Section 13 – Beneficial Shareholder Reporting Requirements – Part II
As discussed last week, the SEC has adopted final amendments to Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 (“Exchange Act”). The amendments were first proposed in February, 2022 – see HERE.
The amendments update Sections 13(d), 13(g) and Regulation 13D-G to accelerate filing deadlines for both initial and amended reports; expand the timeframe within a business day in which filings may be timely made; and require that Schedule 13D and 13G filings be filed using XBRL.
The final rules do not adopt proposed changes to determine beneficial ownership where a person holds cash settled derivative securities but rather refer to guidance on the subject. Likewise, the final rules do not adopt many changes that had been proposed to clarify the circumstances under which two or more persons have formed a “group” that would be subject to beneficial ownership reporting obligations; or to provide new exemptions to permit certain persons to communicate and consult with one
Section 13 – Beneficial Shareholder Reporting Requirements – Part 1
Barely two weeks after the SEC charged six officers, directors and five percent (5%) or greater shareholders with failing to timely file reports, the SEC adopted final amendments to Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 (“Exchange Act”). The amendments were first proposed in February, 2022 – see HERE.
The amendments update Sections 13(d), 13(g) and Regulation 13D-G to accelerate filing deadlines for both initial and amended reports; expand the timeframe within a business day in which filings may be timely made; clarify the Schedule 13D disclosure requirements with respect to derivative securities; and require that Schedule 13D and 13G filings be filed using XBRL. I’ve included a chart of the amendments to Schedules 13D and 13G at the end of this blog.
The final rules do not adopt changes that had been proposed to clarify the circumstances under which two or more persons have formed a “group” that would be subject to beneficial ownership reporting
SEC Proposes Amendments To Beneficial Ownership Reporting Rules
On February 10, 2022, the SEC announced proposed rule amendments governing beneficial ownership reporting under Exchange Act Sections 13(d) and 13(g). The proposed amendments would accelerate the filing deadlines for Schedules 13D beneficial ownership reports from 10 days to 5 calendar days and require that amendments be filed within one business day; generally accelerate the filing deadlines for Schedule 13G beneficial ownership reports (which differ based on the type of filer); extend the filing deadline to 10:00 p.m. EST; expand the application of Regulation 13D-G to certain derivative securities; clarify the circumstances under which two or more persons have formed a “group” that would be subject to beneficial ownership reporting obligations; provide new exemptions to permit certain persons to communicate and consult with one another, jointly engage issuers, and execute certain transactions without being subject to regulation as a “group;” and require that Schedules 13D and 13G be filed using XBRL.
Final rules have yet to be published, but the
SEC Files Dozens of Charges for Violations of the Section 16 and Section 13 Corporate Insider Reporting Requirements
ABA Journal’s 10th Annual Blawg 100
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Introduction
On September 10, 2014, the SEC filed 28 separate actions against officers, directors and major shareholders and an additional 6 actions against reporting companies, all stemming from violations of the reporting requirements contained in Sections 13 and 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”). The SEC announced that it had created a task force to investigate violations using quantitative data sources and ranking algorithms to identify repetitive late filers. The SEC settled with all but one of the charged for a total of $2.6 million in penalties.
The actions against insiders and major shareholders were based on direct violations of their individual reporting requirements. The actions against reporting companies were for “contributing to” the violations. In these cases, the companies had contractually agreed to take on the responsibility of making the filings for their insiders, and had been delinquent in doing so.
Historically the SEC has rarely
