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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 13d101”), 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 13d7”).

Unless 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.

Unless 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.

Table of Contents

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 CASHSETTLED 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

STRUCTURED DATA REQUIREMENT FOR SCHEDULES 13D AND 13G

Proposed Amendment

Comments Received

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

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

Unless 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.

See infra note 22 for a discussion of certain technical amendments we are adopting that the Commission

did not previously propose.

See 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. 3311180; 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/s70622-20165251334474.pdf (“DERA Memorandum”).

See generally letters submitted in connection with the Proposed Amendments, available at

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-proposed-amendmentsregulation-13d-g-proposed-rule-10b-1-and.pdf. The IAC was established in Apr. 2012 pursuant to section

are making 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

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-advisory-committee/iac092122agenda.htm.

As 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.

As 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.

See 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.

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

The 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.”

Throughout 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.”

The 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 non-U.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 240.13d1(b)(1)(i).

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;

•

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;

The 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.

Any 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.”

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 240.13d1(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.

The 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. 3439538 (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).

•

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

When we refer to “Eastern Time” in this release, we mean Eastern Standard Time or Eastern Daylight

Saving Time, whichever is currently in effect.

This 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.

See 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.

in section II.A:

Issue

Initial

Filing

Deadline

Amendment

Triggering

Event

Current

Schedule 13D

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).

Material change in

the facts set forth

in the previous

Schedule 13D.

Rule 13d-2(a).

New Schedule 13D

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).

Same as current

Schedule 13D:

Material change in the

facts set forth in the

previous Schedule

13D. Rule 13d-2(a).

Current Schedule 13G

New Schedule 13G

QIIs & Exempt

Investors: 45 days after

calendar year-end in

which beneficial

ownership exceeds 5%.

Rule 13d-1(b) and (d).

QIIs & Exempt

Investors: 45 days

after calendar quarterend in which

beneficial ownership

exceeds 5%. Rule 13d1(b) and (d).

QIIs: 10 days after

month-end in which

beneficial ownership

exceeds 10%. Rule 13d1(b).

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).

All Schedule 13G

Filers: Material

change in the

information previously

reported on Schedule

13G. Rule 13d-2(b).

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 13d2(c) and (d).

QIIs & Passive

Investors: Same as

current Schedule 13G:

Upon exceeding 10%

beneficial ownership

or a 5% increase or

decrease in beneficial

ownership. Rule 13d2(c) and (d).

Issue

Amendment

Filing

Deadline

Filing “CutOff” Time

Current

Schedule 13D

Promptly after the

triggering event.

Rule 13d-2(a).

5:30 p.m. Eastern

Time. Rule

13(a)(2) of

Regulation S-T.

New Schedule 13D

Within two business

days after the

triggering event. Rule

13d-2(a).

10 p.m. Eastern Time.

Rule 13(a)(4) of

Regulation S-T.

Current Schedule 13G

New Schedule 13G

All Schedule 13G Filers:

45 days after calendar

year-end in which any

change occurred. Rule

13d-2(b).

All Schedule 13G

Filers: 45 days after

calendar quarter-end

in which a material

change occurred. Rule

13d-2(b).

QIIs: 10 days after

month-end in which

beneficial ownership

exceeded 10% or there

was, as of the monthend, a 5% increase or

decrease in beneficial

ownership. Rule 13d2(c).

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 13d2(d).

Passive Investors:

Two business days

after exceeding 10%

beneficial ownership

or a 5% increase or

decrease in beneficial

ownership. Rule 13d2(d).

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) (“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 cashsettled 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 XML-based 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.

But 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.

Under this structured data requirement, only the exhibits to Schedules 13D and 13G will remain

unstructured.

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

Specifically, 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).

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

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 13d1(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 non-institutional 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

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).

Section 13(d)(1) of the Exchange Act was enacted by the Ninetieth Congress in 1968 through the approval

of Senate Bill 510.

17 CFR 240.13d-1(b).

17 CFR 240.13d-1(c).

The 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.”

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 13d1(e)(1) requires 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

Whether 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 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)].

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

Proposing Release at 13851.

Id.

Id. at 13852.

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),

Proposing Release at 13850, 13852.

Id. at 13854.

Id.

Throughout 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

(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 commenters asserted that the proposed

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.

See, 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, AFLCIO (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 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

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 decisionmaking 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

(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.

See, e.g., letters from ABA; Anthony R.; FedEx; Freeport-McMoRan; Jonah; P. Worts; T. Mirvis, et al.

See, 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.

See, e.g., letters from C. Robinson (“I welcome all rules that require more disclosure and faster times to

report[].”); J. Soucie; P. Worts.

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

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

See 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”).

See letter from HMA I.

See, 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.

See letter from Labor Unions.

See letter from NIRI.

See letter from Better Markets I; see also letter from Better Markets II.

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 anti-takeover provisions that are not present in

See, e.g., letters from ABA; AFL-CIO; Better Markets I; BRT; C. Robinson; FedEx; Freeport-McMoRan;

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.

See 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.

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

See letter from BRT.

See letter from NIRI.

See, e.g., letters from AFREF; Better Markets I; SCG; Sen. Baldwin, et al.; WLRK II.

those jurisdictions. 54 To the contrary, that commenter asserted that some of those foreign

jurisdictions are even less “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

See letter from WLRK II.

See 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.

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

See, e.g., letters from ABA; Anonymous 11; BRT; Freeport-McMoRan; J. Soucie; WLRK I.

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

See letter from WLRK I.

See letter from FedEx.

See, e.g., letters from ABA; AFREF; Better Markets I; Better Markets II; HMA II; Labor Unions; Sen.

Baldwin, et al.; WLRK I.

See 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).

See letter from HMA II.

See 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.

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, longterm 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,

See letter from AFL-CIO.

See letter from WLRK I.

See, e.g., letters from AFREF; Better Markets I; HMA II; Labor Unions; NIRI; SCG; Sen. Baldwin, et al.;

WLRK I.

See letter from AFREF. The commenter also noted that while hedge fund activism is associated with shortterm 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).

See letter from WLRK I.

See 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.

See letter from NIRI.

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 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

See 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”).

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

See 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.

See 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 shortterm 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.

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 pre-disclosure

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

See letter from Better Markets I.

See, 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).

See, 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.

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

See letter from ICM.

See letter from AIMA.

See letter from Profs. Schwartz and Shavell II (emphasis in original); see also letter from Profs. Schwartz

and Shavell I.

See 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.

See 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.

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 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

See 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 mid-capitalization issuers . . . where the majority of active shareholder engagement

occurs”).

See, 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).

See letter from Profs. Swanson, Young, and Yust.

See, 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.

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

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

See, 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.

See letters from AIMA; TRP.

See 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).

See, 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).

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,

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

See letter from ICI I.

See letter from IAA. The commenter cited legal developments since 1968, including various anti-takeover

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.

See 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.

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 non-institutional 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 amendments.

For example, a number of commenters expressed concerns that the proposed amendments would

See letter from B. Sharfman.

See 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.

See letters from CIRCA IV; ICM.

See letters from A. Day; E. Fraser.

100

See letter from NVCA.

101

See 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).

102

See 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.

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

103

See, e.g., letters from AIMA; CIRCA I; CIRCA III; Dodge & Cox; ICM; M. Frampton; MFA; Rice

Management; TRP.

104

See 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.

105

See letter from Profs. Swanson, Young, and Yust.

106

See letter from ICI I.

107

See letter from Rice Management.

108

See letters from ICM; R. Parta.

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, third-party 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

109

See 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.

111

See letter from Profs. Schwartz and Shavell I.

112

See letter from Corey (Feb. 19, 2022) (“Corey”).

113

See letter from Prof. Steinberg.

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 management-based

threshold for the proposed accelerated Schedule 13D filing deadlines. 119

Other opposing commenters recommended that the Commission consider a “tiered

114

See 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.

115

See, 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 twobusiness day deadline).

116

See letter from T. Reilly.

117

See, e.g., letters from AFREF; Freeport-McMoRan; HMA I.

118

See letter from Prof. Gordon.

119

See letter from A. Day.

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 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

120

See letters from ICM; STB.

121

See letter from ICM.

122

See letter from STB.

123

See 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.

124

See letter from MFA.

13D be filed in five business days rather than five calendar days. 125 Some of those commenters

suggested that a five-business 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

125

See, e.g., letters from Dodge & Cox; ICI I; SIFMA AMG; STB; see also IAC Recommendations

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

deadline, for an initial Schedule 13D filing).

126

See letters from Dodge & Cox; ICI I.

127

See letter from STB; see also IAC Recommendations.

128

See, 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).

129

See letter from Charles Jacobs, USCG (Feb. 20, 2022) (“C. Jacobs”).

130

See 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.

131

See, 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.

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.

132

See, 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.

133

See letter from Committee on Securities Law of the Business Law Section of the Maryland State Bar

Association (Apr. 11, 2022) (“MSBA”).

134

The 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.

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 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

135

Under 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-and-desist 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.

136

We 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).

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 ST, 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

137

See 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.

138

See, 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 record-keeping 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

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

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”).

140

See, 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.

141

Shortening the Securities Transaction Settlement Cycle, Release No. 34-96930 (Feb. 15, 2023) [88 FR

13872, 13873 (Mar. 6, 2023)].

142

Id. at 13873, 13916.

143

See 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.

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 Similarly, the Commission has long recognized the benefits of more expedient

144

Public Law 111-203, 124 Stat. 1900 929R(a)(1)(A) (2010).

145

For 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.

146

Acceleration 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 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

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 decision-making by investors, and enhancing

the efficiency of resource allocation (i.e., the direction of capital and other resources to their

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 non-issuer 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.

147

Acceleration 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.”).

148

See supra notes 48-52 and accompanying text.

149

See supra notes 42-43 and accompanying text.

150

See supra notes 38-41 and accompanying text.

most productive uses) across the economy. 151

We recognize that several commenters opposed the proposed amendments to Rule 13d1(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

151

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

152

See supra note 92 and accompanying text.

153

See, 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”).

154

See supra notes 138-139 and accompanying text.

155

See 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”).

156

See supra note 140 and accompanying text.

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 control

157

We 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 five-business day deadline should mitigate these

concerns. See infra note 165 and accompanying text. In addition, for the reasons discussed infra notes 166168 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.

158

See supra notes 77-83 and accompanying text.

159

See supra notes 77-83, 103 and accompanying text.

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 10day 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 five-business day deadline. This change from the proposal comports

with a recommendation that a number of commenters, including several that opposed the

160

See 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.).

161

Proposing 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.

163

See supra notes 57-65 and accompanying text.

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

164

See supra notes 125, 130 and accompanying text.

165

The 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.”).

166

See 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.”).

167

See supra note 58 and accompanying text.

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 five-business 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

168

See 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”).

169

See infra note 847 and accompanying text.

170

See 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”).

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 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

171

See supra note 37 and accompanying text.

172

See, 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 onebusiness day initial Schedule 13D filing deadline); C. Jacobs (recommending a two-day initial Schedule

13D filing deadline); NIRI (recommending a two-business 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).

173

See 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

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

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).

174

For 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.

175

See infra section IV.C.1.b.

176

See infra section IV.C.a.

177

See supra notes 84-90 and accompanying text.

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

178

See 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.

179

See infra sections IV.C.1.a.iii and iv.

180

See Proposing Release at 13850 & n.19, 13881 & n.214.

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 “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,

181

See infra note 753 and accompanying text for a discussion of the term “informed bystanders,” as used in

this release.

182

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

183

See id.

184

See 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)).

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

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”).

186

S. 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”).

187

See supra note 96 and accompanying text.

188

See 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”).

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

190

Report 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.

191

See 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.

193

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

194

S. Rep. No. 95-114, at 13 (1977), as reprinted in 1977 U.S.C.C.A.N. 4098, 4111.

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 beneficially owns more than

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).

197

First 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 “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).

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 13d1(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

198

17 CFR 240.13d-1(d).

199

The 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.

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 well-established compliance systems in place to

200

Filing 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.

201

Proposing Release at 13856.

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

202

Id.

203

Id.

204

Id.

205

Id. at 13855.

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 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

206

Id.

207

Id. at 13855-56.

208

Id. at 13856.

209

Id.

210

See, 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.

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

211

See supra notes 38-40, 43-44 and accompanying text.

212

See 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.

213

See, e.g., letters from AFL-CIO; C. Robinson; FedEx; Freeport-McMoRan; T. Mirvis, et al.

214

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

215

See letter from T. Mirvis, et al.

216

See, e.g., letters from Anonymous 11; Freeport-McMoRan; J. Soucie.

217

See letter from FedEx.

218

See, 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

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

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.

219

See, e.g., letters from ABA; Dodge & Cox; IAA; ICI I; MSBA; STB; TIAA.

220

See 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.

221

See 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.

222

See 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.

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

223

See 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)”).

224

See letters from STB; TIAA. For example, one of these commenters noted that notwithstanding any

technological advancements, a month-end-based 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.

225

See letter from ABA.

226

See, 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.

amendments will promote transparency into matters of corporate control and questioned the

necessity of the proposed amendments in that respect. 227 Some of those commenters exp

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