By Rodney F. Tonkovic, J.D.
The SEC has unanimously adopted final rules requiring the electronic filing of documents by investment advisers, institutional investment managers, and others that had previously been filed on paper. In short, the amendments will require the filing or submission of: applications for orders under the Investment Advisers Act; confidential treatment requests for Form 13F filings; and Form ADV-NR. Other technical amendments are intended to enhance the quality of the date reported on Form 13F. The rules are effective upon publication in the Federal Register, except for the amendments to Form 13F, which are effective on January 3, 2023, and there will be a six-month transition period (Electronic Submission of Applications for Orders under the Advisers Act and the Investment Company Act, Confidential Treatment Requests for Filings on Form 13F, and Form ADV-NR; Amendments to Form 13F, Release No. 34-95148, June 23, 2022).
The new requirements are intended to minimize delay in receiving information and to increase the efficiency of the review process. The release also notes that electronic filing effectively addressed logistical and operational issues occasioned by the COVID-19 pandemic and would be similarly effective during future disruptive events. In a statement announcing the new rule amendments, Chair Gensler said: "In a digital age, it is important for filers to have easy, online methods to submit information to the Commission, and where appropriate for investors to have easy, online access as well. Electronic filing as opposed to paper filing makes this submission and disclosure more efficient, transparent, and operationally resilient. In light of this, these amendments benefit filers, investors, and the SEC."
The rule and form amendments were proposed in November 2021. While the proposal did not generate many comments, those received were generally supportive of the Commission's aims while offering suggested refinements mainly to the approach to Form 13F filings. The amendments have been adopted largely as proposed.
Advisers Act. The final rules require the electronic filing through EDGAR of applications for orders under any section of the Advisers Act for which a form with instructions is not specifically prescribed. Before these amendments, applicants were required to file the application, plus a proposed notice of application, in paper and in quintuplicate. Once EDGAR accepts an application, on the other hand, it is immediately available to the staff and public, allowing for easier search and review of filed applications. The Commission said that it chose EDGAR over IARD for a number of reasons, including cost and the use of readily available technology. Significantly, these changes will make the application process under the Advisers Act consistent with the process for orders under the Investment Company Act (which has used EDGAR since 2009), and applications for orders under both acts may be made jointly in a single submission.
Form 13F. Under Exchange Act Section 13(f), managers are required to file a report on Form 13F if they exercise investment discretion over accounts holding certain equity securities having an aggregate fair market value of at least $100 million. Filers may request that the Commission delay or prevent disclosure of certain information that could have harmful market effects, however. The paper confidential treatment requests were subject to a time-consuming, manual receipt and distribution process, the Commission observed, and faults in the process were highlighted by the challenges of the coronavirus pandemic.
The new amendments for Form 13F and related rules require managers to file requests for confidential treatment via EDGAR. An amendment to the form's instructions requires filers to demonstrate that the information is customarily and actually kept private and that failure to grant the request for confidential treatment would be likely to cause harm to the manager. In addition to existing requirements, filers must provide additional identifying information such as a Central Registration Depository number and SEC file number, if any. Each reported security's CUSIP number must still be disclosed, but managers will also be permitted—but not required—to disclose the security's share class level Financial Instrument Global Identifier ("FIGI"). Technical amendments will simplify the form's rounding convention and otherwise account for the change to the XML-based structured data language.
Form ADV-NR. Finally, Form ADV-NR will be required to be filed electronically through the through the Investment Adviser Registration Depository system. This form must be filed by non-resident general partners and non-resident managing agents of SEC-registered investment advisers and exempt reporting advisers to appoint an agent for service of process in the United States. The filing must be made in connection with an adviser's initial Form ADV application or report (also filed via IARD). The form will be available in a fillable format and require signatures in electronic format. Members of the public will be able to view Forms ADV-NR through IARD's public interface.
The release is No. 34-95148.