102 of 

this chapter),’’. 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 4. The authority citation for part 240 

continues to read, in part, 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, 78j–4, 78k, 78k–1, 78l, 78m, 

78n, 78n–1, 78o, 78o–4, 78o–10, 78p, 78q, 

78q–1, 78s, 78u–5, 78w, 78x, 78dd, 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; and 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. 

* * * * * 

Section 240.13d-3 is also issued under 

Public Law 111–203 § 766, 124 Stat. 1799 

(2010). 

* * * * * 

■ 5. Amend § 240.13d–1 by revising 

paragraphs (a), (b)(1)(i) and (iii), (b)(2), 

(c) introductory text, (d), (e)(1) 

introductory text, (e)(1)(ii), (f)(1), (g), (i), 

and (j) to read as follows: 

§ 240.13d–1 Filing of Schedules 13D and 

13G. 

(a) Any person who, after acquiring 

directly or indirectly the beneficial 

ownership of any equity security of a 

class which is specified in paragraph 

(i)(1) of this section, is directly or 

indirectly the beneficial owner of more 

than five percent of the class shall, 

within five business days after the date 

of the acquisition, file with the 

Commission, a statement containing the 

information required by Schedule 13D 

(§ 240.13d-101). 

(b) * * * 

(1) * * * 

(i) Such person has acquired such 

securities in the ordinary course of the 

person’s business and not with the 

purpose nor with the effect of changing 

or influencing the control of the issuer, 

nor in connection with or as a 


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participant in any transaction having 

such purpose or effect, including any 

transaction subject to § 240.13d–3(b), 

other than activities solely in 

connection with a nomination under 

§ 240.14a–11; and 

* * * * * 

(iii) Such person has promptly 

notified any other person (or group 

within the meaning of section 13(d)(3) 

of the Act) on whose behalf it holds, on 

a discretionary basis, securities 

exceeding five percent of the class, of 

any acquisition or transaction on behalf 

of such other person which might be 

reportable by that person under section 

13(d) of the Act. This paragraph 

(b)(1)(iii) only requires notice to the 

account owner of information which the 

filing person reasonably should be 

expected to know and which would 

advise the account owner of an 

obligation such account owner may 

have to file a statement, or an 

amendment thereto, pursuant to section 

13(d) of the Act. 

* * * * * 

(2) The Schedule 13G filed pursuant 

to paragraph (b)(1) of this section shall 

be filed within 45 days after the end of 

the calendar quarter in which the 

person became obligated under 

paragraph (b)(1) of this section to report 

the person’s beneficial ownership as of 

the last day of the calendar quarter, 

provided, that it shall not be necessary 

to file a Schedule 13G unless the 

percentage of the class of equity security 

specified in paragraph (i)(1) of this 

section beneficially owned as of the end 

of the calendar quarter is more than five 

percent; however, if the person’s direct 

or indirect beneficial ownership exceeds 

10 percent of the class of equity 

securities prior to the end of the 

calendar quarter, the initial Schedule 

13G shall be filed within five business 

days after the end of the first month in 

which the person’s direct or indirect 

beneficial ownership exceeds 10 percent 

of the class of equity securities, 

computed as of the last day of the 

month. 

(c) A person who would otherwise be 

obligated under paragraph (a) of this 

section to file a statement on Schedule 

13D (§ 240.13d–101) may, in lieu 

thereof, file with the Commission, 

within five business days after the date 

of an acquisition described in paragraph 

(a) of this section, a short-form 

statement on Schedule 13G (§ 240.13d– 

102). Provided, that the person: 

* * * * * 

(d) Any person who, as of the end of 

any calendar quarter, is or becomes 

directly or indirectly the beneficial 

owner of more than five percent of any 

equity security of a class specified in 

paragraph (i)(1) of this section and who 

is not required to file a statement under 

paragraph (a) of this section by virtue of 

the exemption provided by section 

13(d)(6)(A) or (B) of the Act (15 U.S.C. 

78m(d)(6)(A) or 78m(d)(6)(B)), or 

because the beneficial ownership was 

acquired prior to December 22, 1970, or 

because the person otherwise (except for 

the exemption provided by section 

13(d)(6)(C) of the Act (15 U.S.C. 

78m(d)(6)(C))) is not required to file a 

statement, shall file with the 

Commission, within 45 days after the 

end of the calendar quarter in which the 

person became obligated to report under 

this paragraph (d), a statement 

containing the information required by 

Schedule 13G (§ 240.13d–102). 

(e)(1) Notwithstanding paragraphs (b) 

and (c) of this section and § 240.13d– 

2(b), a person that has reported that it 

is the beneficial owner of more than five 

percent of a class of equity securities in 

a statement on Schedule 13G 

(§ 240.13d–102) pursuant to paragraph 

(b) or (c) of this section, or is required 

to report the acquisition but has not yet 

filed the schedule, shall immediately 

become subject to paragraph (a) of this 

section and § 240.13d–2(a) and shall file 

a statement on Schedule 13D 

(§ 240.13d–101) within five business 

days if, and shall remain subject to 

those requirements for so long as, the 

person: 

* * * * * 

(ii) Is at that time the beneficial owner 

of more than five percent of a class of 

equity securities described in paragraph 

(i)(1) of this section. 

* * * * * 

(f)(1) Notwithstanding paragraph (c) 

of this section and § 240.13d–2(b), 

persons reporting on Schedule 13G 

(§ 240.13d–102) pursuant to paragraph 

(c) of this section shall immediately 

become subject to paragraph (a) of this 

section and § 240.13d–2(a) and shall 

remain subject to those requirements for 

so long as, and shall file a statement on 

Schedule 13D (§ 240.13d–101) within 

five business days after the date on 

which the person’s beneficial ownership 

equals or exceeds 20 percent of the class 

of equity securities. 

* * * * * 

(g) Any person who has reported an 

acquisition of securities in a statement 

on Schedule 13G (§ 240.13d–102) 

pursuant to paragraph (b) of this section, 

or has become obligated to report on 

Schedule 13G (§ 240.13d–102) but has 

not yet filed the Schedule, and 

thereafter ceases to be a person specified 

in paragraph (b)(1)(ii) of this section or 

determines that it no longer has 

acquired or holds the securities in the 

ordinary course of business shall 

immediately become subject to 

paragraph (a) or (c) of this section (if the 

person satisfies the requirements 

specified in paragraph (c)) and 

§ 240.13d–2(a), (b), or (d), and shall file, 

within five business days thereafter, a 

statement on Schedule 13D (§ 240.13d– 

101) or amendment to Schedule 13G, as 

applicable, if the person is a beneficial 

owner at that time of more than five 

percent of the class of equity securities. 

* * * * * 

(i)(1) For the purpose of this section, 

the term equity security means any 

equity security of a class which is 

registered pursuant to section 12 of the 

Act, or any equity security of any 

insurance company which would have 

been required to be so registered except 

for the exemption contained in section 

12(g)(2)(G) of the Act, or any equity 

security issued by a closed-end 

investment company registered under 

the Investment Company Act of 1940; 

provided, such term shall not include 

securities of a class of non-voting 

securities. 

(2) For the purpose of this section, the 

term business day means any day, other 

than Saturday, Sunday, or a Federal 

holiday, from 12 a.m. to 11:59 p.m., 

Eastern Time. 

(j) For the purpose of sections 13(d) 

and 13(g) of the Act, any person, in 

determining the amount of outstanding 

securities of a class of equity securities, 

may rely upon information set forth in 

the issuer’s most recent quarterly or 

annual report, and any current report 

subsequent thereto, filed with the 

Commission pursuant to the Act, unless 

such person knows or has reason to 

believe that the information contained 

therein is inaccurate. 

* * * * * 

■ 6. Amend § 240.13d–2 by: 

■ a. Revising paragraphs (a) through (d); 

and 

■ b. Removing the sectional authority 

citation from the end of the section. 

The revisions read as follows: 

§ 240.13d–2 Filing of amendments to 

Schedules 13D or 13G. 

(a) If any material change occurs in 

the facts set forth in the Schedule 13D 

(§ 240.13d–101) required by § 240.13d– 

1(a), including, but not limited to, any 

material increase or decrease in the 

percentage of the class beneficially 

owned, the person or persons who were 

required to file the statement shall file 

or cause to be filed with the 

Commission an amendment disclosing 

that change within two business days 

after the date of such change. An 


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acquisition or disposition of beneficial 

ownership of securities in an amount 

equal to one percent or more of the class 

of securities shall be deemed ‘‘material’’ 

for purposes of this section; acquisitions 

or dispositions of less than those 

amounts may be material, depending 

upon the facts and circumstances. 

(b) Notwithstanding paragraph (a) of 

this section, and provided that the 

person filing a Schedule 13G 

(§ 240.13d–102) pursuant to § 240.13d– 

1(b) or (c) continues to meet the 

requirements set forth therein, any 

person who has filed a Schedule 13G 

(§ 240.13d–102) pursuant to § 240.13d– 

1(b), (c), or (d) shall amend the 

statement within 45 days after the end 

of each calendar quarter if, as of the end 

of the calendar quarter, there are any 

material changes in the information 

reported in the previous filing on that 

Schedule; provided, however, that an 

amendment need not be filed with 

respect to a change in the percent of the 

class outstanding previously reported if 

the change results solely from a change 

in the aggregate number of securities 

outstanding. Once an amendment has 

been filed reflecting beneficial 

ownership of five percent or less of the 

class of securities, no additional filings 

are required unless the person thereafter 

becomes the beneficial owner of more 

than five percent of the class and is 

required to file pursuant to § 240.13d– 

1. 

(c) Any person relying on § 240.13d– 

1(b) that has filed its initial Schedule 

13G (§ 240.13d–102) pursuant to 

§ 240.13d–1(b) shall, in addition to 

filing any amendments pursuant to 

paragraph (b) of this section, file an 

amendment on Schedule 13G 

(§ 240.13d–102) within five business 

days after the end of the first month in 

which the person’s direct or indirect 

beneficial ownership, computed as of 

the last day of the month, exceeds 10 

percent of the class of equity securities. 

Thereafter, that person shall, in addition 

to filing any amendments pursuant to 

paragraph (b) of this section, file an 

amendment on Schedule 13G 

(§ 240.13d–102) within five business 

days after the end of the first month in 

which the person’s direct or indirect 

beneficial ownership, computed as of 

the last day of the month, increases or 

decreases by more than five percent of 

the class of equity securities. Once an 

amendment has been filed reflecting 

beneficial ownership of five percent or 

less of the class of securities, no 

additional filings are required by this 

paragraph (c). 

(d) Any person relying on § 240.13d– 

1(c) that has filed its initial Schedule 

13G (§ 240.13d–102) pursuant to 

§ 240.13d–1(c) shall, in addition to 

filing any amendments pursuant to 

paragraph (b) of this section, file an 

amendment on Schedule 13G 

(§ 240.13d–102) within two business 

days after acquiring, directly or 

indirectly, greater than 10 percent of a 

class of equity securities specified in 

§ 240.13d–1(d), and thereafter within 

two business days after increasing or 

decreasing its beneficial ownership by 

more than five percent of the class of 

equity securities. Once an amendment 

has been filed reflecting beneficial 

ownership of five percent or less of the 

class of securities, no additional filings 

are required by this paragraph (d). 

* * * * * 

■ 7. Amend § 240.13d–3 by: 

■ a. Revising paragraphs (d)(3) 

introductory text and (d)(4); and 

■ b. Removing the sectional authority 

citation from the end of the section. 

The revisions read as follows: 

§ 240.13d–3 Determination of beneficial 

owner. 

* * * * * 

(d) * * * 

(3) A person who in the ordinary 

course of such person’s business is a 

pledgee of securities under a written 

pledge agreement shall not be deemed 

to be the beneficial owner of such 

pledged securities until the pledgee has 

taken all formal steps necessary which 

are required to declare a default and 

determines that the power to vote or to 

direct the vote or to dispose or to direct 

the disposition of such pledged 

securities will be exercised, provided, 

that: 

* * * * * 

(4) A person engaged in business as 

an underwriter of securities who 

acquires securities through such 

person’s participation in good faith in a 

firm commitment underwriting 

registered under the Securities Act of 

1933 shall not be deemed to be the 

beneficial owner of such securities until 

the expiration of 40 days after the date 

of such acquisition. 

■ 8. Revise § 240.13d–5 to read as 

follows: 

§ 240.13d–5 Acquisition of beneficial 

ownership. 

(a) A person who becomes a beneficial 

owner of securities shall be deemed to 

have acquired such beneficial 

ownership for purposes of section 

13(d)(1) of the Act, whether such 

acquisition was through purchase or 

otherwise. However, executors or 

administrators of a decedent’s estate 

generally will be presumed not to have 

acquired the beneficial ownership held 

by the decedent’s estate until such time 

as such executors or administrators are 

qualified under local law to perform 

their duties. 

(b)(1)(i) When two or more persons 

agree to act together for the purpose of 

acquiring, holding, voting or disposing 

of equity securities of an issuer, the 

group formed thereby shall be deemed 

to have acquired beneficial ownership, 

for purposes of sections 13(d) and (g) of 

the Act, as of the date of such 

agreement, of all equity securities of that 

issuer beneficially owned by any such 

persons. 

(ii) A group regulated as a person 

pursuant to section 13(d)(3) of the Act 

shall be deemed to have acquired 

beneficial ownership, as determined 

under paragraph (a) of this section and 

for purposes of sections 13(d)(1) and (2) 

of the Act, if any member of the group 

becomes the beneficial owner of 

additional equity securities in the same 

class beneficially owned by the group 

after the group’s formation. The 

beneficial ownership so acquired shall 

be reported as being held by the group 

through the earlier of {x} the date of the 

group’s dissolution or {y} the date of 

that member’s withdrawal from the 

group. 

(iii) Notwithstanding paragraph 

(b)(1)(ii) of this section, a group 

regulated under section 13(d)(3) of the 

Act shall not be deemed to have 

acquired beneficial ownership, as 

determined under paragraph (a) of this 

section, if, after the group’s formation, a 

member of the group becomes the 

beneficial owner of additional equity 

securities in the same class beneficially 

owned by the group through a sale by 

or transfer from another member of the 

group. 

(2)(i) A group regulated as a person 

pursuant to section 13(g)(3) of the Act 

shall be deemed to have become the 

beneficial owner, for purposes of 

sections 13(g)(1) and (2) of the Act, if 

any member of the group becomes a 

beneficial owner of additional equity 

securities in the same class held by the 

group after the group’s formation and 

through the earlier of {x} the date of the 

group’s dissolution or {y} the date of 

that member’s withdrawal from the 

group. 

(ii) Notwithstanding paragraph 

(b)(2)(i) of this section, a group 

regulated under section 13(g)(3) of the 

Act shall not be deemed to have become 

the beneficial owner of additional 

equity securities in the same class 

beneficially owned by the group if, after 

the group’s formation, a member of the 

group becomes the beneficial owner of 

additional equity securities in the same 

class beneficially owned by the group 


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through a sale by or transfer from 

another member of the group. 

■ 9. Revise § 240.13d–6 to read as 

follows: 

§ 240.13d–6 Exemption of certain 

acquisitions. 

(a) The acquisition of securities of an 

issuer by a person who, prior to such 

acquisition, was a beneficial owner of 

more than five percent of the 

outstanding securities of the same class 

as those acquired shall be exempt from 

section 13(d) of the Act; provided, that: 

(1) The acquisition is made pursuant 

to preemptive subscription rights in an 

offering made to all holders of securities 

of the class to which the preemptive 

subscription rights pertain; 

(2) Such person does not acquire 

additional securities except through the 

exercise of such person’s pro rata share 

of the preemptive subscription rights; 

and 

(3) The acquisition is duly reported, if 

required, pursuant to section 16(a) of 

the Act and the rules and regulations 

thereunder in this part. 

(b) A group shall be deemed not to 

have acquired any equity securities 

beneficially owned by the other 

members of the group solely by virtue 

of their concerted actions relating to the 

purchase of equity securities directly 

from an issuer in a transaction not 

involving a public offering; provided, 

that: 

(1) All the members of the group are 

persons specified in § 240.13d– 

1(b)(1)(ii); 

(2) The purchase is in the ordinary 

course of each member’s business and 

not with the purpose nor with the effect 

of changing or influencing control of the 

issuer, nor in connection with or as a 

participant in any transaction having 

such purpose or effect, including any 

transaction subject to § 240.13d–3(b); 

(3) There is no agreement among or 

between any members of the group to 

act together with respect to the issuer or 

its securities except for the purpose of 

facilitating the specific purchase 

involved; and 

(4) The only actions among or 

between any members of the group with 

respect to the issuer or its securities 

subsequent to the closing date of the 

non-public offering are those which are 

necessary to conclude ministerial 

matters directly related to the 

completion of the offer or sale of the 

securities. 

§ 240.13d–7 [Removed and Reserved] 

■ 10. Remove and reserve § 240.13d–7. 

■ 11. Amend § 240.13d–101 by: 

■ a. Removing the note that reads ‘‘Note: 

Schedules filed in paper format shall 

include a signed original and five copies 

of the schedule, including all exhibits. 

See Rule 13d–7 for other parties to 

whom copies are to be sent.’’; and 

■ b. Revising Item 6 and the paragraph 

following the ‘‘Name/Title’’ block. 

The revisions read as follows: 

§ 240.13d–101 Schedule 13D—Information 

to be included in statements filed pursuant 

to § 240.13d–1(a) and amendments thereto 

filed pursuant to § 240.13d–2(a). 

* * * * * 

Item 6. Contracts, Arrangements, 

Understandings or Relationships With 

Respect to Securities of the Issuer. 

Describe any contracts, arrangements, 

understandings, or relationships (legal 

or otherwise) among the persons named 

in Item 2 and between such persons and 

any person with respect to any 

securities of the issuer, including any 

class of such issuer’s securities used as 

a reference security, in connection with 

any of the following: call options, put 

options, security-based swaps or any 

other derivative securities, transfer or 

voting of any of the securities, finder’s 

fees, joint ventures, loan or option 

arrangements, guarantees of profits, 

division of profits or loss, or the giving 

or withholding of proxies, naming the 

persons with whom such contracts, 

arrangements, understandings, or 

relationships have been entered into. 

Include such information for any of the 

securities that are pledged or otherwise 

subject to a contingency the occurrence 

of which would give another person 

voting power or investment power over 

such securities except that disclosure of 

standard default and similar provisions 

contained in loan agreements need not 

be included. 

* * * * * 

The original statement shall be signed 

by each person on whose behalf the 

statement is filed or such person’s 

authorized representative. If the 

statement is signed on behalf of a person 

by such person’s authorized 

representative (other than an executive 

officer or general partner of the filing 

person), evidence of the representative’s 

authority to sign on behalf of such 

person shall be filed with the statement; 

provided, however, that a power of 

attorney for this purpose which is 

already on file with the Commission 

may be incorporated by reference. The 

name and any title of each person who 

signs the statement shall be typed or 

printed beneath such person’s signature. 

* * * * * 

■ 12. Amend § 240.13d–102 by: 

■ a. Revising Item 8 and the paragraph 

following the ‘‘Name/Title’’ block; and 

■ b. Removing the note at the end of the 

section. 

The revisions read as follows: 

§ 240.13d–102 Schedule 13G—Information 

to be included in statements filed pursuant 

to § 240.13d–1(b), (c), and (d) and 

amendments thereto filed pursuant to 

§ 240.13d–2. 

* * * * * 

Item 8. Identification and 

Classification of Members of the Group 

If a group has filed this schedule 

pursuant to § 240.13d–1(b)(1)(ii)(K), so 

indicate under Item 3(k) and attach an 

exhibit stating the identity and Item 3 

classification of each member of the 

group. If a group has filed this schedule 

pursuant to Rule 13d–1(c) or Rule 13d– 

1(d), attach an exhibit stating the 

identity of each member of the group. 

* * * * * 

The original statement shall be signed 

by each person on whose behalf the 

statement is filed or such person’s 

authorized representative. If the 

statement is signed on behalf of a person 

by such person’s authorized 

representative other than an executive 

officer or general partner of the filing 

person, evidence of the representative’s 

authority to sign on behalf of such 

person shall be filed with the statement; 

provided, however, that a power of 

attorney for this purpose which is 

already on file with the Commission 

may be incorporated by reference. The 

name and any title of each person who 

signs the statement shall be typed or 

printed beneath such person’s signature. 

* * * * * 

By the Commission. 

Dated: October 10, 2023. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2023–22678 Filed 11–6–23; 8:45 am] 

BILLING CODE 8011–01–P 


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