THE FREQUENT FILER

The Modernization of Beneficial Ownership

In 1977, a man by the name of George Lucas released a movie that influenced an entire cinematic generation. I’m sure you know exactly what movie I’m speaking of, and if you don’t, I may or may not be judging you right now. Other than the release of one of the greatest movies of all time, something else with meaning happened that year. 1977 was also the last time the SEC updated its deadline for filing the initial Schedule 13G.

And guess what, if that seems like a very long time ago, just know that 1968 was the last time the filing deadline for Schedule 13D was updated. For context, that was the same year Apollo 8 flew around the moon for the first time.

The Change 
Clearly, a rule update for these forms has been long past due and the SEC recognized this fact. As a result, the Securities and Exchange Commission adopted amendments to modernize the rules governing beneficial ownership reporting. The main change in the rule is the shortening of the deadlines for the initial and amended Schedule 13D and 13G filings. Previously, if you acquired 5% of a company you had 10 calendar days to report the transaction. Now, that time has been reduced to 5 business days.

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EA Forms - BOIR

The Reason
The SEC has concluded that it shouldn’t take as long as 10 days to inform the public about an attempt to change or influence a public company.

The reality is that we are in the 21st Century. An era of high-speed internet access, 24-hour media, and a higher frequency of trading than what was going on in the 60’s and 70’s. To put it in perspective, faxing documents was considered new technology when these rules were originally made, so it was extremely necessary to modernize the requirements to match the modern-day investor. 

This new rule of shortening the deadline allows more transparency for investors, which at the end of the day is the entire reason why the SEC is here. To provide transparency for the public at the appropriate times.

David Jackson

Assistant Manager - Typeset

David Jackson has 5+ years of experience in the Financial Services industry and is currently the Assistant Manager of Typeset at EdgarAgents. He’s a die-hard Knicks fan who thinks a championship is right around the corner. He clearly also believes in miracles.