SUMMARY: The Securities and Exchange Commission (“Commission”) is adopting

 
Conformed to Federal Register version 
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 r ule; 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. 

2 
FOR FURTHER INFORMATION CONTACT: Nicholas Panos, Senior Special Counsel, and 
Valian Afshar, Senior Special Counsel, Division of Corporation Finance, at (202) 551-3440, U.S. 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.  
SUPPLEMENTARY INFORMATION: We are adopting amendments to 17 CFR 240.13d-1 
(“Rule 13d-1”), 17 CFR 240.13d-2 (“Rule 13d-2”), 17 CFR 240.13d-3 (“Rule 13d-3”), 17 CFR 
240.13d-5 (“Rule 13d-5”), 17 CFR 240.13d-6 (“Rule 13d-6”), 17 CFR 240.13d-101 (“Rule 13d-
101”), and 17 CFR 240.13d-102 (“Rule 13d-102”) under the Securities Exchange Act of 1934 
[15 U.S.C. 78a et seq.] (“Exchange Act”).
1
 We also are adopting amendments to 17 CFR 232.13 
(“Rule 13 of Regulation S-T”) and 17 CFR 232.201 (“Rule 201 of Regulation S-T”) under 17 
CFR part 232 (“Regulation S-T”).
2
 In addition, we are rescinding 17 CFR 240.13d-7 (“Rule 13d-
7”). 
 
  
 
1
  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. 
2
  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.  

3 
Table of Contents 
I. INTRODUCTION 
II.   DISCUSSION OF THE FINAL AMENDMENTS 
A.    AMENDMENTS TO RULES 13D-1 AND 13D-2 AND RULES 13 AND 201 OF 
REGULATION S-T TO REVISE FILING DEADLINES AND FILING DATE 
ASSIGNMENT 
1. Rule 13d-1(a), (e), (f), and (g) 
2. Rule 13d-1(b), (c), and (d) 
3.  Rule 13d-2(a) and (b) 
4. Rule 13d-2(c) and (d) 
5.  Rules 13(a)(4) and 201(a) of Regulation S-T 
B.    PROPOSED AMENDMENT TO RULE 13D-3 REGARDING THE USE OF CASH-
SETTLED DERIVATIVE SECURITIES 
1. Proposed Amendment 
2. Comments Received 
3. Commission Guidance 
C.    PROPOSED AMENDMENTS TO RULE 13D-5 
1. Proposed Rule 13d-5(b)(1)(i), (b)(2)(i), and (b)(1)(ii) 
2. Proposed Rule 13d-5(b)(1)(iii) and (b)(2)(ii) 
3. Proposed Rule 13d-5(b)(1)(iv) and (b)(2)(iii) 
D.    PROPOSED AMENDMENTS TO RULE 13D-6 TO CREATE CERTAIN 
EXEMPTIONS 
1. Proposed Amendments 
2. Comments Received 
3. Final Amendments 
E.  AMENDMENT TO SCHEDULE 13D TO CLARIFY DISCLOSURE 
REQUIREMENTS REGARDING DERIVATIVE SECURITIES 
1. Proposed Amendment 
2. Comments Received 
3. Final Amendment 
F. STRUCTURED DATA REQUIREMENT FOR SCHEDULES 13D AND 13G 
1. Proposed Amendment 
2. Comments Received 
3. Final Amendment 
G. COMPLIANCE DATES 
III.  OTHER MATTERS 

4 
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 
 
 
  

5 
I. Introduction 
We are amending certain rules within 17 CFR 240.13d-1 through 240.13f-1 (“Regulation 
13D-G”)
3
 and Regulation S-T to modernize the beneficial ownership reporting requirements and 
improve their operation and efficacy. Some
4
 of these amendments are based on the amendments 
that the Commission proposed in 2022 (“Proposed Amendments”).
5
 Specifically, we are 
adopting revisions to the deadlines for Schedule 13D and Schedule 13G filings. We also are 
adopting certain related technical changes to Regulation S-T that the Commission proposed in 
connection with these amendments. Further, we are requiring that Schedule 13D and 13G filings 
be submitted using a structured, machine-readable data language.  
In response to the comments we received on the Proposed Amendments,
6
 however, we 
 
3
  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. 
4
  See infra note 22 for a discussion of certain technical amendments we are adopting that the Commission 
did not previously propose. 
5
  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. 33-
11180; 34-97405 (Apr. 28, 2023) [88 FR 28440 (May 4, 2023)] (“Reopening Release”). That memorandum 
provided supplemental data and analysis related to certain economic effects of the Proposed Amendments. 
See Memorandum of the Staff of the Division of Economic and Risk Analysis, Supplemental data and 
analysis on certain economic effects of proposed amendments regarding the reporting of beneficial 
ownership (Apr. 28, 2023), available at https://www.sec.gov/comments/s7-06-22/s70622-20165251-
334474.pdf (“DERA Memorandum”).  
6
  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-amendments-
regulation-13d-g-proposed-rule-10b-1-and.pdf. The IAC was established in Apr. 2012 pursuant to section 
 
 

6 
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/iac092122-
agenda.htm. 
7
  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. 
8
  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. 
9
  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. 

7 
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)”): S hortening 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)”): S hortening the deadline for the 
initial Schedule 13G filing for Qualified Institutional Investors (“QIIs”)
12
 and Exempt 
 
10
  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.” 
11
  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.” 
12
  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 240.13d-
1(b)(1)(i). 

8 
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)”): S hortening 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)”): R evising 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)”): S hortening 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;  
 
13
  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. 
14
  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.” 
15
  In addition, we are retaining the requirement in Rule 13d-1(b)(2) that a QII file its initial Schedule 13G on 
a more expedited basis if its beneficial ownership exceeds 10% of a covered class. 17 CFR 240.13d-
1(b)(2). We are amending that rule, however, to require that such an initial Schedule 13G be filed within 
five business days after the end of the first month in which the QII’s beneficial ownership exceeds 10% of a 
covered class, computed as of the last day of the month, rather than the current requirement of 10 calendar 
days after month-end. 
16
  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. 34-
39538 (Jan. 12, 1998) [63 FR 2854, n.9 (Jan. 16, 1998)]. These investors are ineligible to report beneficial 
ownership pursuant to Rule 13d-1(b) or (d) but are eligible to report beneficial ownership on Schedule 13G 
in reliance upon Rule 13d-1(c).  

9 
• 17 CFR 240.13d-2(c) (“Rule 13d-2(c)”): S hortening 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)”): R evising 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 a n 
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 
 
17
  When we refer to “Eastern Time” in this release, we mean Eastern Standard Time or Eastern Daylight 
Saving Time, whichever is currently in effect. 
18
  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. 
19
  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.  

10 
in section II.A:  
Issue 
Current 
Schedule 13D 
New Schedule 13D Current Schedule 13G New Schedule 13G 
Initial 
Filing 
Deadline 
Within 10 days 
after acquiring 
beneficial 
ownership of 
more than 5% or 
losing eligibility 
to file on 
Schedule 13G. 
Rule 13d-1(a), (e), 
(f), and (g). 
Within five business 
days after acquiring 
beneficial ownership 
of more than 5% or 
losing eligibility to file 
on Schedule 13G. 
Rule 13d-1(a), (e), (f), 
and (g). 
QIIs & Exempt 
Investors: 45 days after 
calendar year-end in 
which beneficial 
ownership exceeds 5%. 
Rule 13d-1(b) and (d). 
 
QIIs: 10 days after 
month-end in which 
beneficial ownership 
exceeds 10%. Rule 13d-
1(b). 
 
Passive Investors:  
Within 10 days after 
acquiring beneficial 
ownership of more than 
5%. Rule 13d-1(c). 
QIIs & Exempt 
Investors: 45 days 
after calendar quarter-
end in which 
beneficial ownership 
exceeds 5%. Rule 13d-
1(b) and (d). 
 
QIIs: Five business 
days after month-end 
in which beneficial 
ownership exceeds 
10%. Rule 13d-1(b). 
 
Passive Investors: 
Within five business 
days after acquiring 
beneficial ownership 
of more than 5%. Rule 
13d-1(c). 
Amendment 
Triggering 
Event 
Material change in 
the facts set forth 
in the previous 
Schedule 13D. 
Rule 13d-2(a). 
Same as current 
Schedule 13D: 
Material change in the 
facts set forth in the 
previous Schedule 
13D. Rule 13d-2(a). 
All Schedule 13G Filers: 
Any change in the 
information previously 
reported on Schedule 
13G. Rule 13d-2(b). 
 
QIIs & Passive 
Investors: Upon 
exceeding 10% 
beneficial ownership or 
a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(c) and (d). 
 
 
All Schedule 13G 
Filers: Material 
change in the 
information previously 
reported on Schedule 
13G. Rule 13d-2(b). 
 
QIIs & Passive 
Investors: Same as 
current Schedule 13G: 
Upon exceeding 10% 
beneficial ownership 
or a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(c) and (d). 

11 
Issue 
Current 
Schedule 13D 
New Schedule 13D Current Schedule 13G New Schedule 13G 
Amendment 
Filing 
Deadline 
Promptly after the 
triggering event. 
Rule 13d-2(a). 
Within two business 
days after the 
triggering event. Rule 
13d-2(a). 
All Schedule 13G Filers: 
45 days after calendar 
year-end in which any 
change occurred. Rule 
13d-2(b). 
 
QIIs: 10 days after 
month-end in which 
beneficial ownership 
exceeded 10% or there 
was, as of the month-
end, a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(c). 
 
Passive Investors: 
Promptly after 
exceeding 10% 
beneficial ownership or 
a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(d). 
All Schedule 13G 
Filers: 45 days after 
calendar quarter-end 
in which a material 
change occurred. Rule 
13d-2(b).  
 
QIIs:  Five business 
days after month-end 
in which beneficial 
ownership exceeds 
10% or a 5% increase 
or decrease in 
beneficial ownership. 
Rule 13d-2(c). 
 
Passive Investors: 
Two business days 
after exceeding 10% 
beneficial ownership 
or a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(d). 
Filing “Cut-
Off” Time 
5:30 p.m. Eastern 
Time. Rule 
13(a)(2) of 
Regulation S-T.   
10 p.m. Eastern Time. 
Rule 13(a)(4) of 
Regulation S-T.   
All Schedule 13G Filers: 
5:30 p.m. Eastern Time. 
Rule 13(a)(2) of 
Regulation S-T.   
All Schedule 13G 
Filers: 10 p.m. Eastern 
Time. Rule 13(a)(4) of 
Regulation S-T.   
As noted above, we are not adopting proposed Rule 13d-3(e). Instead, we discuss the 
circumstances in which a holder of a cash-settled derivative security, excluding SBS, may be 
deemed the beneficial owner of the reference covered class under Rule 13d-3. We also are not 
adopting the proposed exemption in 17 CFR 240.13d-6(d) (“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 

12 
amending Item 6 of Schedule 13D, codified at Rule 13d-101, to remove any implication that a 
person is not required to disclose interests in all derivative securities that use a covered class as a 
reference security. This amendment is intended to eliminate any ambiguity regarding the scope 
of the disclosure obligations of Item 6 of Schedule 13D as to derivative securities, including with 
respect to any derivative not originating with, or offered or sold by, the issuer, such as a cash-
settled option or SBS. 
As noted above, we are not adopting most of the proposed substantive amendments to 
Rule 13d-5.
20
 We also are not adopting proposed 17 CFR 240.13d-6(c) (“Rule 13d-6(c)”), which 
would have specified certain circumstances under which two or more persons may coordinate 
and consult with one another and engage with an issuer without being subject to regulation as a 
group. Instead, we are issuing guidance regarding the appropriate legal standard for determining 
whether a group is formed. This guidance is intended to provide clarity on the circumstances 
under which a person may be deemed to have formed a group with another person or persons 
within the meaning of sections 13(d)(3) and 13(g)(3). 
We are adopting the proposed requirement that Schedules 13D and 13G be filed using a 
structured, machine-readable data language. We are, therefore, now requiring that all disclosures, 
including quantitative disclosures, textual narratives, and identification checkboxes, on 
Schedules 13D and 13G be filed using an 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.  
 
20
  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. 
21
  Under this structured data requirement, only the exhibits to Schedules 13D and 13G will remain 
unstructured. 

13 
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 
 
22
  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). 
23
  15 U.S.C. 78m(d)(1). 

14 
provision, Rule 13d-1(a) sets forth the 10-day filing deadline for the initial Schedule 13D.
24
 
Although the Dodd-Frank Act amended section 13(d)(1) to grant the Commission the authority 
to shorten the deadline for filing the initial Schedule 13D, the 10-day deadline has not been 
updated since it was enacted more than 50 years ago.
25
   
Rule 13d-1(e), (f), and (g) set forth the initial Schedule 13D filing obligations for 
investors who are no longer eligible to rely upon Rule 13d-1(b)
26
 or (c)
27
 ( which permit investors 
to file the more abbreviated Schedule 13G in lieu of the longer-form Schedule 13D). Rule 13d-
1(e), (f), and (g) ensure that initial Schedule 13D filings uniformly are subject to a 10-day 
deadline, regardless of whether the beneficial owners were previously eligible to file a Schedule 
13G in lieu of the Schedule 13D. 
Rule 13d-1(e) applies to persons who have been filing a Schedule 13G in lieu of 
Schedule 13D in reliance upon either Rule 13d-1(b) or (c). Rule 13d-1(b) and (c) both provide 
that a person may not rely on those provisions if he or she beneficially owns the relevant equity 
securities with the purpose or effect of changing or influencing the control of the issuer.
28
 
Institutional and 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 
 
24
  17 CFR 240.13d-1(a) (requiring that a Schedule 13D be filed “within 10 days after the acquisition” of 
beneficial ownership of more than 5% of a covered class). 
25
  Section 13(d)(1) of the Exchange Act was enacted by the Ninetieth Congress in 1968 through the approval 
of Senate Bill 510.  
26
  17 CFR 240.13d-1(b).  
27
  17 CFR 240.13d-1(c).  
28
  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.” 

15 
effect, as described more fully under Item 10 of Schedule 13G, or certain institutional investors 
that also acquire or hold beneficial ownership outside of the ordinary course of business, are 
considered to have, for purposes of this release, a “disqualifying purpose or effect.”
29
 Rule 13d-
1(e)(1) requires 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 
 
29
  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)].  

16 
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 
 
30
  Proposing Release at 13851. 
31
  Id. 
32
  Id. at 13852. 

17 
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), 
 
33
  Proposing Release at 13850, 13852. 
34
  Id. at 13854. 
35
  Id. 
36
  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 
 
 

18 
(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. 
37
  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, AFL-
CIO (Apr. 11, 2022) (“AFL-CIO”) (expressly supporting only the proposed amendment to Rule 13d-1(a)); 
Americans for Financial Reform Education Fund (“Apr. 11, 2022) (“AFREF”) (same); Americans for 
Financial Reform Education Fund, American Federation of Labor and Congress of Industrial Organizations 
(AFL-CIO), Communications Workers of America (CWA), Interfaith Center on Corporate Responsibility 
(ICCR), Public Citizen (June 27, 2023) (“AFREF, et al.”) (same); Anonymous (Feb. 19, 2022) 
(“Anonymous 1”); Anonymous (Feb. 19, 2022) (“Anonymous 3”); Anonymous (Feb. 20, 2022) 
(“Anonymous 5”); Anonymous (Mar. 14, 2022) (“Anonymous 11”); Anonymous (Mar. 14, 2022) 
(“Anonymous 12”); Anthony R., Individual Investors (Feb. 18, 2022) (“Anthony R.”); Better Markets (Apr. 
11, 2022) (“Better Markets I”) (same); Better Markets (June 27, 2023) (“Better Markets II”) (same); Maria 
Ghazal, Senior Vice President and Counsel, Business Roundtable (Apr. 11, 2022) (“BRT”) (same); Curtis 
Robinson (Feb. 18, 2022 (“C. Robinson”); Richard F. McMahon, Jr., Senior Vice President, Energy Supply 
& Finance Edison Electric Institute (Mar. 22, 2022) (“EEI”); An Investor, Engineer (Apr. 4, 2022) 
(“Engineer”); Mark R. Allen, Executive Vice 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 
 
 

19 
amendments would increase the timeliness and quality of information for market participants.
38
 
A number of commenters asserted that the proposed amendments would increase transparency 
and fairness in the financial markets.
39
  
 Several commenters identified potential specific benefits of the proposed amendments. 
For example, some commenters asserted that the proposed amendments would be particularly 
beneficial for retail investors by providing them with additional information and transparency.
40
 
Another commenter stated that the proposed amendments would enable investors and the market 
to “better track when beneficial owners take significant positions in covered securities for 
purposes of controlling or exerting influence over issuers, resulting in more informed decision-
making by investors and more accurate valuation of securities by the market.”
41
 
Other commenters highlighted potential downsides of the current 10-day deadline. For 
example, one commenter described the 10-day deadline as costly to public companies and 
investors generally and based its support for the proposed amendments “on the fundamental 
concept that a public company must have timely information about its owners in order to engage 
 
(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.  
38
  See, e.g., letters from ABA; Anthony R.; FedEx; Freeport-McMoRan; Jonah; P. Worts; T. Mirvis, et al. 
39
  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. 
40
  See, e.g., letters from C. Robinson (“I welcome all rules that require more disclosure and faster times to 
report[].”); J. Soucie; P. Worts.  
41
  See letter from TIAA; see also letter from P. Worts. 

20 
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 
 
42
  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”). 
43
  See letter from HMA I. 
44
  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. 
45
  See letter from Labor Unions. 
46
  See letter from NIRI. 
47
  See letter from Better Markets I; see also letter from Better Markets II. 

21 
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 
 
48
  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. 
49
  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. 
50
  See, e.g., letters from Sen. Baldwin, et al.; T. Mirvis, et al. 
51
  See letter from BRT. 
52
  See letter from NIRI. 
53
  See, e.g., letters from AFREF; Better Markets I; SCG; Sen. Baldwin, et al.; WLRK II. 

22 
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 
 
54
  See letter from WLRK II. 
55
  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. 
56
  See, e.g., letters from SCG; WLRK I. 
57
  See, e.g., letters from ABA; Anonymous 11; BRT; Freeport-McMoRan; J. Soucie; WLRK I. 

23 
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 
 
58
  See letter from WLRK I. 
59
  See letter from FedEx. 
60
  See, e.g., letters from ABA; AFREF; Better Markets I; Better Markets II; HMA II; Labor Unions; Sen. 
Baldwin, et al.; WLRK I. 
61
  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). 
62
  See letter from HMA II. 
63
  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.   

24 
investor.”
64
 And, one commenter asserted that the proposed amendments are “more likely to 
adversely affect short-term behaviors than long-term oriented activism.”
65
 
 In addition, a number of commenters stated that shareholder activism is not uniformly 
beneficial for issuers and their shareholders.
66
 For example, one commenter asserted that hedge 
fund activism could be contributing to an emphasis on short-term gains over sustainable, long-
term growth that benefits longer-term investors.
67
 One commenter noted that while a Schedule 
13D filing by an activist may often lead to an immediate bump in the issuer’s stock price, there is 
no compelling evidence that activist interventions deliver long-term value to shareholders.
68
 One 
commenter asserted that the current 10-day deadline may discourage companies from going 
public, inhibiting capital formation, based on the threat of activism and “the burden of being 
subject to attacks by activist investors, a number of whom have short-term agendas.”
69
 One 
commenter stated that activist investors often pressure companies and their management to agree 
to their short-term demands that may or may not be in the long-term interests of shareholders, 
employees, and other stakeholders.
70
 Further, one commenter cited a study indicating that 
activist hedge fund campaigns targeting public companies are associated with a reduction in jobs, 
 
64
  See letter from AFL-CIO. 
65
  See letter from WLRK I. 
66
  See, e.g., letters from AFREF; Better Markets I; HMA II; Labor Unions; NIRI; SCG; Sen. Baldwin, et al.; 
WLRK I. 
67
  See letter from AFREF. The commenter also noted that while hedge fund activism is associated with short-
term increases in shareholder value, the evidence is much more mixed on the question of whether hedge 
fund activism results in long-term gains. Id.; see also letter from Better Markets I (stating that the benefits 
of shareholders seeking to acquire or influence corporate control and policy are mixed because some act 
out of short-term profit motives, not a desire to promote long-term value). 
68
  See letter from WLRK I. 
69
  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. 
70
  See letter from NIRI. 

25 
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 
 
71
  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”). 
72
  Public Law 90-439, 82 Stat. 454 (July 29, 1968). 
73
  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. 
74
  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 short-
term shareholder payouts and forgoing investments necessary for long-term financial health and growth) to 
avoid becoming targets of activism. Id. The commenter also asserted that the proposed amendments would 
benefit shareholders and other market participants by facilitating sound corporate governance. Id. For 
example, the commenter stated that a shortened filing deadline would help investors ensure their asset 
managers are fulfilling their fiduciary duties and help inform the education and advocacy efforts of those 
with a stake in proxy contests, shareholder resolutions, and other important votes. Id. 

26 
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 
 
75
  See letter from Better Markets I. 
76
  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). 
77
  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. 

27 
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 
 
78
  See letter from ICM. 
79
  See letter from AIMA. 
80
  See letter from Profs. Schwartz and Shavell II (emphasis in original); see also letter from Profs. Schwartz 
and Shavell I. 
81
  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. 
82
  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. 

28 
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 
 
83
  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”). 
84
  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). 
85
  See letter from Profs. Swanson, Young, and Yust. 
86
  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. 

29 
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 
 
87
  See, e.g., letters from CIRCA I; ICM; Prof. Gordon. 
88
  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. 
89
  See letters from AIMA; TRP. 
90
  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). 
91
  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). 

30 
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, 
 
92
  See, e.g., letters from AIMA; ICI I; ICM; STB. 
93
  See letter from ICI I. 
94
  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. 
95
  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. 

31 
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
 O ther 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
 O ne 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 
 
96
  See letter from B. Sharfman. 
97
  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. 
98
  See letters from CIRCA IV; ICM. 
99
  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. 

32 
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
 O ther 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. 

33 
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 b eneficial 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. 

34 
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 two-
business 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. 

35 
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. 

36 
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. 

37 
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. 

38 
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). 

39 
a person loses eligibility to file on Schedule 13G under Rule 13d-1(e), (f), and (g)—in order for 
the filing to be considered timely. Pursuant to our amendment to Rule 13(a)(4) of Regulation S-
T, discussed in section II.A.5 below, the filing will have to be submitted by direct transmission 
commencing on or before 10 p.m. Eastern Time on the due date.
137
 
We believe the current 10-day filing deadline for an initial Schedule 13D filing should be 
revised to ensure investors receive material information in a manner that is considered timely in 
light of advancements in technology and developments in the financial markets that have 
occurred since that deadline was enacted in 1968. Those technological advancements include, for 
example, market professionals’ use of information technologies to compile the necessary data 
and prepare a filing,
138
 as well as their ability to submit filings electronically through the 
Commission’s Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system.
139
 In 
 
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 Y
ALE 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 H
ARV. 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 
 
 

40 
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. 

41 
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 
 
 

42 
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. 

43 
most productive uses) across the economy.
151
 
We recognize that several commenters opposed the proposed amendments to Rule 13d-
1(a), (e), (f), and (g). Some commenters asserted that neither Congress nor the Commission 
previously suggested that technological ability to file should be the primary basis to determine 
the appropriate initial Schedule 13D filing deadline.
152
 There is some indication, however, that 
when enacting the 10-day deadline, Congress considered the amount of time a beneficial owner 
would need to prepare and submit a filing.
153
 As noted above, there have been significant 
technological advancements since 1968 that have made it easier to prepare and file a Schedule 
13D more quickly.
154
 There also is some indication that Congress enacted section 13(d), in part, 
to provide shareholders with material information regarding potential changes in control in a 
timely manner to facilitate their investment decisions.
155
 Because changes in technology and 
developments in the financial markets since 1968 have facilitated investors’ abilities to rapidly 
accumulate beneficial ownership,
156
 we believe it is appropriate to shorten the initial Schedule 
 
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, 90
th
 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. 

44 
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 166-
168 and accompanying text, we believe that our analyses of the current timing of Schedule 13D filings and 
accumulations of significant equity stakes demonstrate that Schedule 13D filers are capable, utilizing 
modern technology and in light of the characteristics of today’s financial markets, of complying with the 
amended five-business day deadline. This is especially so given the sophistication and size of many 
Schedule 13D filers. See supra note 58 and accompanying text. Finally, some commenters expressed 
concerns about filers’ ability to meet the proposed deadline (as well as the other Schedule 13D and 13G 
filing deadlines) given the amount of time it may take to obtain EDGAR filer codes. See, e.g., letters from 
MSBA; STB. To ensure they obtain their EDGAR filer codes in a timely manner, we generally expect filers 
to begin the process of applying for their EDGAR filer codes before they have incurred a filing obligation 
(e.g., as they begin to acquire shares with a control intent but before crossing the 5% threshold). Filers 
should note that the Commission’s staff reviews all Form ID applications, and filers should allow sufficient 
time for that review. Further, the Commission’s staff works diligently to process Form IDs promptly upon 
receipt of an application. 
158
  See supra notes 77-83 and accompanying text. 
159
  See supra notes 77-83, 103 and accompanying text. 

45 
transactions.
160
 In the Proposing Release, the Commission “recognize[d] the chilling effect that a 
shortening of the initial Schedule 13D filing deadline could have on a shareholder’s ability . . . to 
effect changes at companies” if the shortened deadline increases the costs and reduces the 
incentives for shareholders attempting to effect a change of control.
161
 Yet, the Commission 
further stated that it did not believe “that a shortening of the deadline would unduly disrupt that 
balance,” noting that “many Schedule 13D filers currently do not avail themselves of the full 10-
day filing period.”
162
 A number of commenters similarly asserted that the proposed five-day 
deadline would not significantly impede shareholder activism or impose significant costs or 
burdens on beneficial owners of more than five percent of a covered class.
163
  
Notwithstanding this support for the proposed five-calendar day deadline,  we have 
decided to instead adopt a 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 C
ONG. 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. 

46 
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
 A s 
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. 

47 
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 five-
business day deadline, we expect the activists will adapt to the shortened deadline and continue 
to pursue the campaigns.
169
 F or 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”). 

48 
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, e  specially 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 five-
business 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 one-
business 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 
 
 

49 
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. 

50 
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. 

51 
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)). 

52 
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”). 

53 
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.  

54 
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). 

55 
10 percent of a covered class as of the last day of any month, then the initial Schedule 13G must 
be filed within 10 days after the end of that month. A QII relying on Rule 13d-1(b), therefore, 
may have beneficial ownership in excess of five percent throughout the calendar year without 
incurring a filing obligation unless the QII beneficially owns more than 10 percent of a covered 
class at the end of any month during that year. 
Rule 13d-1(d),
198
 as with Rule 13d-1(b), imposes an initial Schedule 13G filing deadline 
of 45 days after the end of the calendar year, but only for investors who have become beneficial 
owners without having made an acquisition recognized under section 13(d)(1). Given that these 
investors did not make the requisite acquisition that would have subjected them to section 13(d), 
the Commission has previously referred to this type of beneficial owner as an “Exempt 
Investor.” Unlike the QIIs and Passive Investors—discussed below, in the context of Rule 13d-
1(c)—who file a Schedule 13G in lieu of Schedule 13D and at all times remain subject to section 
13(d), Exempt Investors are subject to section 13(g) at the time their initial filing obligation 
arises. Exempt Investors reporting pursuant to Rule 13d-1(d) today may include persons such as 
founders of companies and early investors in an issuer’s class of equity securities who made their 
acquisition before the class was registered under section 12 of the Exchange Act.
199
 These 
beneficial owners may continue to influence or control the issuer. Accordingly, the Commission 
 
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. 

56 
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. 

57 
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. 

58 
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. 

59 
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 
 
 

60 
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. 

61 
numerous operational components that take time to complete.
223
 S imilarly, 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. 

62 
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 expressed 
the view that the Commission’s existing rules provide sufficient transparency into matters of 
corporate control with respect to QIIs and Passive Investors,
228
 as well as Exempt Investors.
229
 
  In addition, one commenter asserted that the Commission has not persuasively explained 
why it is appropriate to accelerate the beneficial ownership reporting deadlines as proposed.
230
 
Some commenters stated that the information filed on Schedule 13G by Passive and Exempt 
Investors is unlikely to be material information that is market-moving.
231
 Other commenters 
asserted that the proposed amendments would provide little benefit to the market given that 
institutional investment managers’ trading activity is already subject to significant scrutiny by 
the Commission and the public through the filing of Form 13F.
232
 
 
227
  See letters from ABA; SIFMA; STB. 
228
  See letters from ABA; STB. For example, those commenters noted that QIIs and Passive Investors already 
are obligated to amend their Schedule 13G promptly upon crossing a 10% beneficial ownership threshold 
and are obligated to file an initial Schedule 13D if their control intent changes. Id. 
229
  See letters from SIFMA; STB. For example, those commenters noted that Exempt Investors are largely 
investors who have held the shares since prior to the issuer’s IPO and, as such, their original ownership is 
already materially disclosed in the IPO prospectus. Id. In addition, those commenters noted that to the 
extent an Exempt Investor’s beneficial ownership either exceeds 10% or exceeds their pre-IPO beneficial 
ownership level, it will be required to make section 16 filings or make an initial Schedule 13D filing. Id. 
230
  See letter from ICI I. 
231
  See letters from ABA; MSBA. For example, those commenters noted that a Schedule 13G filed by a 
Passive Investor does not include information about potential changes in control and that Passive Investors 
must certify that they do not have a control intent. Id. Those commenters also noted that the proposed 
amendments to Rule 13d-5 include a “tipper-tippee” provision with respect to the filing of a Schedule 13D 
but not with respect to the filing of a Schedule 13G, see letter from MSBA, and stated that accelerating the 
filing deadline for Exempt Investors will provide no additional information to the market given that the vast 
majority of Exempt Investors become Exempt Investors following the effectiveness of a registration 
statement which contains all of the information, if not more, that would be included in a Schedule 13G. See 
letter from ABA. 
232
  See letters from ABA; MFA. 

63 
Several commenters also expressed concern regarding administrative burdens associated 
with the proposed amendments to Rule 13d-1(b) and (d).
233
 Some commenters noted that 
beneficial owners often file a Schedule 13G for multiple different issuers, which “strains” their 
filing resources at the end of the reporting period.
234
 One commenter stated that a month-end-
based reporting deadline applicable would burden the external resources (including outside 
counsel, filing agents, and the EDGAR system) needed to prepare and make these filings given 
that all QIIs and Exempt Investors would be performing the Schedule 13G filing analysis during 
the same five-business day period.
235
 One commenter expressed concern that the proposed 
amendment to Rule 13d-1(b) could create practical difficulties for QIIs, including insufficient 
time to validate the data to be included in a consolidated filing for a large institutional investor 
with multiple entities.
236
 And, one commenter expressed concern that institutional investors and 
other unregistered entities may lack the infrastructure and personnel to comply with the revised 
filing deadlines and described year-round monitoring of beneficial ownership reporting 
obligations and the filing deadlines that would be required under the proposed amendments as 
burdensome.
237
 
Other commenters expressed similar concerns that the proposed amendment to Rule 13d-
1(b) would increase QIIs’ filing burdens significantly, without material benefit to investors.
238
 
 
233
  See, e.g., letters from ABA; IAA; ICI I; Perkins Coie; SSC; STB; see also letter from MFA & NAPFM. 
234
  See letters from IAA; ICI I. 
235
  See letter from STB. The commenter also asserted that the proposed five-business day period after month-
end is not enough time for outside counsel to gather the requisite information from their clients and prepare 
a Schedule 13G filing and expressed concern that investors may not be able to obtain EDGAR filing codes 
in time to meet the proposed deadlines, noting that the Commission recently has been taking three to five 
business days (and even longer during busy periods) to generally provide such codes. Id. 
236
  See letter from SSC; see also letter from IAA. 
237
  See letter from Perkins Coie. 
238
  See, e.g., letters from ABA; ICI I; SIFMA. 

64 
Some of those commenters disagreed with the Commission’s statement that QIIs already have 
systems in place to monitor their beneficial ownership levels and asserted that the proposed 
amendment would require significant changes to their operational systems and processes.
239
 One 
commenter disagreed with the Commission’s statement that the proposed amendments only 
would require QIIs to monitor the beneficial ownership levels on a monthly basis, suggesting 
instead that the proposed amendments would require daily monitoring.
240
 Another commenter 
expressed concern that, as a practical matter, the proposed five-day deadline under Rule 13d-1(c) 
would be impossible to comply with in most cases.
241
 The same commenter also stated that 
Exempt Investors that are not affiliated with the issuer are unlikely to become aware of their 
potential beneficial ownership reporting obligations in a timely manner and, therefore, may be 
unlikely to be able to comply with the proposed deadline under Rule 13d-1(d) given the practical 
challenges associated with making a Schedule 13G filing.
242
 
Some commenters expressed concern that the proposed deadlines would be unduly 
burdensome for smaller and non-institutional beneficial owners,
243
 with one commenter stating 
that by increasing overhead costs and expanding an already complex regulatory regime, the 
Commission’s accelerated timeline will render it particularly difficult for smaller managers, who 
 
239
  See letters from ICI I; SIFMA. 
240
  See letter from SIFMA. 
241
  See letter from MSBA. For example, the commenter explained that obtaining EDGAR filing codes by 
making a Form ID filing requires the assistance of counsel and that such filing usually takes 7 days to be 
processed by the Commission, by which time the proposed deadline will have passed given that many 
Passive Investors are unaware of their Schedule 13G filing obligations until after they have crossed the 5% 
threshold. Id. The commenter also asserted that even if a Passive Investor is aware of its Schedule 13G 
filing obligation before it has crossed the 5% threshold, it is unlikely to take steps to prepare for such 
obligation before actually crossing the threshold. Id. In addition, the commenter noted that many Schedule 
13G filings have multiple filing persons, which requires even more time in the preparation of the filing and 
the engagement of counsel to help prepare the filing. Id. 
242
  Id. 
243
  See, e.g., letters from A. Day; E. Fraser; MFA. 

65 
cannot readily bear the costs and administrative burden of monthly filings.
244
 Some commenters 
also asserted that the proposed amendment to Rule 13d-1(b) raises significant concerns regarding 
harm to investment advisers and funds and would impose substantial unnecessary costs on their 
clients.
245
 Similarly, some commenters stated that the proposed amendment to Rule 13d-1(b) and 
(d) would create a significant risk of prematurely disclosing sensitive portfolio holdings 
information to the market, which may result in front-running, copycatting, and other abusive 
trading practices that harm advisers and their clients, including funds and their investors.
246
 And, 
more generally, one commenter expressed concern that the proposed amendments would create 
significant reporting and monitoring burdens for all Schedule 13G filers.
247
 
Opposing commenters also highlighted some other potential risks associated with the 
proposed deadlines. For example, one commenter expressed concern that reporting within such a 
short time period under the proposed amendment to Rule 13d-1(b) would increase the risk 
reported information would subsequently need to be revised through amendments to Schedule 
13G, potentially confusing the market.
248
 One commenter asserted that the proposed 
amendments would increase the number of unintentionally inaccurate filings.
249
 One commenter 
expressed concern that the proposed amendments could negatively impact the ability of investors 
 
244
  See letter from MFA. 
245
  See letters from ICI I; MFA. 
246
  See letters from IAA; ICI I. 
247
  See letter from Perkins Coie. 
248
  See letter from ICI I. 
249
  See letter from ABA. 

66 
and their advisors to draft meaningful disclosures and engage in thoughtful analysis.
250
 Another 
commenter stated that the proposed amendments could be more broadly disruptive to trading.
251
 
Finally, several opposing commenters expressed concern that the proposed amendments 
do not reflect the differences between Schedule 13D and 13G filers (particularly QIIs) based on 
the legislative and administrative history of sections 13(d) and (g) of the Exchange Act.
252
 And, 
other commenters expressed concern that the proposed amendment to Rule 13d-1(b) would be 
unprecedented and inappropriate, unnecessary to accomplish the Commission’s regulatory 
objectives, and inconsistent with the intent and administrative history of the rules under sections 
13(d) and 13(g).
253
  
The opposing commenters also provided some recommendations regarding the proposed 
amendments. A number of those commenters suggested a quarter-end-based initial Schedule 13G 
filing deadline for QIIs and Exempt Investors rather than a month-end-based deadline. For 
example, some commenters recommended that QIIs be required to file their initial Schedule 13G 
within 45 days after the end of a calendar quarter as of which the QII beneficially owns more 
than five percent of a covered class to align with the filing timeframe under section 13(f) and 
better reflect the distinction the Commission has historically made between QIIs and other 
institutional investors.
254
 Similarly, some commenters recommended that the Commission 
require that both QIIs and Exempt Investors file their initial Schedule 13G 45 days after the end 
 
250
  See letter from STB; see also supra note 102. 
251
  See letter from TRP. Specifically, the commenter posited that there would be additional trading and 
volatility in certain issuers just after the reporting deadline each month, as institutional investors begin the 
process of accumulating or reducing positions, followed by reduced liquidity leading up to the reporting 
deadline, as they concluded that trading. Id. 
252
  See letters from ABA; ICI I.  
253
  See id. 
254
  See letters from Dodge & Cox; ICI I; SIFMA. 

67 
of a calendar quarter, consistent with the Form 13F
255
 filing deadline.
256
 One commenter 
recommended that QIIs be required to file their initial Schedule 13G within 15 business days 
after the end of a calendar quarter as of which the QII beneficially owns more than five percent 
of a covered class.
257
 Another commenter recommended that QIIs be required to file their initial 
Schedule 13G on a quarterly basis with at least a 30-day period before the filing deadline.
258
 
Opposing commenters also made alternative suggestions regarding the proposed 
amendments. For example, one commenter recommended that QIIs and Exempt Investors be 
required to file their initial Schedule 13G within 10 days after the end of the month in which its 
beneficial ownership exceeds five percent as of month-end.
259
 Another commenter recommended 
that to the extent the Commission is concerned about Schedule 13G filers acquiring additional 
shares after crossing the five percent threshold without public disclosure, it should prohibit 
trading after crossing the five percent threshold rather than accelerating the filing deadlines.
260
 
One commenter suggested that if the Commission seeks to apply the proposed amendments to a 
broad set of investors whose activities are largely unrelated to matters of corporate control, or 
where such matters may be implicated but are already subject to disclosure requirements under 
 
255
  See infra note 280 for a discussion of Form 13F and its filing deadlines. 
256
  See letters from IAA; MFA; see also IAC Recommendations (recommending that the Commission shorten 
the initial filing deadlines for QIIs and Exempt Investors to 45 days after the end of a calendar quarter). 
One of the commenters stated that a quarterly deadline would increase transparency for market participants 
as compared with the current annual deadline and noted that institutional investment managers are already 
reviewing and assessing their holdings on a quarterly basis in order to prepare Form 13F filings and are 
more equipped to submit accurate Schedule 13G filings with the same frequency. See letter from IAA. The 
commenter also asserted that aligning the deadlines for initial Schedule 13G filings with Form 13F filings 
would strike the right balance between the Commission’s concerns about information asymmetry in the 
marketplace, and advisers’ concerns about operational strains and competitive disadvantages that would 
come with publicly exposing their positions more frequently. Id. 
257
  See letter from SSC. 
258
  See letter from TRP. 
259
  See letter from ABA. 
260
  See letter from MSBA. 

68 
the existing disclosure regime, it should conduct further study and analysis to better understand 
what percentage of such investors ever are implicated in actual change in control scenarios—to 
determine the percentage of activist matters where earlier and more frequent disclosure of such 
investors’ holding would have been materially beneficial to investors.
261
 Another commenter 
recommended that rather than adopting the proposed amendments, the Commission should add a 
column to Form 13F requiring filers to explicitly note, for each listed class of securities, whether 
the filer has acquired over five percent beneficial ownership during the reporting period.
262
 And, 
one commenter recommended that the Commission consider extending the filing deadline for 
Passive Investors (e.g., to 15 or 30 days) rather than accelerating it.
263
 
In addition, some supporting commenters recommended that the Commission consider 
further shortening the initial Schedule 13G filing deadlines.
264
 Those commenters, however, did 
not specify alternative deadlines that the Commission should adopt.
265
 
Finally, some commenters that neither clearly supported nor opposed the proposed 
amendments made recommendations to the Commission. One commenter expressed the view 
that there should not be filing differences between institutional investors and Passive Investors 
and suggested that certain institutional investors should have more stringent filing requirements 
 
261
  See letter from STB. The commenter also suggested that if the Commission’s goal is market transparency 
more generally, and not a targeted concern related to matters of corporate control, the Commission should 
consider whether more appropriate tools exist to disclose 5% beneficial ownership or material changes to 
such positions in a more concise and efficient manner, using Form 13F as an example. Id. 
262
  See letter from MFA. 
263
  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 has a holding over the 5% 
of outstanding shares and suggested recommended that the Commission consider increase the threshold 
from greater than 5% beneficial ownership to 10%. Id. 
264
  See letters from AFREF; Freeport-McMoRan; HMA I. 
265
  Id. 

69 
than Passive Investors.
266
 S everal other commenters recommended that the Commission require 
Passive Investors to file an initial Schedule 13G in five business days rather than five calendar 
days.
267
 
c.   Final Amendments 
We are amending Rule 13d-1(b) and (d) to shorten the initial Schedule 13G filing 
deadlines under those rules, with some modifications from the proposals in response to 
commenter concerns. Specifically, we are adopting an initial Schedule 13G filing deadline of 45 
days
268
 after calendar quarter-end for QIIs and Exempt Investors. In addition, consistent with our 
amendment to the initial Schedule 13D deadline, we are amending Rule 13d-1(c) to require that 
Passive Investors file their initial Schedule 13G within five business days after the date on which 
the Passive Investor acquired beneficial ownership of more than five percent of a covered class.  
As noted above, Rule 13d-1(b) and (d) currently require QIIs and Exempt Investors, 
respectively, to file an initial Schedule 13G within 45 days after calendar year-end if, as of the 
end of that year, they beneficially own more than five percent of a covered class. We are 
amending Rule 13d-1(b) and (d) to require that QIIs and Exempt Investors file their initial 
Schedule 13G within 45 days after calendar quarter-end if, as of the end of that quarter, their 
beneficial ownership exceeds five percent of a covered class ( rather than five business days after 
the end of the month in which beneficial ownership exceeds five percent, as proposed). Further, 
 
266
  See letter from J. Dunlop. 
267
  See letters from ABA; Dodge & Cox; IAA; ICI I. Some of these 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 13G. See letters from Dodge & Cox, IAA; ICI I; see also supra note 130. 
268
  If the deadline falls on a Federal holiday, a Saturday, or a Sunday, then the filing may be made on the next 
business day thereafter. 17 CFR 240.0-3 (“[I]f the last day on which [a filing] can be accepted as timely 
filed falls on a Saturday, Sunday or holiday, such [filing] may be [made] on the first business day 
following.”).  

70 
because we are adopting the new 45 days after quarter-end deadline rather than the proposed five 
business days after month-end deadline, we are not adopting the proposed amendment to delete 
the language in Rule 13d-1(b)(2) that imposes an accelerated initial reporting obligation.
269
 
Instead, we are amending that rule to require that such an initial Schedule 13G be filed within 
five business days (instead of the current requirement of 10 days) after the end of the first month 
in which the QII’s beneficial ownership exceeds 10 percent of a covered class, computed as of 
the last day of the month. 
The Commission adopted the current initial Schedule 13G filing deadlines of 45 days 
after year-end in Rule 13d-1(b) and (d) in the late 1970s.
270
 In light of the technological 
advancements and developments in the financial markets in the more than 40 intervening 
years,
271
 we believe it is appropriate to shorten those deadlines to ensure beneficial ownership 
information disclosed in an initial Schedule 13G is reported in a manner that is considered timely 
by modern standards. We also expect that shortening those deadlines from year-end to quarter-
end will reduce the risk that QIIs and Exempt Investors sell down their positions before the end 
of the year and avoid reporting altogether,
272
 which should help to ensure large accumulations of 
 
269
  See Proposing Release at 13856 (“Given the proposal to shorten the initial reporting deadline [in Rule 13d-
1(b)] to five business days after the end of the month, the current provision of Rule 13d-1(b)(2) that 
operates to accelerate that initial filing deadline if beneficial ownership exceeds 10% at the end of any 
month would be unnecessary . . . .”). 
270
  See supra notes 197, 199 and accompanying text. 
271
  See supra notes 138-144 and accompanying text for some examples of those advancements and 
developments. 
272
  See, e.g., Kristin Giglia, Note, A Little Letter, a Big Difference: An Empirical Inquiry into Possible Misuse 
of Schedule 13G/13D Filings, 116 C
OLUM. L. REV. 105, 115-16 (2015) (explaining that the availability of 
Schedule 13G may allow investors to “intentionally structure their acquisition strategies to exploit the gaps 
created by the current reporting regime, to their own short-term benefit and to the overall detriment of 
market transparency and investor confidence” (internal quotations omitted)). QIIs in particular may be able 
to amass sizeable amounts of beneficial ownership without reporting such positions. Rule 13d-1(b)(2) 
provides in relevant part that “it shall not be necessary to file a Schedule 13G unless the percentage of [a 
 
 

71 
beneficial ownership are reported in a timely manner, ultimately improving market 
transparency.
273
 
In the Proposing Release, the Commission stated its expectation that the proposed initial 
Schedule 13G deadlines under Rule 13d-1(b) and (d) (i.e., five business days after the end of the 
month in which beneficial ownership exceeds five percent of a covered class) would result in 
minimal additional burdens on filers because QIIs and Exempt Investors “already have well-
established compliance systems in place to monitor Schedule 13G ownership levels to determine 
whether filing obligations have been triggered.”
274
 Although some commenters agreed with this 
expectation,
275
 several comments disagreed and asserted that the proposed deadlines would be 
unduly burdensome for QIIs and Exempt Investors (especially those that are smaller and non-
 
covered class] beneficially owned as of the end of the calendar year is more than five percent.” 17 CFR 
240.13d-1(b)(2). As such, a QII may beneficially own in excess of 5% of a covered class for the entire year, 
sell down its position to 5% or below on the last day of the calendar year and bypass having to report at all 
under the current regulatory framework assuming that its beneficial ownership continues to be held in the 
ordinary course of business, without a disqualifying purpose or effect, and does not exceed 10% of a 
covered class.  
273
  We note that some commenters asserted that the Commission did not substantiate its concerns regarding 
reporting gaps and QIIs selling down positions before the end of a reporting period to avoid a Schedule 
13G filing. See supra note 226 and accompanying text. Given the potential materiality of the information 
disclosed on Schedule 13G and its importance to the market, however, we believe it is appropriate to take 
action to reduce the risk of such reporting gaps, even absent evidence indicating that the practice of selling 
down positions to avoid a Schedule 13G filing currently is widespread. See Proposing Release at 13882, 
n.221 (noting the importance to the market of information regarding beneficial ownership, regardless of 
whether it is disclosed on Schedule 13D or 13G, based on evidence that the initial filing of Schedule 13G, 
like that of Schedule 13D, generates a positive stock price reaction, albeit smaller in magnitude). We also 
recognize that because the new filing deadline will be tied to a QII’s beneficial ownership as of calendar 
quarter-end, QIIs may still be able to avoid a reporting obligation if they sell down their positions before 
the end of a quarter. We believe, however, that risk is lower under a quarter-end-based deadline than a 
year-end-based deadline because of the increased transaction costs, as well as disruptions with respect to a 
long-term investment strategy, that would be associated with selling down and building up positions 
multiple times throughout a year. 
274
  Proposing Release at 13856 (noting that “QIIs currently need to monitor beneficial ownership levels at least 
on a monthly basis in case their holdings exceed more than 10% at the end of the month” and that “Exempt 
Investors already need to monitor the level of their beneficial ownership continuously or periodically to 
ensure that the amount of their beneficial ownership does not unintentionally exceed 2% in a 12-month 
period”). 
275
  See supra note 216 and accompanying text (describing and citing comment letters that asserted that the 
proposed amendments would not impose significant burdens on Schedule 13G filers). 

72 
institutional investors) given the number of tasks and amount of resources required to prepare a 
filing in such a limited amount of time
276
 and that such burdens are not sufficiently mitigated by 
any technological advancements to justify adopting the proposed deadlines.
277
 
Based on commenters’ observations regarding the potentially significant burdens that the 
proposed deadlines would impose on QIIs and Exempt Investors, we have decided to take a 
different approach from the proposal and instead amend Rule 13d-1(b) and (d) to require an 
initial Schedule 13G be filed within 45 days after calendar quarter-end. This change to a quarter-
end-based deadline, rather than the proposed month-end-based deadline, is consistent with the 
recommendations that a number of commenters made to the Commission.
278
 We note that those 
commenters recommended various different numbers of days after quarter-end for the 
deadline.
279
 Taking into account those various recommendations, believe that 45 days is the 
appropriate length of time because it aligns with the filing deadline for Form 13F,
280
 and many 
institutional investment managers who file a Schedule 13G are already reviewing and assessing 
 
276
  See supra notes 233-247 and accompanying text. 
277
  See supra notes 219-225 and accompanying text. 
278
  See supra notes 254-258 and accompanying text.   
279
  See letters from Dodge & Cox (recommending a filing deadline of 45 days after quarter-end); IAA (same); 
ICI I (same); MFA (same); SIFMA (same); TRP (recommending a filing deadline of at least 30 days after 
quarter-end); SSC (recommending a filing deadline of 15 business days after quarter-end). 
280
  Form 13F is the reporting form filed by institutional investment managers pursuant to section 13(f) of the 
Exchange Act. Under section 13(f)(1), institutional investment managers that use the U.S. mail (or other 
means or instrumentality of interstate commerce) in the course of their business and that exercise 
investment discretion over $100 million or more in section 13(f) securities must file Form 13F. Such 
institutional investment managers must submit four Form 13F filings, with the first filing due within 45 
days after the end of the fourth quarter of the calendar year (i.e., the quarter ending Dec. 31 of the same 
calendar year that the $100 million filing threshold is reached) and the three additional filings due 45 days 
after the end of the subsequent three calendar quarters (i.e., the calendar quarters that end on Mar. 31, June 
30, and Sept. 30). See 17 CFR 240.13f-1(a)(1); see also U.S.
 SECURITIES & EXCHANGE COMMISSION, 
DIVISION OF INVESTMENT MANAGEMENT, Frequently Asked Questions About Form 13F, available at 
https://www.sec.gov/divisions/investment/13ffaq. 

73 
their holdings on a quarterly basis in order to prepare Form 13F filings.
281
 In addition, although 
most of the other amended Schedule 13D and 13G filing deadlines will be expressed in “business 
days,” we believe the potential compliance benefits of aligning the initial Schedule 13G filing 
deadlines for QIIs and Exempt Investors with the Form 13F filing deadline justify using calendar 
days rather than business days.
282
 
Even for those QIIs and Exempt Investors that are not Form 13F filers, the 45-day period 
after calendar quarter-end deadline will be familiar given that they currently must file their initial 
Schedule 13G within 45 days after calendar year-end.
283
 As such, we believe that many of those 
beneficial owners are well-positioned to submit their Schedule 13G filings within 45 days after 
calendar quarter-end. This deadline, therefore, is likely to be less burdensome and should require 
fewer changes to QIIs’ and Exempt Investors’ existing compliance operations than the proposed 
month-end-based deadline. We also expect that the extended filing deadline (i.e., 45 days rather 
than the proposed five business days) will address some commenters’ concerns that the more 
compressed time period under the proposed deadlines could have negatively impacted the 
accuracy and usefulness of initial Schedule 13G filings.
284
 
 
281
  See infra section IV.B.3.b, Table 4 (presenting statistics regarding the number of Schedule 13G filers that 
also filed Form 13F in 2022, noting that 84% of QIIs and 10% of Exempt Investors also filed Form 13F). 
282
  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). 
283
  In addition, the amended deadline may result in the same amount of time to file as under the current rules, 
depending on the quarter in which the filing obligation is triggered. That is, if a QII or Exempt Investor 
becomes the beneficial owner of more than 5% of a covered class on or after Oct. 1 (the beginning of the 
fourth calendar quarter) and remains above the 5% threshold as of Dec. 31 (both calendar year-end and the 
end of the fourth calendar quarter), then they would have the same amount of time to prepare and submit 
their initial Schedule 13G filing under both the current and amended Rule 13d-1(b) and (d). 
284
  See supra notes 248-250 and accompanying text. 

74 
Further, a 45-day, quarter-end-based deadline (instead of the proposed five-business day, 
month-end-based deadline) should help mitigate concerns that some opposing commenters 
expressed regarding the risk of QIIs and Exempt Investors prematurely disclosing sensitive 
portfolio holdings information to the market (i.e., “front-running” and “free-riding”),
285
 
especially given that many of those Schedule 13G filers already are obligated to disclose their 
holdings via Form 13F on a quarterly basis. We also believe that, as compared with the current 
year-end-based deadline, a  quarter-end-based deadline will increase transparency for market 
participants and better reflects the technological advancements and developments in the financial 
markets since the Commission adopted Rule 13d-1(b) and (d).
286
 Thus, we believe that this 
deadline will address the goals that prompted the Commission’s reassessment of those rules in 
the Proposing Release while, at the same time, avoiding inordinately burdening Schedule 13G 
filers. 
In addition, as discussed above, Rule 13d-1(c) currently requires Passive Investors to file 
an initial Schedule 13G within 10 days of acquiring beneficial ownership of more than five 
percent of a covered class. As with our final amendment to Rule 13d-1(a), we are amending Rule 
13d-1(c) to require that Passive Investors file their initial Schedule 13G within five business days 
after
287
 acquiring beneficial ownership of more than five percent of a covered class. We believe 
it is appropriate to amend the initial Schedule 13G filing deadline in Rule 13d-1(c) to match the 
initial Schedule 13D filing deadline in Rule 13d-1(a) in order to maintain the historical 
 
285
  See supra note 246 and accompanying text; see also infra section IV.C.2.b. 
286
  See, e.g., letter from IAA (“A quarterly deadline significantly increases transparency for market 
participants as compared with the current annual deadline.”).  
287
  See supra note 136 for a discussion of a revision we are making to Rule 13d-1(c) to clarify that the five-
business day deadline is determined beginning on the day after the date on which a person acquires 
beneficial ownership of more than 5% of a covered class. 

75 
regulatory consistency between the deadlines in Rule 13d-1(c) and (a) and to facilitate the overall 
goals of increasing transparency in beneficial ownership and ensuring that investors receive 
material information in a timely manner.  
Consistent with our rationale for shortening the initial Schedule 13D deadline, we believe 
that many Passive Investors are large and sophisticated enough to prepare and file an initial 
Schedule 13G within five business days.
288
 The change to a five-business day deadline from the 
proposed five-calendar day deadline should mitigate commenters’ concerns regarding the 
burdens that a shortened deadline would impose on Passive Investors and the workability of that 
deadline.
289
 Further, we note that research indicates that at least some beneficial owners may 
improperly rely on Rule 13d-1(c) to file a Schedule 13G in lieu of a Schedule 13D to obscure 
their control purpose.
290
 Given this increased likelihood, as compared to QIIs and Exempt 
Investors,
291
 of Passive Investors ultimately having a control purpose with respect to an issuer, 
we believe it is appropriate to shorten their initial Schedule 13G filing deadline to five business 
days in order for that deadline to continue to mirror the initial Schedule 13D filing deadline. This 
 
288
  See, for example, infra section IV.B.3.b, Table 4, which indicates that 31% of Passive Investors that filed a 
Schedule 13G in 2022 also filed a Form 13F (which would only be required if, among other things, they 
exercise investment discretion over $100 million or more in section 13(f) securities). 
289
  See supra note 241 and accompanying text. 
290
  See Kristin Giglia, Note, A Little Letter, a Big Difference: An Empirical Inquiry into Possible Misuse of 
Schedule 13G/13D Filings, 116 C
OLUM. L. REV. 105, 119 (2015) (“Activists can fly under the radar, 
planning to effect large changes to the issuer and even acquiring up to twenty percent ownership interest at 
a relatively low price, all while maintaining that their intent is still ‘passive.’”). 
291
  Id. at n.160 (noting that QIIs and Exempt Investors are less likely than Passive Investors “to switch to a 
[Schedule] 13D filing”). 

76 
is consistent with the Commission’s decision to require Passive Investors to file their initial 
Schedule 13G in 10 days, the same deadline as Schedule 13D, when it adopted Rule 13d-1(c).
292
 
3. Rule 13d-2(a) and (b) 
Section 13(d)(2) requires that an amendment must be filed to the statement required 
under section 13(d)(1) if any material change occurs in the facts set forth in the statement filed. 
Section 13(d)(2) does not, however, identify a specific deadline by which such amendment must 
be filed. Instead, Rule 13d-2(a) provides that such amendment must be filed with the 
Commission “promptly.”
293
 The obligation to file an amendment under current Rule 13d-2(a) is 
not limited to acquisitions. Instead, changes in the disclosure narrative that are material also must 
be reported in an amendment, as must material changes in the level of beneficial ownership 
caused by an involuntary change in circumstances, such as a reduction in the amount of 
beneficial ownership caused solely by an increase in the number of shares outstanding.
294
  
Section 13(g)(2) requires that an amendment be filed to the statement required under 
section 13(g)(1) if any material change occurs in the facts set forth in the statement filed, but like 
section 13(d)(2), does not identify a deadline by which such amendment must be filed. Rule 13d-
2(b), however, does specify a deadline and provides that for all persons who report beneficial 
ownership on Schedule 13G, an amendment shall be filed “within forty-five days after the end of 
 
292
  Amendments to Beneficial Ownership Reporting Requirements, Release No. 34-39538 (Jan. 12, 1998) [63 
FR 2854, 2854 (Jan. 16, 1998)] (stating that “the Commission is imposing some safeguards” on Passive 
Investors, including that an “[i]nitial Schedule 13G must be filed within 10 days (instead of year end)” 
because “a control purpose reflects the state of mind of a filing person and there are incentives to disclose 
less information”). The Commission also indicated that, as compared to QIIs and Exempt Investors, Passive 
Investors are more likely to represent “voting blocks that have the potential of affecting or influencing 
control of the issuer” which, therefore, warrants more timely notice to the market of their existence. Id. at 
2855. 
293
  17 CFR 240.13d-2(a). 
294
  See id. (requiring an amendment “[i]f any material change occurs in the facts set forth in the Schedule 13D” 
including “any material increase or decrease in the percentage of the class beneficially owned”). 

77 
each calendar year if, as of the end of the calendar year, there are any changes in the information 
reported in the previous filing on that Schedule [13G].”
295
  
a. Proposed Amendments 
In the Proposing Release, the Commission proposed to amend Rule 13d-2(a) to require 
that all amendments to Schedule 13D be filed within one business day after the date of the 
material change that triggers the amendment obligation. The Commission proposed this change 
from the “promptly” standard to establish a specified filing deadline, remove any uncertainty as 
to the date on which an amendment is due, and help ensure that beneficial owners amend their 
filings in a more uniform and consistent manner.
296
 The Commission stated that it did not believe 
that requiring Schedule 13D amendments to be filed within one business day after the date on 
which a material change occurs would place those filers at a disadvantage.
297
 The Commission 
also stated that because an amendment to a Schedule 13D only requires that the material change 
be reported and not a complete set of new narrative responses to each of the disclosure form’s 
individual line items,
298
 it expected that those amendments should present a lower administrative 
burden than the initial Schedule 13D filing.
299
 In addition, the Commission noted that that the 
proposed amendment would be consistent with its existing view that, under the current 
“promptly” standard in Rule 13d-2(a), “[a]ny delay beyond the date the filing reasonably can be 
 
295
  17 CFR 240.13d-2(b). 
296
  Proposing Release at 13857. 
297
  Id. 
298
  Under Rule 13d-2(a), the Schedule 13D filer only has an obligation to “file or cause to be filed with the 
Commission an amendment disclosing that [material] change.” See also 17 CFR 240.12b-15, titled 
“Amendments,” which explains that “[a]mendments filed pursuant to this section must set forth the 
complete text of each item as amended.” 
299
  Proposing Release at 13857. 

78 
filed may not be prompt” and that an amendment to a Schedule 13D reasonably could be filed in 
as little as one day following the material change.
300
 
The Commission also proposed to amend Rule 13d-2(b) to require that a Schedule 13G 
be amended within five business days of the end of the month in which a material change occurs 
in the information previously reported. The Commission stated that accelerating the deadline for 
amendments from the current standard of 45 days after the end of the calendar year would help 
ensure that the information reported would be timely and useful.
301
 The Commission also noted 
that this proposed deadline would be consistent with the proposed five-business day deadline 
from the end of the month applicable to QIIs’ and Exempt Investors’ initial Schedule 13G filing 
obligations arising under Rule 13d-1(b) and (d).
302
 In addition, the Commission proposed a 
“business day” standard for the proposed deadline to partially mitigate the time pressures 
resulting from the reduction of the current 45-day deadline.
303
  
The Commission further proposed to amend Rule 13d-2(b) to substitute the term 
“material” in place of the term “any” to serve as the standard for determining the type of change 
that will trigger an amendment obligation under Rule 13d-2(b). The Commission noted that, 
unlike sections 13(d)(2) and 13(g)(2), Rule 13d-2(b) does not include an express materiality 
qualifier for Schedule 13G amendments and simply requires an amendment for “any change.”
304
 
At the time Rule 13d-2(b) was adopted, however, the Commission stated that there is a 
 
300
  Id. at n.67 (quoting In re Cooper Laboratories, Release No. 34-22171 (June 26, 1985)). 
301
  Id. at 13857. 
302
  Id. 
303
  Id. 
304
  Id. at 13857-58. 

79 
materiality standard inherent in the provisions governing Schedule 13G filings.
305
 This inherent 
materiality standard is based on the fact that any disclosure provided by a Schedule 13G filer, in 
light of the infrequency of the reports and comparatively minimal statements required to be 
made, is effectively material.
306
 The Commission’s proposed change, therefore, was intended to 
merely codify this view in the text of Rule 13d-2(b). 
b.   Comments Received 
The Commission received a variety of comments on the proposed amendments to Rule 
13d-2(a) and (b). Several commenters supported the proposed amendments.
307
 Some of those 
commenters supported revising the Schedule 13D and 13G amendment deadlines for many of the 
same reasons they supported accelerating the initial Schedule 13D and 13G filing deadlines.
308
 
In addition, several commenters supported the proposed amendments to Rule 13d-2(a) 
and (b) based on changes in technology and developments in the financial markets.
309
 O ne 
commenter agreed with the concern in the Proposing Release that material information about 
potential change of control transactions is not being disseminated to the public in a manner that 
would be considered timely in today’s financial markets.
310
 Other commenters asserted that the 
 
305
  Id. at 13858. 
306
  Id. (citing Filing and Disclosure Release at 18489 (stating the Commission’s belief that because “the 
information required by Schedule 13G has been reduced to the minimum necessary to satisfy the statutory 
purpose, . . . a materiality standard is inherent in those requirements” and “it is unnecessary to further 
minimize it by the insertion of an express materiality standard”)). 
307
  See, e.g., letters from AFREF (supporting only the proposed amendment to Rule 13d-2(a)); Anonymous 3; 
Anonymous 5; Anonymous 11; Anonymous 12; Anthony R.; BRT (same); C. Robinson; Engineer; FedEx; 
Freeport-McMoRan; HMA I; Jonah; J. Pieper; J. Soucie; Juan; Mark C.; Mike; Nasdaq; P. Worts; SIFMA 
AMG (same); TIAA (same); T. Mirvis, et al. (same); Todd. In addition, one commenter, which neither 
clearly supported nor opposed the proposed amendment to Rule 13d-2(b), supported the proposed shift 
from an “any change” to a “material change” standard. See letter from IAA. 
308
  See supra notes 38-41, 43-44 and accompanying text; see also supra note 211 and accompanying text. 
309
  See, e.g., letters from BRT; C. Robinson; FedEx; Freeport-McMoRan; Nasdaq; T. Mirvis, et al. 
310
  See letter from BRT. 

80 
proposed amendments would not impose significant costs or burdens on beneficial owners of 
more than five percent of a covered class
311
 and that the proposed amendments would be 
consistent in balancing the need for adequate disclosures to investors with burdens placed on 
filers to accurately prepare required disclosures.
312
 
A number of commenters opposed the proposed amendments to Rule 13d-2(a) and (b).
313
 
Several commenters disagreed with the Commission’s technological advancement-based 
justifications for the proposed acceleration of the beneficial ownership reporting deadlines,
314
 
some of whom raised many of the same concerns that they expressed with respect to the 
proposed acceleration of the initial Schedule 13D and 13G filing deadlines.
315
 One commenter 
stated that filing a Schedule 13D amendment is not just a question of technology, but often a 
question of marshalling complex and evolving facts and making difficult disclosure 
judgments.
316
 
Some commenters focused solely on the proposed amendment to Rule 13d-2(a), 
expressing concern that a one-business day deadline would be unduly burdensome and may not 
 
311
  See, e.g., letters from Anonymous 11; BRT; J. Soucie. 
312
  See letter from FedEx. 
313
  See, e.g., letters from A. Day; ABA (opposing only the proposed amendment to Rule 13d-2(a)); AIMA; B. 
Mason; Dodge & Cox; EEI (same); EIM I (same); Hoak and Co. (Apr. 11, 2022) (“Hoak”) (same); ICI I; 
MFA; MSBA (same); NVCA (same); Perkins Coie; SIFMA (opposing only the proposed amendment to 
Rule 13d-2(b)); SIFMA & SIFMA AMG (same); SSC (same); STB; TRP (same). 
314
  See, e.g., letters from ABA; Dodge & Cox; IAA; ICI I; TIAA. 
315
  See supra notes 92-94, 220-224 and accompanying text. 
316
  See letter from ABA. The commenter also noted that filing a Schedule 13D amendment depends on many 
factors, including the complexity of the information, the pace of developments of the information, and the 
number of persons or parties who have an interest in the disclosure and need to review the information, 
contribute to its drafting, and, if they are signing the Schedule 13D, are subject to liability for the accuracy 
of the information. Id. 

81 
be enough time to prepare a Schedule 13D amendment in all circumstances.
317
 For example, one 
commenter stated that in its experience, it generally takes two to three business days, and in 
some cases longer, to compile and file such amendments.
318
 One commenter noted that if the 
Commission adopts the proposed structured data requirements,
319
 this will add more time to the 
process of preparing a Schedule 13D amendment and may make the proposed one-business day 
deadline impractical.
320
 Another commenter asserted that the proposed extension of the filing 
“cut-off” time to 10 p.m.
321
 would not be sufficient to offset the burden associated with meeting 
the proposed one-business day deadline for a Schedule 13D amendment.
322
 
Further, several commenters expressed concerns regarding the effect of the proposed 
amendment to Rule 13d-2(a) on the accuracy of Schedule 13D amendments.
323
 For example, one 
of those commenters asserted that the proposed amendment would make filing accurate 
amendments nearly impossible.
324
 S ome commenters expressed concern that by providing 
Schedule 13D filers with insufficient time to prepare and file amendments, the proposed 
 
317
  See, e.g., letters from ABA; AIMA; EIM I; Hoak; ICI I; MFA; MSBA; Perkins Coie; STB; see also letter 
from MFA & NAPFM. 
318
  See letter from STB. The commenter also noted that while the one-business day deadline may be feasible 
for an investor engaged in a change of control objective, as that investor may have (1) been taking 
preparatory steps toward such goal, (2) an internal deal team and external advisors actively engaged in the 
project, and (3) built the Schedule 13D amendment obligation into its workstream, there are many 
situations requiring a Schedule 13D amendment in which such advance notice and planning is not possible 
or practical. Id. The commenter further asserted that practical concerns regarding the ability to file an 
amendment pursuant to Rule 13d-2(a) in a timely manner may cause some Schedule 13D filers to avoid 
filing amendments for changes in their Schedule 13D disclosures, preferring to take more risk that their 
determination on materiality is later questioned than risk having a “late” filing with the Commission. Id. 
319
  See infra section II.F for a discussion of the proposed structured data requirement for Schedules 13D and 
13G. 
320
  See letter from ABA. 
321
  See infra section II.A.5 for a discussion of the proposed extension of the filing “cut-off” time for Schedules 
13D and 13G. 
322
  See letter from Hoak. 
323
  See, e.g., letters from ABA; EEI; Hoak; MFA; NVCA. 
324
  See letter from NVCA. 

82 
amendment would increase the likelihood of errors and risk of liability.
325
 Another commenter 
noted that the proposed amendment to Rule 13d-2(a) could decrease transparency by increasing 
the risk of errors in Schedule 13D amendments.
326
 
Commenters also expressed concerns about other potential downsides associated with the 
proposed amendment to Rule 13d-2(a). For example, some commenters expressed concern that 
the proposed amendment could negatively impact the ability of investors and their advisors to 
draft meaningful disclosures and engage in thoughtful analysis.
327
 Some commenters noted that 
the proposed amendment to Rule 13d-2(a) may not leave adequate time to prepare the filing in 
the event of unforeseen circumstances, including the possibility that a necessary approver or 
signer may not be available.
328
 And, one commenter stated that there have been very few, if any, 
abuses associated with the current “promptly” regime and asserted that it has worked well and 
effectively.
329
 
In addition, some commenters questioned the basis for the proposed amendment to Rule 
13d-2(a). For example, some commenters noted that a one-business day deadline for Schedule 
13D amendments would be more restrictive than the filing deadline for a Form 8-K.
330
 Similarly, 
 
325
  See, e.g., letters from EIM I; Hoak; MFA. 
326
  See letter from Hoak. 
327
  See letters from ABA; STB; see also supra note 102. 
328
  See letters from EEI; Hoak. 
329
  See letter from AIMA. 
330
  See letters from EIM I; MFA. Those commenters also stated that the Commission has not justified 
imposing such a restrictive deadline on Schedule 13D amendments, especially given the relatively 
importance of a Form 8-K. Id. One of those commenters noted that Schedule 13D amendments often 
disclose agreements between the beneficial owner and the issuer, and issuers typically have four business 
days to publicly disclose such agreements on Forms 8-K after entering into them and often prefer to be the 
first to disclose in order to control the initial message to the market, and the proposed deadline would 
deprive issuers of this opportunity. See letter from MFA. The commenter also asserted that the proposed 
Schedule 13D amendment deadline would make it more difficult for issuers and Schedule 13D filers to 
 
 

83 
some commenters noted that Form 8-K and section 16 filings do not have as restrictive filing 
deadlines as proposed under Rule 13d-2(a).
331
 One commenter asserted that the “promptly” 
standard under Rule 13d-2(a) has “generally been understood” to mean within two business days 
and disagreed with the Proposing Release that Commission precedent supports a one-business 
day interpretation of that standard.
332
 
Further, one commenter stated that the proposed amendment to Rule 13d-2(a) would 
“unnecessarily sacrifice” the flexibility that the current version of the rule provides.
333
 Other 
commenters noted that the promptness of a Schedule 13D amendment filing obligation under 
Rule 13d-2(a) currently is determined by considering the facts and circumstances related to such 
filing and urged the Commission to continue to consider the variation in circumstances that can 
lead to an amendment obligation rather than applying the same standard in all circumstances.
334
 
One commenter asserted that the proposed amendment to Rule 13d-2(a) could lead to a large 
increase in the number of late Schedule 13D amendment filings.
335
  
 
coordinate their messages regarding material agreements they have entered into and may force investors to 
publicly disclose an agreement in principle through a Schedule 13D amendment before the terms are 
finalized, creating the risk of prematurely disseminating information to the market that turns out to be 
inaccurate or incomplete. Id. 
331
  See letters from MFA; STB. Those commenters also asserted that the Form 8-K and section 16 filing 
deadlines acknowledge the balance between the importance of getting disclosures to investors in a timely 
manner, with the complexity and labor required in order to create such filings in a complete and thoughtful 
manner, noting that section 16 filings require even less narrative disclosure than a Schedule 13D 
amendment. Id. 
332
  See letter from EIM I. 
333
  See letter from ABA. The commenter stated that, as the Commission has acknowledged in the past, in order 
to serve the policies of the Williams Act, the timing for public filings should vary based on the 
circumstances. Id. 
334
  See letters from MFA; STB. The commenters noted, for example, that a one-business day deadline may not 
be appropriate for Schedule 13D amendments with respect to material changes that do not have any nexus 
to a change or influence in corporate control. Id. 
335
  See letter from ABA. 

84 
In addition, some commenters expressed concern about the costs of the proposed 
amendment to Rule 13d-2(a) relative to its benefits. For example, one commenter stated that the 
proposed amendment to Rule 13d-2(a) does not appropriately balance the need for prompt 
disclosure of important, market-moving events with the need to avoid imposing an undue, 
impracticable burden on investors making more routine filings.
336
 Another commenter asserted 
that the burdens and risks of the proposed amendment to Rule 13d-2(a) associated with venture 
capital funds that make Schedule 13D filings exceed its benefits.
337
  
Several commenters
338
 opposed the proposed amendment to Rule 13d-2(b) for many of 
the same reasons that they opposed the proposed acceleration of the initial Schedule 13G filing 
deadlines for QIIs and Exempt Investors.
339
 In addition, one commenter broadly asserted that the 
costs of the proposed amendment to Rule 13d-2(b) “far outweigh any perceived benefits.”
340
 
Another commenter noted that many Schedule 13G filers have filing obligations with respect to 
multiple issuers and that the proposed amendment may require “hundreds of filings on a monthly 
basis, as their investments fluctuate perpetually.”
341
 And, other commenters expressed the same 
 
336
  See letter from MFA. 
337
  See letter from NVCA. Specifically, the commenter asserted that the burden of inaccurate Schedule 13D 
amendments and the associated risks are far greater than any benefit to be gained from the information that 
a venture capital fund is reducing its share ownership in the ordinary course of exiting investments and 
providing returns to limited partner-investors. Id. The commenter also noted that the proposed amendment 
would impose substantial compliance burdens on venture capital funds that make Schedule 13D filings and 
expressed concern that inaccurate Schedule 13D amendments caused by the proposed accelerated deadline 
could result in giving the market information that is misleading, particularly to retail investors, which could 
reduce liquidity and negatively impact an issuer’s share price, harming all investors other than short sellers. 
Id. 
338
  See, e.g., letters from MFA; Perkins Coie; STB; TIAA; TRP. 
339
  See supra notes 226-228, 235-236, 251 and accompanying text. 
340
  See letter from MFA. The commenter further stated that the benefits of the proposed amendment would be 
minimal because Schedule 13G filers generally do not have control intent and already disclose their 
holdings on Form 13F. Id. 
341
  See letter from MFA. 

85 
concerns about the proposed amendments to Rule 13d-2(a) and (b) that they expressed with 
respect to the proposed acceleration of the initial Schedule 13D and 13G filing deadlines.
342
 
Finally, some commenters made recommendations to the Commission regarding the 
proposed amendments to Rule 13d-2(a) and (b). For example, some commenters that generally 
supported the proposed amendments recommended that the Commission consider further 
shortening the filing deadlines.
343
 Further, specifically with respect to the proposed amendment 
to Rule 13d-2(a), one supporting commenter recommended that the Commission include an 
assets under management-based threshold for the proposed accelerated Schedule 13D filing 
deadlines.
344
 Another commenter that generally supported revising the Schedule 13D 
amendment deadline recommended that the Commission require that Schedule 13D amendments 
be filed within three business days.
345
 
Conversely, several opposing commenters recommended that the Commission retain the 
requirement that Schedule 13D amendments be filed promptly, but require that they be filed 
within no more than a specified number of days after the relevant triggering event (with 
recommendations varying between two and four business days).
346
 One opposing commenter 
suggested that the Commission require that Schedule 13D amendments be filed within five 
 
342
  See supra notes 99, 106, 226, 243 and accompanying text; see also letter from MFA & NAPFM. 
343
  See letters from Freeport-McMoRan; HMA I. 
344
  See letter from A. Day. 
345
  See letter from SIFMA AMG. 
346
  See, e.g., letters from ABA; Dodge & Cox; ICI I; MFA. One of those commenters also noted that to the 
extent that a Schedule 13D filer is able to file earlier, the filer would still be obligated to do so because the 
rule would still require prompt filings. See letter from ABA. Alternatively, the commenter suggested that 
the Commission require that certain categories of amendments (e.g., dispositions or acquisitions of 
beneficial ownership of 1% or more) be filed within a specified one or two business day window. Id. 
Similarly, another commenter recommended that the Commission add a narrative setting forth its timing 
expectations in different situations for the filing to satisfy the “prompt” standard, including those where a 
shorter filing deadline would be required. See letter from MFA. 

86 
business days.
347
 Other commenters, which either generally opposed or neither clearly supported 
nor opposed the proposed amendment to Rule 13d-2(a), recommended that the Commission 
require that Schedule 13D amendments be filed within two business days.
348
 
In addition to focusing on the Schedule 13D filing deadline, some opposing commenters 
made other recommendations with respect to the proposed amendment to Rule 13d-2(a). For 
example, one opposing commenter asserted that a Schedule 13D amendment should not be 
required for involuntary changes in circumstances caused by the issuer because such 
amendments do not relate to the Schedule 13D filer’s action or intent and are already disclosed to 
the market by the issuer.
349
 Another opposing commenter recommended that if the Commission 
believes that a one-business day interpretation of “promptly” is not being properly observed, it 
should clarify that in situations involving acquisition of corporate control, “promptly” means one 
business day.
350
 One commenter, which neither clearly supported nor opposed the proposed 
amendment to Rule 13d-2(a), recommended that the Commission define the percentage 
 
347
  See letter from AIMA. 
348
  See, e.g., letters from EEI; EIM I; Hoak; IAA; Perkins Coie. Several of those commenters asserted that two 
business days would be consistent with the current general understanding of the “promptly” standard. See 
letters from EIM I; IAA. Some commenters indicated that a one-business day deadline for Schedule 13D 
amendments would be too “aggressive from an operational perspective,” would be extremely difficult for 
filers to comply with, and could result in inadvertent errors, see letter from IAA, and that a two-business 
day deadline would be less onerous for investors yet would ensure the accuracy and transparency of the 
information in their filings. See letter from EEI. 
349
  See letter from Hoak. 
350
  See letter from STB. The commenter recommended that the Commission engage in further study to 
determine the percentage of Schedule 13D filers that ultimately engage in activities that impact corporate 
control and the number of such cases in which a Schedule 13D amendment is not filed within the one-
business day timeframe. Id. The commenter also suggested that the Commission engage in further study 
regarding the different circumstances under which Schedule 13D amendments are filed and consider 
whether requiring such amendments to be filed within the one business day timeframe would materially 
improve the information provided to investors relating to such issuer control matters. Id. 

87 
ownership change that is deemed a “material change” as the specified percentage only, and that it 
omit the subjective “facts and circumstances” part of the standard.
351
 
Further, a number of opposing commenters made recommendations regarding the 
proposed amendment to Rule 13d-2(b). For example, several commenters recommended that the 
Commission require Schedule 13G amendments to be filed within 45 days after the end of a 
quarter in which a material change occurred, consistent with the amendment frequency for Form 
13F.
352
 One commenter recommended that QIIs be required to file an amended Schedule 13G 
within 20 business days after the end of a quarter in which a material change has occurred.
353
 
One commenter, which neither clearly supported nor opposed the proposed amendment to Rule 
13d-2(b), recommended that the Commission require that Schedule 13G amendments be filed 
within 10 days after the end of the month in which a material change occurs.
354
 
In addition to focusing on the Schedule 13G amendment deadline, some commenters 
made other recommendations with respect to Rule 13d-2(b). For example, one opposing 
commenter suggested that the Commission conduct further study and analysis to understand 
what percentage of Schedule 13G filers are involved in change in control scenarios.
355
 A number 
of commenters, which either generally opposed or neither clearly supported nor opposed the 
proposed amendment to Rule 13d-2(b), also requested that the Commission clarify what 
 
351
  See letter from IAA. 
352
  See, e.g., letters from Dodge & Cox; IAA; ICI I. 
353
  See letter from SSC. The commenter also recommended that materiality be defined as more than a 5% 
change in beneficial ownership. Id. 
354
  See letter from ABA. 
355
  See letter from STB. The commenter also suggested that if the Commission’s goal is market transparency, 
and not a targeted concern related to matters of corporate control, the Commission should consider whether 
there are more appropriate tools to disclose significant beneficial ownership positions or material changes 
to such positions in a more concise and efficient manner (e.g., Form 13F). Id. 

88 
constitutes a “material change” for Schedule 13G filers.
356
 One commenter recommended that 
the Commission carve out QIIs from the accelerated filing deadline, including because QIIs must 
certify that they do not have a control intent.
357
 And, one commenter recommended that the 
Schedule 13G amendment filing deadline be expressed in business days.
358
 
c.   Final Amendments 
We are amending Rule 13d-2(a) and (b) to revise the Schedule 13D and 13G amendment 
filing deadlines under those rules. In response to commenter concerns, however, we are making 
some changes to the proposed deadlines. Specifically, we are adopting a Schedule 13D 
amendment filing deadline of two business days
359
 after the date of a material change and a 
Schedule 13G amendment filing deadline of 45 days after calendar quarter-end. We also are 
amending Rule 13d-2(b) to require an amendment to a Schedule 13G be filed only if a “material 
change” occurs. 
As noted above, Rule 13d-2(a) currently requires that an amendment be filed promptly if 
a material change occurs in the facts set forth in a Schedule 13D. Although the Commission 
proposed to amend Rule 13d-2(a) to replace the “promptly” standard with a one-business day 
deadline, we are instead adopting a two-business day deadline in light of the comments received. 
As noted in the Proposing Release, establishing a specified filing deadline for Schedule 13D 
 
356
  See, e.g., letters from ABA; IAA; ICI I; STB. Several of those commenters requested that the Commission 
confirm that a change in beneficial ownership of less than 5% will not be deemed “material” for purposes 
of the rule. See letters from IAA; ICI I; STB. Further, one of those commenters recommended that the 
Commission clarify whether a Schedule 13G amendment obligation would be triggered based on actual 
trading activity of an investor or whether such obligation could be triggered based on changes in the 
number of outstanding shares. See letter from STB. The commenter also requested clarification as to 
whether an investor would be permitted to “net” purchases and sales for purposes of the analysis. Id.  
357
  See letter from TIAA. 
358
  See letter from IAA. 
359
  See supra note 134 for a discussion of the new definition of “business day” that we are adopting for 
purposes of Regulation 13D-G. 

89 
amendments should remove any uncertainty as to the date on which an amendment is due and 
help ensure that beneficial owners amend their filings in a more uniform and consistent 
manner.
360
 We note, however, that several commenters disagreed with the Commission’s 
expectation that the proposed one-business day deadline would impose minimal incremental 
burdens on Schedule 13D filers.
361
 To the contrary, those commenters expressed concerns about 
the workability of a one-business day deadline for filing Schedule 13D amendments and 
described the burdens that beneficial owners would incur trying to meet that deadline.
362
  
We believe that shifting from the proposed one-business day deadline to a two-business 
day deadline will address those concerns and provide beneficial owners with adequate time to 
prepare and file a Schedule 13D amendment. Relevantly, several commenters, including some 
that generally opposed the proposed amendment, recommended that the Commission adopt a 
two-business day deadline under Rule 13d-2(a).
363
 We agree with those commenters that a two-
business day deadline, as compared to a one-business day deadline, would be less onerous for 
beneficial owners while at the same time ensuring that investors and markets are provided with 
material information disclosed in Schedule 13D amendments in a sufficiently prompt manner. 
 
360
  Proposing Release at 13857; see also letter from EIM I (stating that replacing the “promptly” standard with 
a two-business day deadline would “provid[e] a more objective deadline”). For that reason, we also 
disagree with commenters who recommended we should retain a flexible standard. See supra notes 333-
334 and accompanying text. We note that those recommendations were made, in part, in response to the 
proposed one-business day deadline. See, e.g., supra note 334 (describing some commenters’ assertion that 
a one-business day deadline may not be appropriate for Schedule 13D amendments with respect to material 
changes that do not have any nexus to a change or influence in corporate control). As such, the additional 
time provided by the two-business day deadline we are adopting should address some of these concerns. 
This view is consistent with several commenters’ assertions that “promptly” is generally understood to 
mean two business days. See supra note 348. 
361
  Id. (expressing the Commission’s belief “that requiring Schedule 13D amendments to be filed within one 
business day after the date on which a material change occurs will [not] place those filers at a 
disadvantage” and noting that “those amendments should present a lower administrative burden than the 
initial Schedule 13D filing”). 
362
  See supra notes 317-322 and accompanying text. 
363
  See supra note 348 and accompanying text. 

90 
We also believe that giving beneficial owners additional time, as compared to the proposed 
deadline, to prepare their Schedule 13D amendments will reduce the risk of erroneous or 
incomplete filings, addressing a concern that some commenters expressed with respect to the 
proposed one-business day deadline and helping to preserve the utility of those filings.
364
 
Further, as discussed above, Rule 13d-2(b) currently requires that an amendment be filed 
within 45 days of calendar year-end if there were any changes to the information previously 
reported on Schedule 13G during that year. Similar to our amendments to the initial Schedule 
13G filing deadlines under Rule 13d-1(b) and (d), we are revising Rule 13d-2(b) to require that a 
Schedule 13G amendment pursuant to that rule be filed within 45 days after calendar quarter-end 
if, during that quarter, there were any material changes to the information previously reported 
(rather than five business days after the end of the month in which a material change occurred, as 
proposed). Thus, there are two components to our amendment to Rule 13d-2(b): we are both 
shortening the deadline for the filing of a Schedule 13G amendment and adding an express 
qualifier to require an amendment only if there is a material change to the information 
previously reported. 
We believe that accelerating the Schedule 13G amendment deadline will help ensure the 
information reported is timely and useful.
365
 Numerous supporting commenters also echoed this 
point.
366
 We note, however, that several commenters asserted that the proposed month-end-based 
deadline would be unduly burdensome for Schedule 13G filers and that such burdens are not 
sufficiently mitigated by any technological advancements to justify adopting the proposed 
 
364
  See supra notes 323-326 and accompanying text. 
365
  Proposing Release at 13857. 
366
  See supra note 308 and accompanying text. 

91 
deadline,
367
 reiterating many of the concerns that were expressed about the proposed 
amendments to Rule 13d-1(b) and (d).
368
  
To mitigate those concerns, and to conform to the initial Schedule 13G filing deadlines 
applicable to QIIs and Exempt Investors under Rule 13d-1(b) and (d),
369
 we are instead adopting 
a quarter-end-based deadline for Schedule 13G amendments under Rule 13d-2(b). This change 
from the proposal comports with the recommendations that several commenters that opposed the 
proposed amendment to Rule 13d-2(b) made to the Commission.
370
 Consistent with the 
comments provided on the proposed amendments to Rule 13d-1(b) and (d), we note that those 
commenters that suggested a quarter-end-based Schedule 13G amendment deadline 
recommended various different numbers of days after quarter-end for the deadline.
371
 Taking 
into consideration those various recommendations, as we noted in the context of our amendments 
to Rule 13d-1(b) and (d),
372
 we believe that 45 days is the appropriate length of time because it 
aligns with the filing deadline for Form 13F, and many institutional investment managers who 
file a Schedule 13G are already reviewing and assessing their holdings on a quarterly basis in 
order to prepare Form 13F filings. In addition, although most of the other amended Schedule 
13D and 13G filing deadlines will be expressed in “business days,” we believe the potential 
 
367
  See supra notes 314-316, 338-342 and accompanying text. 
368
  See supra section II.A.2. 
369
  We believe that aligning the Schedule 13G amendment deadline under Rule 13d-2(b) with the new quarter-
end Schedule 13G filing deadlines for Exempt Investors and QIIs under Rule 13d-1(b) and (d) will promote 
compliance with those rules, as it preserves the uniformity currently in effect with respect to the year-end 
filing deadlines under those rules.  
370
  See supra notes 352-353 and accompanying text.  
371
  See letters from Dodge & Cox (recommending a filing deadline of 45 days after quarter-end); IAA (same); 
ICI I (same); SSC (recommending a filing deadline of 20 business days for QIIs after quarter-end). 
372
  See supra section II.A.2.c. 

92 
compliance benefits of aligning the Schedule 13G amendment deadline with the Form 13F filing 
deadline justify using calendar days rather than business days.
373
 
Even for those Schedule 13G filers that are not Form 13F filers, the 45-day period after 
calendar quarter-end deadline will be familiar given that they currently must file their Schedule 
13G amendment 45 days after calendar year-end.
374
 As such, we believe that many of those 
beneficial owners are well-positioned to submit their Schedule 13G filings 45 days after calendar 
quarter-end, and we expect that this change from the proposal will produce the same benefits and 
mitigate opposing commenters’ concerns to the same degree as our amendments to Rule 13d-
1(b) and (d).
375
 
Finally, we also are revising the text of Rule 13d-2(b), as proposed, to substitute the term 
“material” in place of the term “any” to serve as the standard for determining the type of change 
that will trigger an amendment obligation under Rule 13d-2(b). As discussed in the Proposing 
Release, this change is merely intended to codify the Commission’s previously stated view that 
there is a n inherent materiality standard in the provisions governing Schedule 13G filings.
376
 We 
note that several commenters requested that the Commission clarify what constitutes a “material 
 
373
  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). 
374
  In addition, the amended deadline may result in the same amount of time to file as under the current rules, 
depending on the quarter in which the filing obligation is triggered. That is, if a material change occurs to 
the information previously reported on Schedule 13G between Oct. 1 (the beginning of the fourth calendar 
quarter) and Dec. 31 (both calendar year-end and the end of the fourth calendar quarter), then the filer 
would have the same amount of time to prepare and submit their Schedule 13G amendment under both the 
current and amended Rule 13d-2(b). 
375
  Id. See supra note 273 for a discussion of why we believe that it is appropriate to accelerate the Schedule 
13G filing deadlines, notwithstanding some commenters’ assertion that the Commission did not 
substantiate its concerns regarding Schedule 13G reporting gaps and QIIs selling down positions before the 
end of a reporting period to avoid a Schedule 13G filing. See supra note 339 and accompanying text.  
376
  See Proposing Release at 13858; see also supra note 306 and accompanying text. 

93 
change,” with some of those commenters recommending that the Commission deem a change in 
beneficial ownership of less than five percent to not be “material” for purposes of Rule 13d-
2(b).
377
 The term “material,” however, already is defined in Rule 12b-2
378
 and is a familiar, 
established concept in the Federal securities laws.
379
 As such, we do not believe it is necessary or 
advisable to adopt a new materiality standard for purposes of Schedule 13G amendments under 
Rule 13d-2(b) or to provide an express safe harbor from the application of Rule 13d-2(b) for 
certain specified de minimis changes in beneficial ownership.  
We recognize that Rule 13d-2(a) provides that a “material change” for purposes of that 
rule includes “any material increase or decrease in the percentage of the class beneficially 
owned” and provides that “[a]n acquisition or disposition of beneficial ownership of securities in 
an amount equal to one percent or more of the class of securities shall be deemed ‘material’ for 
purposes of this section.”
380
 We also note, however, that these are non-exclusive circumstances 
in which an amendment obligation has been triggered.
381
 Thus, although this language in Rule 
13d-2(a) provides guidance for beneficial owners to determine when a Schedule 13D amendment 
obligation arises under that rule, it is fundamentally different from the express safe harbor that 
 
377
  See supra note 356 and accompanying text. 
378
  17 CFR 240.12b-2 (stating that the term “material,” when used to qualify a requirement for the furnishing 
of information as to any subject, limits the information required to those matters to which there is a 
substantial likelihood that a reasonable investor would attach importance in determining whether to buy or 
sell the securities registered). 
379
  See, e.g., Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988) (noting that the U.S. Supreme Court 
“explicitly has defined a standard of materiality under the securities laws” to mean that “there must be a 
substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable 
investor as having significantly altered the ‘total mix’ of information made available” (quoting TSC 
Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976))). 
380
  17 CFR 240.13d-2(a). 
381
  Id. (providing that a material change includes, “but [is] not limited to,” a “material increase or decrease in 
the percentage of the class beneficially owned” and that “acquisitions or dispositions of less than [one 
percent of the class of securities] may be material, depending upon the facts and circumstances”). 

94 
some commenters requested with respect to the Schedule 13G amendment obligation under Rule 
13d-2(b). Further, because both Rule 13d-2(a) and (b) will now share the same materiality 
standard for determining when an amendment is due, the language in Rule 13d-2(a), including 
the statement that “[a]n acquisition or disposition of beneficial ownership of securities in an 
amount equal to one percent or more of the class of securities shall be deemed ‘material,’” is 
equally instructive for purposes of determining what changes are material under Rule 13d-2(b). 
4. Rule 13d-2(c) and (d)  
Rule 13d-2(c) governs the amendment obligation for QIIs whose beneficial ownership 
exceeds 10 percent of a covered class. Under Rule 13d-2(c), QIIs are required to file an 
amendment to their Schedule 13G within 10 days after the end of the first month in which their 
beneficial ownership exceeds 10 percent of a covered class, calculated as of the last day of the 
month. Once across the 10 percent threshold, QIIs are further required under current Rule 13d-
2(c) to file additional amendments within 10 days after the end of the first month in which their 
beneficial ownership increases or decreases by more than five percent of the covered class, 
calculated as of the last day of the month. 
Rule 13d-2(d) governs the amendment obligation for Passive Investors whose beneficial 
ownership exceeds 10 percent of a covered class. Under current Rule 13d-2(d), Passive Investors 
are required to “promptly” file an amendment to their Schedule 13G upon acquiring greater than 
10 percent of a covered class. Once across the 10 percent threshold, Passive Investors are further 
required under current Rule 13d-2(d) to file additional amendments “promptly” if their beneficial 
ownership increases or decreases by more than five percent of the covered class.  
The amendment obligations arising under Rule 13d-2(c) and (d) are in addition to the 
general amendment requirement in Rule 13d-2(b), which is discussed in more detail in section 

95 
II.3 above. To comply with Rule 13d-2(c) and (d), QIIs and Passive Investors, depending on 
their beneficial ownership levels, may have to amend their Schedule 13G filings more frequently 
and do so throughout the year.  
a. Proposed Amendments 
In connection with the proposed amendment to Rule 13d-2(b),
382
 the Commission 
proposed to amend Rule 13d-2(c) to require that QIIs file an amendment to their Schedule 13G 
within five days after the date on which their beneficial ownership exceeds 10 percent of a 
covered class, rather than 10 days after the end of the month. Similarly, once across the 10 
percent threshold, the proposed amendment would have required QIIs to file additional 
amendments five days after the date on which their beneficial ownership increases or decreases 
by more than five percent of the covered class, rather than 10 days after the end of the month. 
The Commission intended that these amendments, when considered in the context of the 
proposed amendment to Rule 13d-2(b), would preserve the utility of Rule 13d-2(c) as a provision 
that provides the market with earlier notice of QIIs’ beneficial ownership exceeding 10 percent 
of a covered class and, thereafter, upon their beneficial ownership of the covered class increasing 
or decreasing by more than five percent.
383
 The Commission also expressed the view that the 
imposition of such an accelerated deadline is appropriate in the context of our proposed 
amendment to Rule 13d-2(c) because the high thresholds in that rule—10 percent beneficial 
ownership of a covered class and any subsequent five percent increase or decrease in beneficial 
ownership—warranted that the amendment be rapidly disseminated to the market.
384
 And, 
 
382
  See supra section II.A.3.a. 
383
  Proposing Release at 13858. 
384
  Id. 

96 
consistent with its rationale for proposing to shorten the other deadlines, the Commission noted 
that QIIs may have access to the same technology as other Schedule 13D and 13G filers to 
satisfy this deadline, especially given the size and sophistication of the persons eligible to file as 
QIIs.
385
  
The Commission also proposed to amend Rule 13d-2(d) to change the amendment filing 
deadline from the “promptly” standard to one business day after the date on which an 
amendment obligation arises. The Commission proposed this amendment for substantially the 
same reasons it proposed to shorten the filing deadline for the initial Schedule 13G
386
 and change 
the filing deadline for Schedule 13D amendments.
387
  
b.   Comments Received 
Commenters expressed a variety of views regarding the proposed amendments to Rule 
13d-2(c) and (d). A number of commenters supported the proposed amendments.
388
 Some of 
those commenters supported the proposed amendments for many of the same reasons they 
supported the revising the other Schedule 13D and 13G filing deadlines.
389
 
Some s upporting commenters also expressed their expectation that the proposed 
amendments to Rule 13d-2(c) and (d) would not impose significant costs to beneficial owners of 
more than five percent of a covered class.
390
 One commenter asserted that the proposed 
 
385
  Id. 
386
  See supra section II.A.2.a. 
387
  See supra section II.A.3.a. 
388
  See, e.g., letters from AFREF (expressly supporting only the proposed amendment to Rule 13d-2(d)); 
Anonymous 3; Anonymous 5; Anonymous 11; Anonymous 12; Anthony R.; C. Robinson; Engineer; 
FedEx; Freeport-McMoRan; HMA I; J. Pieper; J. Soucie; Jonah; Juan; Mark C.; Mike; Nasdaq; P. Worts; 
Todd. 
389
  See supra notes 38-40, 43-44 and accompanying text; see also supra notes 211, 308 and accompanying 
text. 
390
  See, e.g., letters from Anonymous 11; Freeport-McMoRan; J. Soucie. 

97 
amendments would be consistent in balancing the need for adequate disclosures to investors with 
burdens placed on filers to accurately prepare required disclosures.
391
 This commenter also 
supported the proposed amendments based on changes in technology and developments in the 
financial markets.
392
 
Several commenters opposed the proposed amendments to Rule 13d-2(c) and (d).
393
 
Some of those commenters opposed the proposed amendments for many of the same reasons 
they opposed revising the other Schedule 13D and 13G filing deadlines.
394
  
In addition, some commenters also expressed concern that the proposed amendment to 
Rule 13d-2(c) would impose significant and unnecessary additional reporting burdens on QIIs, 
including costs related to enhancing their systems to comply with potential intra-month 
reporting.
395
 Another commenter asserted that retaining the current Schedule 13G amendment 
filing deadline under Rule 13d-2(c) would be consistent with the Commission’s historical 
recognition that beneficial ownership by QIIs does not raise the same concerns as beneficial 
ownership by investors that hold positions with a control intent and, therefore, it is appropriate to 
minimize the reporting burdens on QIIs.
396
 
 
391
  See letter from FedEx. 
392
  See id. 
393
  See, e.g., letters from A. Day; ABA; AIMA; B. Mason; Dodge & Cox; EEI (opposing only the proposed 
amendment to Rule 13d-2(d)); ICI I; MFA; MSBA (same); Perkins Coie; SSC (opposing only the proposed 
amendment to Rule 13d-2(c)); TIAA (same). 
394
  See supra notes 99, 101-102, 226, 236, 243, 247, 250, 327 and accompanying text. 
395
  See, e.g., letters from ABA; ICI I; MFA. One commenter noted that proposed amendment represents a 
radical change for QIIs as it will require them to shift from monitoring and reporting Schedule 13G 
positions on a monthly basis to a daily basis. See letter from MFA. The commenter also stated that the 
proposed amendment would be particularly burdensome for algorithmic traders whose investments are in a 
perpetual state of flux. Id. 
396
  See letter from ICI I. 

98 
With respect to the proposed amendment to Rule 13d-2(d), one commenter asserted that 
the proposed one business day deadline is unreasonable given that many Passive Investors 
require assistance of counsel and that a filing under that rule may require input by multiple 
parties before being filed.
397
 One commenter stated that the proposed amendment would 
compromise the accuracy of Schedule 13G amendments and also would not allow for the 
possibility that a necessary approver or signer may not be available.
398
 
Commenters also criticized the Commission’s justifications for the proposed amendments 
to Rule 13d-2(c) and (d). For example, several commenters disagreed with the Commission’s 
technological advancement-based justifications for the proposed amendments,
399
 some of whom 
raised many of the same concerns that they expressed with respect to the proposed amendments 
to the other Schedule 13D and 13G filing deadlines.
400
 One commenter also noted that Passive 
Investors generally do not have access to specialized technology that would make it practical for 
them to file an amended Schedule 13G on the proposed accelerated basis.
401
 And, some 
commenters asserted that the costs of the proposed amendments to Rule 13d-2(c) and (d) would 
exceed their benefits.
402
 
Commenters also made some recommendations regarding the proposed amendments. For 
example, one commenter that generally opposed the proposed amendment to Rule 13d-2(c) 
recommended that the Commission require that Schedule 13G amendments pursuant to that rule 
 
397
  See letter from MSBA. 
398
  See letter from EEI. 
399
  See, e.g., letters from Dodge & Cox; IAA; ICI I; MSBA.  
400
  See supra notes 92-94, 220, 223 and accompanying text.  
401
  See letter from MSBA. 
402
  See letters from ABA; MFA. One commenter stated that because QIIs do not have any control intent, the 
timing of their beneficial ownership reporting is not a source of meaningful concern. See letter from ABA. 

99 
be filed within 45 days after the end of a quarter, consistent with the amendment frequency for 
Form 13F.
403
 
Some commenters that opposed the proposed amendment to Rule 13d-2(d) recommended 
a two-business day deadline under that rule,
404
 with one commenter asserting that such a 
deadline would be less onerous for investors yet would ensure the accuracy and transparency of 
the information in their filings.
405
 One such commenter expressed the view that the Commission 
should require that Schedule 13G amendments under Rule 13d-2(d) be filed promptly, but within 
no more than some period of time (e.g., between two and four business days).
406
 Another 
opposing commenter suggested that the Commission require that Schedule 13G amendments 
pursuant to Rule 13d-2(d) be filed within 10 business days because Passive Investors “lack 
control intent and certify to that effect.”
407
 
c.   Final Amendments 
We are amending Rule 13d-2(c) and (d) to revise the Schedule 13G amendment filing 
deadlines under those rules. In response to commenter concerns, however, we are making some 
changes from the proposed deadlines. Specifically, we are adopting a filing deadline of five 
business days
408
 after the end of the first month in which an amendment obligation is triggered 
 
403
  See letter from IAA. 
404
  See letters from EEI; Perkins Coie. 
405
  See letter from EEI. 
406
  See letter from ABA. 
407
  See letter from IAA. The commenter further noted that “Passive Investors (and QIIs) who lose eligibility to 
file on Schedule 13G – for example, by changing to a control intent – currently have 10 calendar days . . . 
to file their initial Schedule 13D reflecting this change in intent” and that “[i]t seems inconsistent with the 
materiality of the information disclosed to require Passive Investors who remain passive to file a Schedule 
13G amendment in a shorter timeline than formerly-Passive Investors who have to file a Schedule 13D.” 
Id. 
408
  See supra note 134 for a discussion of the new definition of “business day” that we are adopting for 
purposes of Regulation 13D-G. 

100 
under Rule 13d-2(c) and two business days after the date on which an amendment obligation is 
triggered under Rule 13d-2(d). 
As noted above, Rule 13d-2(c) currently requires QIIs to file a Schedule 13G amendment 
within 10 days after the end of the first month in which their beneficial ownership exceeds 10 
percent of a covered class and, once across the 10 percent threshold, within 10 days after the first 
month in which their beneficial ownership increases or decreases by more than five percent. 
Although the Commission proposed to revise Rule 13d-2(c) to shorten the filing deadline to five 
days after the date on which an amendment obligation arises under that rule, we are instead 
retaining the month-end-based filing deadline and shortening that deadline from 10 days after 
month-end to five business days after month-end. The Commission based its proposed deadline 
under Rule 13d-2(c), in large part, on the proposal to shorten the Schedule 13G amendment 
deadline under Rule 13d-2(b) from a calendar year-end-based deadline to a month-end-based 
deadline.
409
 Therefore, if we had adopted the Commission’s proposed amendment to Rule 13d-
2(b), then Rule 13d-2(c), in its current form—which as noted above requires that QIIs file a 
Schedule 13G amendment within 10 days after the end of the first month in which the triggering 
event occurs—would not be of any value. 
As discussed above, however, we did not adopt the Commission’s proposed month-end-
based deadline under Rule 13d-2(b).
410
 Instead, we revised Rule 13d-2(b) to require that a 
Schedule 13G amendment be filed within 45 days after the end of a calendar quarter in which a 
material change occurs to the information previously reported. Because Rule 13d-2(b) will have 
 
409
  See Proposing Release at 13858 (stating that the proposed amendments to Rule 13d-2(c), “when considered 
in the context of our proposed amendment to Rule 13d-2(b), preserve the utility of Rule 13d-2(c) as a 
provision that provides the market with earlier notice of” significant changes in QIIs’ beneficial 
ownership). 
410
  See supra section II.A.3.c. 

101 
a quarter-end-based filing deadline, the month-end-based deadline in Rule 13d-2(c) will continue 
to have utility as a provision that provides the market with earlier notice of QIIs’ beneficial 
ownership exceeding 10 percent of a covered class and, thereafter, upon their beneficial 
ownership increasing or decreasing by more than five percent. In addition, we expect that 
retaining the month-end-based deadline in Rule 13d-2(c) will address the concerns that several 
commenters expressed about the burdens that the proposed amendment would impose on QIIs.
411
 
Notwithstanding those commenters’ concerns, we believe it is appropriate to accelerate 
the filing deadline in Rule 13d-2(c) in order for investors to receive material information in a 
timely manner in light of the technological advancements and other developments in the 
financial markets
412
 in the more than 40 years since the 10-day deadline was adopted.
413
 As such, 
we are shortening Rule 13d-2(c)’s filing deadline from 10 days after month-end to five business 
days after month-end. Because the deadline is being expressed in “business days” instead of 
“days,”
414
 and given the size and sophistication of the persons eligible to file as QIIs, we do not 
expect that this new filing deadline under Rule 13d-2(c) will be unduly burdensome. 
In addition, as discussed above, Rule 13d-2(d) currently requires that Passive Investors 
file a Schedule 13G amendment promptly upon acquiring beneficial ownership of more than 10 
percent of a covered class and, once across the 10 percent threshold, promptly upon increasing or 
decreasing their beneficial ownership by more than five percent. As with the Schedule 13D 
 
411
  See supra notes 394-396 and accompanying text. 
412
  See supra notes 138-144 and accompanying text for some examples of those advancements and 
developments. 
413
  See Filing and Disclosure Release (adopting the predecessor to current Rule 13d-2(c)).  
414
  The five-business day deadline after month-end, as compared to a hypothetical five-calendar day deadline, 
will give beneficial owners additional time before their Schedule 13G amendment is due if the filing period 
encompasses days that are not business days (i.e., Saturday, Sunday, or a Federal holiday). 

102 
amendment deadline under Rule 13d-2(a), the Commission proposed to change the deadline 
under Rule 13d-2(d) from the “promptly” standard to one business day.
415
 For the same reasons 
that we changed the filing deadline for Schedule 13D amendments to two business days,
416
 and 
to retain the historical consistency with that deadline, we also are amending Rule 13d-2(d) to 
change the amendment filing deadline from the current “promptly” standard to two business days 
after the date on which an amendment obligation arises.  
5. Rules 13(a)(4) and 201(a) of Regulation S-T 
Regulation 13D-G states that Schedules 13D and 13G should be prepared in accordance 
with Regulation S-T, which governs the preparation and submission of documents filed 
electronically on the Commission’s EDGAR system.
417
 In accordance with 17 CFR 232.12, 
electronic filings may be submitted to the Commission Monday through Friday, except Federal 
holidays, from 6 a.m. to 10 p.m. Eastern Time.
418
 Under Rule 13(a) of Regulation S-T, however, 
most filings must be submitted by direct transmission commencing on or before 5:30 p.m. 
Eastern Time in order to be deemed filed on the same business day.
419
 Most filings submitted by 
direct transmission commencing after 5:30 p.m. will be deemed filed   as of the next business 
day.
420
 Rule 13(a)(4) of Regulation S-T, however, sets forth certain exceptions from that 5:30 
p.m. “cut-off” time. Specifically, it provides that certain filings—namely, Forms 3, 4 and 5, 
Form 144, and Schedule 14N—“submitted by direct transmission on or before 10 p.m. [Eastern 
 
415
  See Proposing Release at 13858. 
416
  See supra section II.A.3.c. 
417
  The preamble to Regulation 13D-G states, in relevant part, that “[t]his regulation should be read in 
conjunction with Regulation S-T (part 323 of this chapter), which governs the preparation and submission 
of documents in electronic format” (all capitalized letters in the original). 
418
  17 CFR 232.12(c).   
419
  See 17 CFR 232.13(a)(2). 
420
  Id. 

103 
Time] shall be deemed filed on the same business day.”
421
 Rule 13(a)(4), therefore, effectively 
extends the “cut-off” time for these filings from 5:30 p.m. to 10 p.m. 
In addition, Rule 201 of Regulation S-T and 17 CFR 232.202 (“Rule 202 of Regulation 
S-T”) address hardship exemptions from EDGAR filing requirements, and Rule 13(b) of 
Regulation S-T addresses the related issue of filing date adjustments. A filer may obtain a 
temporary hardship exemption under current Rule 201 of Regulation S-T if it experiences 
unanticipated technical difficulties that prevent the timely submission of an electronic filing by 
submitting a properly formatted paper copy of the filing under cover of Form TH.
422
 
Alternatively, instead of pursuing a hardship exemption, a filer may request a filing date 
adjustment under Rule 13(b) of Regulation S-T. That rule addresses circumstances in which a 
filer attempts in good faith to file a document with the Commission in a timely manner, but the 
filing is delayed due to technical difficulties beyond the filer’s control.
423
 In those instances, the 
filer may request a filing date adjustment.
424
 The staff may grant the request if it appears that the 
adjustment is appropriate and consistent with the public interest and the protection of 
investors.
425
  
a. Proposed Amendments 
In the Proposing Release, the Commission proposed to amend Rule 13(a)(4) of 
Regulation S-T to provide that any Schedule 13D or Schedule 13G, including any amendments 
 
421
  17 CFR 232.13(a)(4). Rule 13(a)(3) also provides the same accommodation for registration statements or 
any post-effective amendment thereto filed pursuant to 17 CFR 230.462(b) (“Rule 462(b)”). See 17 CFR 
232.13(a)(3). 
422
  17 CFR 232.201(a). 
423
  17 CFR 232.13(b). 
424
  Id. 
425
  Id. 

104 
thereto, submitted by direct transmission on or before 10 p.m. Eastern Time on a given business 
day will be deemed filed on the same business day.
426
 Conversely, under the proposed 
amendment, any Schedule 13D or 13G filing not submitted by direct transmission by 10 p.m. on 
its due date will be assigned a filing date of the next business day, and for purposes of 
compliance with the applicable reporting requirements, would be considered late. The 
Commission proposed this extension of the “cut-off” time to ease filers’ administrative burdens 
in connection with the proposed accelerated filing deadlines for Schedule 13D and 13G filings, 
including those filers located in different time zones.
427
 
The Commission also proposed to amend Rule 201(a) of Regulation S-T to remove a 
Schedule 13D or 13G filer’s ability to rely on a temporary hardship exemption under that rule. 
The Commission noted that this proposal would be consistent with the treatment of Forms 3, 4, 
and 5, which have a 10 p.m. “cut-off” time under Rule 13(a)(4) of Regulation S-T and are 
ineligible for a temporary hardship exemption under Rule 201(a) of Regulation S-T.
428
 The 
Commission also based this proposal on the following factors: the relative ease of using the 
EDGAR on-line filing system; the proposed extended 10 p.m. Eastern Time filing deadline; the 
limited value to the public of paper filings; and the availability of a filing date adjustment under 
the same circumstances as a temporary hardship exemption would have been available but for 
the proposed amendment.
429
  
 
426
  Notwithstanding the proposed extension of the time period in which accepted Schedule 13D and 13G 
filings may be made and still be considered timely, the Commission stated that filer support hours would 
not be extended. Proposing Release at 13859, n.82. Thus, filer support would continue to remain available 
only until 5:30 p.m. Eastern Time as is currently the case. 
427
  Proposing Release at 13859. 
428
  Id. 
429
  Id. at 13859-60. 

105 
b.   Comments Received 
Commenters largely supported the proposed amendments to Rules 13(a)(4) and 201(a) of 
Regulation S-T,
430
 with only one commenter expressly opposing the proposed amendment to 
Rule 201(a) of Regulation S-T.
431
 One of the supporting commenters asserted that additional 
time to file would be critical under the Commission’s proposed acceleration of the Schedule 13D 
and 13G filing deadlines.
432
 Another supporting commenter noted that the proposed amendment 
to Rule 13(a)(4) would conform to the section 16 filing deadlines and help ease the compliance 
burdens of shortened filing deadlines and time zone differences.
433
 
Some commenters also made recommendations in connection with the proposed 
amendments to Rules 13(a)(4) and 201(a) of Regulation S-T. One supporting commenter 
recommended that the Commission extend filer support hours beyond 6 p.m. Eastern Time.
434
 
Another commenter, which neither clearly supported nor opposed the proposed amendment to 
Rule 201(a), stated that it would not object to making a temporary hardship exemption 
unavailable to Schedules 13D and 13G filers as long as a filer may request a filing date 
adjustment under Rule 13(b) of Regulation S-T if it experiences unanticipated technical 
difficulties that prevent the timely submission of an electronic filing.
435
 
c.   Final Amendments 
 
430
  See letters from EIM I (supporting only the proposed amendment to Rule 13(a)(4)); Engineer; Hoak 
(same); IAA (same); ICI I. 
431
  See letter from EIM I. 
432
  See letter from ICI I. 
433
  See letter from IAA. 
434
  See letter from ICI I. 
435
  See letter from IAA. 

106 
We are amending Rules 13(a)(4) and 201(a) of Regulation S-T as proposed. Thus, the 
filing “cut-off” time for Schedules 13D and 13G under Rule 13(a)(4) of Regulation S-T will be 
extended from 5:30 p.m. to 10 p.m. Eastern Time. In addition, the temporary hardship exemption 
under Rule 201(a) of Regulation S-T will be made unavailable for Schedule 13D and 13G filers. 
Schedule 13D and 13G filers will, however, remain eligible to request a filing date adjustment 
under Rule 13(b) of Regulation S-T.
436
 
We are adopting these amendments as proposed for the same reasons the Commission 
discussed in the Proposing Release,
437
 which were largely supported by the commenters.
438
 We 
note that a commenter also requested that we extend filer support hours beyond 6 p.m. Eastern 
Time.
439
 As the Commission noted in the Proposing Release, however, the amendment to Rule 
13(a)(4) of Regulation S-T mirrors the existing filing “cut-off” time for Forms 3, 4, and 5.
440
 In 
extending the filing “cut-off” time for those forms, the Commission declined to extend filer 
support hours.
441
 We also decline to do so here in light of the relative ease of using the EDGAR 
 
436
  One commenter requested that we allow Schedule 13D and 13G filers to request a filing date adjustment 
under Rule 13(b) of Regulation S-T if they experience unanticipated technical difficulties. See supra note 
435 and accompanying text. For example, as noted above and consistent with the Commission’s statement 
in the Proposing Release, “[f]iling date adjustments may . . . be made if a filer is unable to submit its 
Schedule 13D or 13G as a result of an EDGAR outage . . . under Rule 13(b) of Regulation S-T on the 
grounds that such outage constitutes technical difficulties beyond the filer’s control.” Proposing Release at 
13860, n.84. 
437
  See Proposing Release at 13859-60 (“We are proposing to amend Rule 201(a) of Regulation S–T to make 
temporary hardship exemptions unavailable to filers of Schedules 13D and 13G because of: The relative 
ease of using the EDGAR on-line filing system; the proposed extended 10 p.m. eastern time filing deadline; 
the limited value to the public of paper filings; and the availability of a filing date adjustment under the 
same circumstances as a temporary hardship exemption would have been available but for the proposed 
amendment.”); see also supra section II.A.5.a. 
438
  See supra section II.A.5.b. 
439
  See supra note 434 and accompanying text.  
440
  Proposing Release at 13859, n.82. 
441
  See Mandated Electronic Filing and Website Posting for Forms 3, 4 and 5, Release No. 34-47809 (May 7, 
2003) [68 FR 25788 at 25793 (May 13, 2003)] (“[W]e have amended Rule 13(a) to provide that any Form 
3, 4 or 5 submitted by direct transmission on or before 10 p.m. Eastern time is deemed filed on the same 
business day. However, filer support hours will not be correspondingly extended . . . .”). 

107 
on-line filing system, the extension of the “cut-off” time by four and a half hours, and the 
availability of a filing date adjustment if the filer experiences unanticipated technical difficulties 
as previously described.  
B.  Proposed Amendment to Rule 13d-3 Regarding the Use of Cash-Settled 
Derivative Securities 
Neither section 3(a) nor section 13(d) of the Exchange Act defines the term “beneficial 
owner” or “beneficial ownership.” Regulation 13D-G similarly does not expressly define those 
terms. To provide clarity, the Commission adopted Rule 13d-3, which provides standards for the 
purpose of determining whether a person is a beneficial owner subject to section 13(d) and 
section 13(g).
442
 Over the years, some observers have raised concerns about the ability of 
investors in cash-settled derivative securities to influence or control an issuer by, for example, 
pressuring a counterparty to the derivative transaction to make certain decisions regarding the 
voting and disposition of substantial blocks of securities of the reference issuer.
443
 To address 
these and related concerns,
444
 the Commission proposed new Rule 13d-3(e). 
1. Proposed Amendment 
 
442
  Adoption of Beneficial Ownership Disclosure Requirements, Release No. 34-13291 (Feb. 24, 1977) [42 FR 
12342 (Mar. 3, 1977)]. The Commission emphasized that “[a]n analysis of all relevant facts and 
circumstances in a particular situation is essential in order to identify each person possessing the requisite 
voting power or investment power.” Id. at 12344. 
443
  See, e.g., Maria Lucia Passador, The Woeful Inadequacy of Section 13(d): Time for a Paradigm Shift?, 13 
VA.
 L. & BUS. REV. 279, 296-99 (2019) (“[I]n the recent past, cash-settled equity derivatives—mainly call 
and security-based options—were frequently used not only with a speculative and hedging purpose, but 
also with the immediate, explicit, and specific aim of silently accumulating a leading (or even control) 
position in public companies.”); Wachtell Petition, supra note139, at 8 (“Even in the absence of voting or 
dispositive power, participants in large hedging transactions gain influence in a number of ways. . . . 
[V]oting of the shares may be subject to counterparty influence or control, either directly or because the 
counterparty is motivated to vote the hedged shares in a way that will please the investor and induce them 
to continue to transact with such counterparty. . . . Even those derivatives that are characterized as ‘cash-
settled’ may ultimately be settled in kind, creating further market pressure as the participants need to 
acquire shares for such settlement.”).  
444
  Proposing Release at 13861. 

108 
The Commission proposed to add new paragraph (e) to Rule 13d-3 to deem certain 
holders of cash-settled derivative securities, other than SBS, to be the beneficial owners of the 
reference covered class.  Proposed Rule 13d-3(e)(1) would have treated a holder of a cash-settled 
derivative security, excluding SBS, as the beneficial owner of the equity securities in the covered 
class referenced by the cash-settled derivative security if such person held the cash-settled 
derivative security with the purpose or effect of changing or influencing the control of the issuer 
of the class of equity securities, or in connection with or as a participant in any transaction 
having that purpose or effect.
445
 The Commission included this control-based standard in 
proposed Rule 13d-3(e) to ease the administrative burdens associated with the application of this 
proposed provision by employing a familiar standard under Regulation 13D-G.
446
 In addition, 
proposed Rule 13d-3(e) would have set forth the formula for calculating the number of equity 
securities that a holder of a cash-settled derivative security would be deemed to beneficially 
own.
447
  
In proposing Rule 13d-3(e), the Commission noted that non-SBS cash-settled derivative 
securities held with the purpose or effect of changing or influencing control of the issuer may be 
used to influence the voting, acquisition, or disposition of any shares the holder’s counterparty 
 
445
  Proposing Release at 13862. Proposed paragraph (e)(1) also would have included a provision stating that 
any securities that are not outstanding but are referenced by the relevant cash-settled derivative security 
would be deemed to be outstanding for the purpose of calculating the percentage of the relevant covered 
class beneficially owned by the holder of the derivative security. Id. at 13862-63. Those reference 
securities, however, would not have been deemed to be outstanding for the purpose of any other person’s 
calculation of the percentage of the covered class it beneficially owns. Id. 
446
  Id. (noting that “the concept ‘purpose or effect of changing or influencing the control of the issuer’ is a 
familiar one under Regulation 13D-G, both in the context of determining whether a person is a beneficial 
owner under Rule 13d-3 and for purposes of determining whether a beneficial owner is eligible to report on 
Schedule 13G in lieu of Schedule 13D under Rule 13d-1”). 
447
  See id. at 13863 (describing that formula and providing illustrative examples of its application). The 
Commission also proposed three notes to Rule 13d-3(e) that would have clarified the application of the 
proposed rule’s formula. Id. at 13863-64. 

109 
may have acquired in a hedge, proprietary investment, or otherwise.
448
 The Commission also 
stated that a non-SBS cash-settled derivative holder’s probability of success in exerting influence 
or control over the issuer of the reference security may increase given that any voting power the 
derivative holder held would be magnified by minimizing the number of shares that potentially 
could be voted against the holder’s plans or proposals.
449
 Finally, the Commission recognized 
that holders of non-SBS cash-settled derivative securities may position themselves to acquire any 
reference securities that the counterparty may acquire to hedge the economic risk of that 
transaction.
450
 The Commission also noted that holders of non-SBS cash-settled derivative 
securities may present their economic positions to persuade an issuer or its shareholders to 
engage with them.
451
 The Commission concluded, therefore, that these persons’ holdings of non-
SBS cash-settled derivative securities may implicate the policies underlying section 13(d).
452
 
2. Comments Received 
Commenters were divided on proposed Rule 13d-3(e). Many commenters expressed 
general support for the proposed amendment.
453
 A number of these commenters indicated that 
 
448
  Id. at 13862. 
449
  Id. The Commission acknowledged the possibility that derivative counterparties may have a business 
relationship to develop and protect, and thus may ultimately cast votes in accordance with the preference of 
the derivative holder or not vote the shares. See id. 
450
  Id. 
451
  Id. 
452
  Id. (citing the Filing and Disclosure Release, which notes that section 13(d)’s legislative history indicates 
that the purpose of that section is “to provide information to the public and the affected issuer about rapid 
accumulations of its equity securities” by “persons who would then have the potential to change or 
influence control of the issuer.”). 
453
  See, e.g., letters from Andres Loubriel (Feb. 19, 2022) (“A. Loubriel”); AFL-CIO; AFREF; AFREF, et al.; 
Anonymous (Feb. 25, 2022) (“Anonymous 7”); Better Markets I; Convergence; Dan Pierce (Feb. 20, 2022) 
(“D. Pierce”); Freeport-McMoRan; FundApps; HMA I; Justin G. (Feb. 19, 2022) (“Justin G.”); Labor 
Unions; Mark C.; NIRI; P. Worts; PL Salvati;Henry T Hu, Allan Shivers Chair in the Law of Banking and 
Finance at the University of Texas Law School (Apr. 11, 2022) (“Prof. Hu”); Robert Rutkowski (Apr. 12, 
2022) (“R. Rutkowski”); Samuel Ryan, Senior Battery Test Engineer, ESS Inc. (Feb. 18, 2022) (“S. 
Ryan”); SCG; Sen. Baldwin, et al.; T. Reilly; Todd; WLRK I; WLRK II; see also Letter Type C. 

110 
proposed Rule 13d-3(e) would add needed market transparency.
454
 One commenter expressed 
the view that the proposal would mitigate what it described as “hidden risk concentration.”
455
 
Another commenter stated that the proposal would provide “the markets more generally with full 
information” and allow stockholders to better assess whether to support or oppose activists’ 
proposals.
456
 Some commenters asserted that an investment fund used derivatives (reportedly 
forward purchase contracts) to conceal an economic interest in an issuer that it later converted 
into a profitable beneficial ownership stake ultimately reported on Schedule 13D.
457
   
  Opposing commenters, by contrast, raised numerous objections to proposed Rule 13d-
3(e).
458
 Some of these commenters questioned whether there was a sound basis for the 
proposal.
459
 One commenter asserted that the proposal was not based on empirical analysis or 
“evidence to establish . . . an actual problem in the marketplace” and is a “solution in search of a 
problem.”
460
 Other commenters asserted that holders of cash-settled derivative securities should 
not be deemed beneficial owners because such derivative securities confer no control or 
 
454
  See, e.g., letters from AFL-CIO; AFREF; Better Markets I; Convergence; D. Pierce; FundApps; Justin G.; 
Labor Unions; NIRI; P. Worts; PL Salvati; Prof. Hu; SCG; WLRK I; WLRK II. 
455
  See letter from Better Markets I. 
456
  See letter from WLRK II. 
457
  See letters from NIRI; SCG. 
458
  See, e.g., letters from ABA; AIMA; B. Mason; CIRCA I; CIRCA III; EIM I; IAA; ICI I; ICM; J. Kennedy; 
MFA; Robert Plesnarski, O’Melveny & Myers LLP (June 27, 2023) (“O’Melveny & Myers”); Perkins 
Coie; Prof. Gordon; Profs. Bishop and Partnoy I; Profs. Bishop and Partnoy II; Profs. Bishop and Partnoy 
III; Profs. Eccles and Rajgopal; SIFMA; SIFMA AMG; SIFMA & SIFMA AMG; STB; TIAA. We note 
that several commenters expressed concern that proposed Rule 13d-3(e) would “[a]ssign[] voting rights to 
derivative holders.” See, e.g., letter from Susanne Trimbath, Ph.D., Economist, Author, Retired Professor 
(June 24, 2023); see also Letter Type B; Letter Type D, available at https://www.sec.gov/comments/s7-06-
22/s70622-typed.htm; Letter Type E, available at https://www.sec.gov/comments/s7-06-22/s70622-
typee.htm. For avoidance of doubt, we note that neither proposed Rule 13d-3(e) nor any of the other 
Proposed Amendments, nor any of the final amendments we are adopting, would have that effect. 
459
  See letters from CIRCA I; MFA; Profs. Bishop and Partnoy III; SIFMA; SIFMA AMG. 
460
  See letter from EIM I. 

111 
influence over the voting or disposition of the reference equity securities.
461
 Some commenters 
asserted that in actuality, a counterparty would not look to the derivative holder as to whether to 
acquire for hedging purposes, or how to vote and/or dispose of, any securities of the reference 
class or that doing so would be contrary to market practice and/or standard industry legal 
documentation.
462
 Several opposing commenters asserted that investors in cash-settled derivative 
securities already may be subject to regulation as beneficial owners under existing Rule 13d-3 in 
applicable circumstances or that the Commission could proceed via interpretation or other means 
and without a rule amendment.
463
 Similarly, one commenter stated that it may not be necessary 
to deem investors in cash-settled derivative securities beneficial owners if the Commission is 
satisfied that derivative counterparties can effectively and irrevocably contract out of the right to 
convert such derivatives to either physical ownership of underlying shares or any other form of 
voting rights.
464
  
In addition, some opposing commenters expressed concerns regarding proposed Rule 
13d-3(e) related to the APA or the Commission’s statutory authority to adopt the proposal. For 
example, some commenters said that the proposal represents an inappropriate expansion of the 
 
461
  See letters from ABA; AIMA; CIRCA I; EIM I; IAA; MFA; STB; TIAA.  
462
  See letters from ABA; CIRCA I; EIM I; O’Melveny & Myers; SIFMA; SIFMA AMG; STB. 
463
  See letters from AIMA; CIRCA I; EIM I; IAA; ICI I; MFA; Profs. Bishop and Partnoy II; Profs. Bishop 
and Partnoy III; SIFMA; SIFMA AMG. One commenter expressly recommended that the Commission 
issue interpretive guidance on this point. See letter from Profs. Bishop and Partnoy II; see also letter from 
Profs. Bishop and Partnoy III. Similarly, another commenter suggested that the Commission “publish 
clarifying guidance explaining that the beneficial ownership determination for all cash-settled derivatives is 
consistent with the treatment of SBS, as described in the 2011 Release.” See letter from IAA. The “2011 
Release” that the commenter refers to is Beneficial Ownership Reporting Requirements and Security-Based 
Swaps, Release No. 34-64628 (June 8, 2011) [76 FR 34579 (June 14, 2011)], which we henceforth refer to 
as the “Security-Based Swaps Release.” 
464
  See letter from Wm. Robertson Dorsett, Columbia Law School (Feb. 11, 2022). 

112 
applicable statutory provisions
465
 or would be arbitrary and capricious, if adopted.
466
 Further, 
one commenter emphasized that “[b]  y focusing on speculative harms; failing to engage seriously 
with the question whether new or different rules were needed to combat them; and failing to 
consider costs, the Proposed Rule falls short of providing a sound justification for the proposals 
being made.”
467
 The commenter stated that “[f]or these reasons, the Commission has not 
satisfied its obligations under sections 3(f) and 23(a)(2) of the Exchange Act.”
468
  
Finally, some opposing commenters discussed other concerns regarding proposed Rule 
13d-3(e). Some commenters expressed concern that the proposal would inhibit activist 
investment strategies.
469
 Other commenters expressed concern that the proposed rule, including 
its “change of control” standard, is overly broad, unclear,  and would be difficult to administer.
470
 
Many commenters indicated that the proposal’s computational methodology, including the need 
to conduct daily calculations, would be complex or increase the compliance burden of the rule.
471
 
In addition, one commenter noted that the “concept of beneficial ownership is used . . . in many 
other federal and state laws and rules, as well as in contracts” and, therefore, “expanding the 
 
465
  See letters from ABA; IAA; MFA; Wm. Robertson Dorsett, Columbia Law School (Apr. 11, 2022). One of 
these commenters also stated that the proposal would be inconsistent with the Commission’s interpretation 
in the Security-Based Swaps Release. See letter from MFA. Another commenter questioned the 
Commission’s authority to adopt proposed Rule 13d-3(e) “when Rule 13d-3(a) and all relevant authority 
relating to an understanding of beneficial ownership has historically required a showing of control over the 
voting or the disposition of securities.” See letter from ABA. 
466
  See letter from EIM I. 
467
  See letter from SIFMA; see also letter from SIFMA & SIFMA AMG.  
468
  See letter from SIFMA. The commenter also recommended that the Proposed Amendments be revised and 
re-proposed for notice and comment. See id. 
469
  See letters from CIRCA I; MFA. 
470
  See letters from ABA; CIRCA I; EIM I; IAA; MFA; Perkins Coie; SIFMA; SIFMA AMG; TIAA; see also 
IAC Recommendations (stating that the proposed rule, together with the Commission’s proposed 17 CFR 
240.10B-1 (“Rule 10B-1”), could “cause confusion in the markets and make compliance difficult for 
market participants” and recommending that the two proposed rules be better aligned). 
471
  See letters from ABA; AIMA; IAA; ICI I; Profs. Bishop and Partnoy I; SIFMA; SIFMA AMG; SIFMA & 
SIFMA AMG; STB; TIAA; see also letter from MFA & NAPFM. 

113 
definition of ‘beneficial ownership’” as proposed in Rule 13d-3(e) could have “significant 
unintended consequences.”
472
 Further, another commenter indicated that the proposed rule’s 
expansion of the scope of the matters that may give rise to beneficial ownership “could result in 
potential and significant overreporting by [investment] advisers, leading to unfounded inferences 
from public filings that holders of cash-settled derivatives may have voting and investment 
power over securities that they do not, in fact, have, nor do they have the right to acquire.”
473
 
3. Commission Guidance 
We are not adopting proposed paragraph (e) to Rule 13d-3 to deem certain holders of 
cash-settled derivative securities as beneficial owners of the reference covered class. Consistent 
with the views expressed by several commenters, we have determined that Commission guidance 
on the applicability of existing Rule 13d-3 to cash-settled derivative securities, similar to the 
guidance provided in the Security-Based Swaps Release,
474
 would provide sufficient clarity.
475
 
The Commission explained in the Security-Based Swaps Release the circumstances under 
which a  holder of a SBS may become a beneficial owner as determined under Rule 13d-3. It 
noted that “our existing regulatory regime may require the reporting of beneficial ownership” in 
cases in which a SBS (1) “confers voting and/or investment power (or a person otherwise 
acquires such power based on the purchase or sale of a [SBS]),” (2) “ is used with the purpose or 
 
472
  See letter from ICI I. 
473
  See letter from IAA; see also letters from MFA and Perkins Coie that expressed similar concerns about 
excessive beneficial ownership reporting and potential market confusion even though the persons holding 
cash-settled derivatives ordinarily have mere economic exposure and no power to vote a reference security 
or influence or change control of an issuer. 
474
  See supra note 463 and accompanying text. 
475
  See letter from IAA; see also letter from Profs. Bishop and Partnoy II (stating that, under existing Rule 
13d-3, holders of cash-settled derivative securities may be subject to regulation as beneficial owners of the 
reference equity securities in applicable circumstances, and recommending that the Commission not adopt 
proposed Rule 13d-3(e) but instead issue “guidance on cash-settled derivatives” and “articulat[e] how the 
Commission’s current rules continue to prohibit problematic conduct related to the [Proposing Release]”). 

114 
effect of divesting or preventing the vesting of beneficial ownership as part of a plan or scheme 
to evade the reporting requirements,”  or (3) “grants a right to acquire an equity security.”
476
 
Although the determination under Rule 13d-3 as to whether the holder of any cash-settled 
derivative security is the beneficial owner of the reference covered class ultimately will depend 
on the relevant facts and circumstances, the above-described reasoning in the Security-Based 
Swaps Release (the three elements of which correspond to Rule 13d-3(a), (b), and (d)(1), 
respectively) provides an instructive analytical framework with respect to cash-settled derivative 
securities.
 
 
As is the case with persons holding cash-settled SBS, Rule 13d-3 similarly may be 
applied to holders of non-SBS cash-settled derivatives
477
 to treat those persons as beneficial 
owners in applicable instances. Although non-SBS derivative securities settled exclusively in 
cash generally are designed to represent only an economic interest, discrete facts and 
circumstances could arise where the holder of these securities may have voting or investment 
power as described in Rule 13d-3(a) or otherwise could be deemed to be a beneficial owner as 
determined under Rule 13d-3(b) or (d), as described below. First, under Rule 13d-3(a), to the 
extent a non-SBS cash-settled derivative security provides its holder, directly or indirectly, with 
exclusive or shared voting or investment power, within the meaning of that rule, over the 
reference covered class through a contractual term of the derivative security or otherwise, the 
holder of that derivative security may become a beneficial owner of the reference covered class. 
Second, to the extent a non-SBS cash-settled derivative security is acquired with the purpose or 
 
476
  Security-Based Swaps Release at 34582. 
477
  Some commenters expressed the view that non-SBS cash-settled derivatives only represent an economic 
interest and that section 13 generally should not or does not apply to these securities. See letters from ABA; 
IAA; MFA; Perkins Coie. 

115 
effect of divesting its holder of beneficial ownership of the reference covered class or preventing 
the vesting of that beneficial ownership as part of a plan or scheme to evade the reporting 
requirements of section 13(d) or 13(g), the derivative security may be viewed as a contract, 
arrangement, or device within the meaning of those terms as used in Rule 13d-3(b). The holder 
of such cash-settled derivative security, therefore, may be deemed a beneficial owner under Rule 
13d-3(b) in this context.  Finally, under Rule 13d-3(d)(1), a person is deemed a beneficial owner 
of an equity security if the person (1) has a right to acquire beneficial ownership of the equity 
security within 60 days or (2) acquires the right to acquire beneficial ownership of the equity 
security with the purpose or effect of changing or influencing the control of the issuer of the 
security for which the right is exercisable, or in connection with or as a participant in any 
transaction having such purpose or effect, regardless of when the right is exercisable.
478
 As the 
Commission stated in the Security-Based Swaps Release, Rule 13d-3(d)(1) applies regardless of 
the origin of the right to acquire the equity security.
479
 If such a right originates in a derivative 
security that is nominally “cash-settled” or from an understanding in connection with that 
derivative security, Rule 13d-3(d)(1) would apply. 
C.  Proposed Amendments to Rule 13d-5  
 
478
  See Rule 13d-3(d)(1)(i). The first prong described above (i.e., the lead-in of Rule 13d-3(d)(1)(i)) applies to 
any “right to acquire,” including but not limited to those enumerated in Rule 13d-3(d)(1)(i)(A) through (D). 
The second prong described above (i.e., the proviso of Rule 13d-3(d)(1)(i)) applies to any “security or 
power” specified in Rule 13d-3(d)(1)(i)(A) through (C), thereby excluding Rule 13d-3(d)(1)(i)(D) (namely, 
“any right to acquire . . . pursuant to the automatic termination of a trust, discretionary account or similar 
arrangement”) from the types of securities or powers that, if held, can result in the holder being deemed a 
beneficial owner regardless of when the right is exercisable. Thus, the holder of any right to acquire 
beneficial ownership as described in Rule 13d-3(d)(1)(i)(D) will be subject to being deemed a beneficial 
owner pursuant to Rule 13d-3(d)(1) if the right creates an entitlement to acquire securities of the underlying 
covered class within 60 days. 
479
  Security-Based Swaps Release at 34582. 

116 
In the Proposing Release, the Commission proposed to amend Rule 13d-5 to, among 
other things: 
• Revise Rule 13d-5(b)(1) to remove the potential implication that it sets forth the 
exclusive legal standard for group formation under section 13(d)(3) or 13(g)(3); 
• Add new paragraph (b)(1)(ii) to specify that if a person, in advance of filing a 
Schedule 13D, discloses to any other person that such filing will be made and such 
other person acquires securities in the covered class for which the Schedule 13D will 
be filed, those persons will have formed a group within the meaning of section 
13(d)(3); and 
• Add new paragraph (b)(2)(i) to specify that when two or more persons “act as” a group 
under section 13(g)(3) of the Act, the group will be deemed to have become the 
beneficial owner, for purposes of section 13(g)(1) and (2) of the Exchange Act, of the 
beneficial ownership held by its members. 
Rather than adopt these amendments, we instead are issuing guidance on the operation of 
existing Rule 13d-5(b) and sections 13(d)(3) and 13(g)(3) that clarifies and affirms that, among 
other matters, two or more persons who “act as” a group for purposes of acquiring, holding, or 
disposing securities may be treated as a group.  
In addition to the foregoing, we are adopting certain amendments to Rule 13d-5 that the 
Commission included in the Proposing Release. Specifically, we are:  
• Adding new paragraph (b)(1)(ii) to specify that a group subject to reporting 
obligations under section 13(d) shall be deemed to acquire any additional equity 
securities acquired by a member of the group after the group’s formation; 

117 
• Adding new paragraph (b)(1)(iii) to carve out from paragraph (b)(1)(ii) any intra-
group transfers of equity securities; 
• Adding new paragraph (b)(2)(i) to specify that a group regulated under section 13(g) 
shall be deemed to acquire any additional equity securities acquired by a member of 
the group after the group’s formation; 
• Adding new paragraph (b)(2)(ii) to carve out from paragraph (b)(2)(i) any intra-group 
transfers of equity securities; 
• Redesignating current Rule 13d-5(b)(1) as Rule 13d-5(b)(1)(i) to accommodate the 
inclusion of these amendments, but otherwise not altering the substance of that rule; 
and 
• Making other technical changes to Rule 13d-5.
480
 
Those amendments, as well as our guidance, are discussed in more detail below. 
1. Proposed Rule 13d-5(b)(1)(i), (b)(2)(i), and (b)(1)(ii)  
a. Proposed Amendments 
 In the Proposing Release, the Commission proposed to amend Rule 13d-5 to track the 
statutory text of sections 13(d)(3) and (g)(3) and specify that two or more persons who “act as” a 
group for purposes of acquiring, holding, or disposing of securities are treated as a group.
481
 
Specifically, the Commission proposed to redesignate Rule 13d-5(b)(1) as Rule 13d-5(b)(1)(i) 
and revise it to, among other things, remove the reference to an agreement between two or more 
persons and instead indicate that when two or more persons act as a group under section 
13(d)(3), the group will be deemed to have acquired beneficial ownership of all of the equity 
 
480
  See supra note 22.  
481
  Proposing Release at 13868-69. 

118 
securities of a covered class beneficially owned by each of the group’s members as of the date on 
which the group is formed. The Commission also proposed new Rule 13d-5(b)(2)(i), which 
would contain nearly identical language to proposed Rule 13d-5(b)(1)(i), with conforming 
changes to address circumstances in which two or more persons act as a group under section 
13(g)(3) and the group is deemed to become the beneficial owner of all of the equity securities of 
a covered class beneficially owned by each of the group’s members as of the date on which the 
group is formed. 
The Commission proposed these amendments, among other things, to (1) make clear that 
“the determination [under sections 13(d)(3) and 13(g)(3)] as to whether two or more persons are 
acting as a group does not depend solely on the presence of an express agreement and that, 
depending on the particular facts and circumstances, concerted actions by two or more persons 
for the purpose of acquiring, holding or disposing of securities of an issuer are sufficient to 
constitute the formation of a group,” and (2) eliminate any potential for Rule 13d-5(b)(1) to be 
misconstrued as the definition of a group and consequently used as a basis to narrow the 
application of sections 13(d)(3) and 13(g)(3).
482
  
In addition, the Commission proposed to amend Rule 13d-5 to include new paragraph 
(b)(1)(ii). The proposed paragraph would provide that a person who shares information about an 
upcoming Schedule 13D filing such person is or will be required to make with respect to a 
covered class, to the extent this information is not yet public and was communicated with the 
purpose of causing others to make purchases of securities of the same covered class, and a 
person who subsequently purchases securities of that class based on this information, will have 
formed a group within the meaning of section 13(d)(3).  
 
482
  Id.  

119 
b.   Comments Received 
Commenters expressed a wide range of views on proposed Rule 13d-5(b)(1)(i) and 
(b)(2)(i).
483
 A number of commenters supported the amendments.
484
 One supporting commenter 
expressed the view that the proposed amendments would ensure that the terms of sections 13(d) 
and (g) will be applied as originally intended.
485
 Another commenter observed that the proposed 
amendments appear designed to simply adhere to the underlying statutory language in the 
Exchange Act.
486
 One commenter stated that it supported the proposed amendments and 
observed that, under the proposed amendments, compliance with the group formation rules 
would not depend on whether an express or implied agreement exists among the parties that are 
acting together.
487
 One commenter asserted that the proposed amendments “could prevent 
sophisticated investors from skirting reporting requirements when coordinating accumulations of 
significant stakes” which could “help[] ensure retail investors have fair insight.”
488
 
Several commenters expressed views rejecting criticism that the proposed amendments 
would interfere with shareholder activism or collaboration.
489
 One of these commenters 
disagreed with the contention by other commenters that such amendments would prevent the 
build-up of ownership stakes and chill shareholder communications.
490
 Another commenter 
 
483
  Although commenters generally focused on proposed Rule 13d-5(b)(1)(i) and did not explicitly address 
proposed Rule 13d-5(b)(2)(i), given the substantial similarity of those proposed rules, we treat comments 
on proposed Rule 13d-5(b)(1)(i) as also applying to proposed Rule 13d-5(b)(2)(i) unless the comment letter 
stated otherwise.  
484
  See letters from AFREF; AFREF, et al.; BRT; Freeport-McMoRan; Labor Unions; Nasdaq; NIRI; P. 
Worts; Perkins Coie; R. Rutkowski; SCG; Sen. Baldwin, et al.; T. Reilly; WLRK I; WLRK II. 
485
  See letter from NIRI. 
486
  See letter from WLRK II. 
487
  See letter from SCG. 
488
  See letter from P. Worts. 
489
  See letters from AFL-CIO; Sen. Baldwin, et al.; WLRK II. 
490
  See letter from Sen. Baldwin, et al.  

120 
disagreed with concerns that the proposal “would put mainstream institutional investors at risk of 
being deemed part of a group simply because they take a meeting with an activist or management 
and indicate that they may be inclined to vote in favor of their proposed course of action.”
491
 
This commenter further stated that it did not view the proposal as propounding a definition of 
“group” that would consider a “regular passive institutional investor” as a member of a group 
with an activist simply because it met with an activist, heard its proposed plans, and signaled it 
would likely use its voting power to support the activist’s proposed campaign.
492
 One commenter 
stated a similar view, asserting that nothing in the proposal would limit the ability of investors to 
engage with company management.
493
 
In addition, although the IAC did not make a recommendation with respect to the 
proposed amendments to Rule 13d-5 “because of a lack of consensus on the effects of the 
proposed definition of a ‘group’ and how that would impact shareholder communication,” the 
IAC stated that it “agree[d] with the SEC’s description of existing case-law regarding the 
definition of ‘group’” and “would support the inclusion of such description in any final 
rulemaking regarding Schedule 13D reporting to highlight to market participants the scope of 
such case law when considering the applicability of the ‘group’ rules.”
494
  
Numerous commenters opposed the proposed amendments, largely because, in their 
view, the proposed amendments would eliminate a requirement that there be some form of 
 
491
  See letter from WLRK II. 
492
  See id. 
493
  See letter from Sen. Baldwin, et al. 
494
  See IAC Recommendations. 

121 
“agreement” among members of a group.
495
 Some opposing commenters expressed the view that 
the proposal—particularly the removal of some form of an “agreement”—would exceed the 
Commission’s authority under the Exchange Act or raise concerns under the APA or the U.S. 
Constitution.
496
 One commenter asserted that eliminating the “agreement” requirement in 
determining whether a group has been formed would contravene the plain meaning of the 
statutory text, disregard the legislative history, and depart from “long-established” judicial 
precedent.
497
 The same commenter asserted that the initial adoption of Rule 13d-5, with what the 
commenter described as its express requirement for an agreement to exist in order to establish 
group status, simply reflected the Commission’s affirmation of established judicial precedent, 
not an unwarranted departure from the statutory language.
498
 A number of commenters 
expressed similar points of view, and, among other things, used canons of construction or 
statutory analysis to assert that persons can only “act as” a group under section 13(d)(3) if an 
agreement exists among the group members.
499
 Another commenter suggested the absence of the 
term “agreement” from section 13(d)(3) did not restrict the Commission’s capacity to use the 
 
495
  See letters from Andrew L. Stern, SEIU (Apr. 11, 2022) (“A. Stern”); ABA; AIMA; Steven M. Rothstein, 
Managing Director, Ceres Accelerator for Sustainable Capital Markets, Ceres, Inc. (Apr. 11, 2022) 
(“Ceres”); CIRCA I; CIRCA III; Dodge & Cox; EIM I; HMA II; IAA; ICI I; ICM; MFA; Neuberger 
Berman Group LLC (Apr. 11, 2022) (“NBG”); O’Melveny & Myers; Benjamin Edwards, Associate 
Professor of Law, University of Nevada, Las Vegas, William S. Boyd School of Law, Sarah C. Haan, 
Professor of Law and Cary Martin Shelby, Professor of Law, Washington and Lee University School of 
Law, Geeyoung Min, Assistant Professor of Law, Michigan State University College of Law, Faith 
Stevelman, Professor of Law, New York Law School (Apr. 12, 2022) (“Prof. Edwards, et al.”); Prof. 
Gordon; David H. Webber, Professor of Law and Paul M. Siskind Scholar, Boston University School of 
Law (Apr. 11, 2022) (“Prof. Webber”); Profs. Bishop and Partnoy I; Profs. Bishop and Partnoy II; Profs. 
Bishop and Partnoy III; Halit Coussin, Chief Legal Officer & Chief Compliance Officer, Pershing Square 
Capital Management, L.P. (Apr. 11, 2022) (“PSCM”); Rice Management; SIFMA; SIFMA AMG; SIFMA 
& SIFMA AMG; SSC; STB; TRP.  
496
  See letters from CIRCA I; EIM I; ICI I; MFA; Prof. Edwards, et al.; PSCM; SIFMA. 
497
  See letter from EIM I.  
498
  See id. 
499
  See letters from CIRCA I; EIM I, MFA; SIFMA; SIFMA AMG. 

122 
term “agree” in Rule 13d-5(b) because administrative rulemakings commonly include language 
not present in a statute in order to implement congressional intent.
500
 
Some opposing commenters expressed concern that the proposed amendments would 
introduce a standard that was overly broad and that could chill or eliminate shareholder 
communications with other shareholders, issuers’ management and/or other parties.
501
 One 
commenter expressed the view that the proposal could deter investors from engaging in “socially 
valuable activism” and noted that to the extent that the proposed rules resulted in restraints on 
shareholder communications, that may lead to claims that the proposed rules burden investors’ 
First Amendment rights.
502
 The commenter also stated that the Commission “should take care to 
minimize any burdens on investors’ expression.”
503
 Other commenters anticipated that under the 
proposed amendments, ordinary course business transactions or conversations, without more, 
could result in a finding of group formation.
504
 One commenter raised the concern that the 
proposed rule would produce disruptive collateral consequences, including in relation to 
ownership reporting under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 Act as it 
is uncertain whether being deemed a member of a group would deprive an investor of relying on 
the “passive investor” exemption from the antitrust notification requirements under that 
statute.
505
 A number of commenters also asserted that the proposed amendments would prompt 
 
500
  See letter from PSCM. 
501
  See letters from A. Stern; ABA; Ceres; CIRCA I; Dodge & Cox; EIM I; IAA; MFA; NBG; Prof. Edwards, 
et al.; Prof. Gordon; Prof. Webber; Profs. Bishop and Partnoy II; Rice Management; SIFMA; STB; TRP; 
see also letter from MFA & NAPFM. 
502
  See letter from Prof. Edwards, et al. 
503
  Id.  
504
  See letters from HMA II; IAA; MFA; Perkins Coie; Prof. Gordon; Profs. Bishop and Partnoy I; SIFMA; 
SIFMA AMG; SSC; TRP. 
505
  See letter from PSCM. 

123 
litigation over whether communications between parties resulted in group formation.
506
 Some 
commenters expressed the view that the resulting increase in uncertainty that would be caused by 
the proposed amendments also would result in additional legal exposure under Exchange Act 
section 16 for persons alleged to have formed a group.
507
 
Opposing commenters also criticized the proposed amendments as inconsistent with 
those Federal court opinions that have addressed the standard for group formation.
508
 One 
commenter asserted that courts have recognized an “agreement” as being a necessary element of 
group formation based on the need for a “workable compromise” between the regulatory 
objective of having a statute’s policies implemented, on one hand, and the market’s need for 
clear rules, on the other hand.
509
 Another commenter expressed concern that the proposed 
amendments would, in its view, dispense “with more than 40 years of practice and court 
decisions” and replace them “ with a vague, circular rule . . . impossibly burdensome to market 
participants.”
510
 One commenter noted that Federal courts “have consistently held that the 
existence of an agreement is necessary to establish the existence of a ‘group’ under Section 
13(d).”
511
 Other commenters expressed the view that the existing standards in Rule 13d-5(b) 
have worked well for decades or are not in need of reform.
512
 Notwithstanding these and other 
 
506
  See letters from ABA; Dodge & Cox; EIM I; Prof. Edwards, et al.; Prof. Gordon; PSCM; Rice 
Management; SIFMA. 
507
  See letters from ABA; EIM I; SIFMA; see also letter from MFA & NAPFM. 
508
  See letters from AIMA; CIRCA I; EIM I; ICI I; MFA; PSCM; SIFMA; SIFMA AMG.  
509
  See letter from SIFMA. 
510
  See letter from SIFMA AMG. 
511
  See letter from EIM I (“Until now, courts have sensibly required and the markets have understood that 
there must be an agreement (whether implicit or explicit) between shareholders before they could be legally 
found to be a group and subject to the consequences of such a finding.”). 
512
  See letters from AIMA; EIM I; ICI I; Profs. Bishop and Partnoy II; PSCM; SSC; STB.  

124 
similar criticisms,
513
 we note that multiple opposing commenters recognized that, even today, the 
determination of whether or not a group exists is ultimately dependent upon the facts and 
circumstances.
514
 
A number of commenters offered suggestions on how the Commission should proceed 
with respect to the proposed amendments.
515
 Some commenters expressed the view that the 
Commission should set forth more specific parameters of what joint conduct or communications 
may result in group formation.
516
 A few commenters offered alternative language to be used in 
any revision the Commission may ultimately adopt.
517
 One commenter encouraged the 
Commission to consider exempting QIIs from any new “group formation” provisions so long as 
QIIs act consistently with the requirements of Rule 13d-1(b).
518
 One commenter suggested that 
the Commission adopt the equivalent of an exemption from section 16 for any groups formed 
pursuant to the proposed amendments.
519
 Another commenter suggested that the proposed 
amendments should not be adopted unless a safe harbor is created for securities dealing 
activities.
520
 One commenter recommended no change to the proposal but expressed the view 
 
513
  See letters from AIMA; CIRCA I; ICI I; MFA; PSCM. 
514
  See letters from EIM I; ICI I; Profs. Bishop and Partnoy I; PSCM; SIFMA; STB. 
515
  See letters from ABA; AFREF; AIMA; HMA II; IAA; ICI I; Labor Unions; MFA; Perkins Coie; Profs. 
Bishop and Partnoy II (expressing the view that it would be sufficient for the Commission to issue guidance 
instead of adopting a rule change and recommending that the Commission take the position that it “intends 
to enforce the ‘group’ definition as it stands”); SIFMA; SSC; STB; TRP. 
516
  See letters from ABA; HMA II; IAA; Perkins Coie; TRP. 
517
  See letters from ABA; MFA. 
518
  See letter from ABA. 
519
  See letter from SIFMA. One commenter, which generally supported the proposal, similarly recommended 
that the Commission address concerns that the proposal could result in a “regular passive institutional 
investor” becoming a member of a group with an activist simply because it met with the activist, heard its 
proposed plans, and signaled that it would likely use its voting power to support the activist’s proposed 
campaign. See letter from WLRK II. 
520
  See letter from SIFMA. 

125 
that the proposed rules would not interfere with shareholder rights to engage in, among other 
things, shareholder activism on ESG issues, collaboration on shareholder proposals under 17 
CFR 240.14a-8 (“Rule 14a-8”), and “vote no” initiatives and any concerns regarding the filing 
obligations of such investor groups could be clarified by the Commission in an explanatory 
statement issued with any final rule.
521
 Another commenter stated the Commission should 
consider whether the public dissemination of information on message boards or through media 
interviews, and, by extension, social media platforms, could result in group formation.
522
  
 A number of commenters recommended no change be made to current Rule 13d-
5(b)(1),
523
 which, according to some of these commenters, would result in retention of the 
“agreement” standard. One commenter made reference to existing Rule 13d-5(b) and advocated 
for the Commission to retain what it referred to as the “current ‘group’ definition,” including the 
requirement that there be an agreement to act as a group, because the current provision does not: 
(1) chill shareholder engagement; (2) create the challenge to determine whether a group has been 
formed or if an exemption applies; or ( 3) make activist campaigns more difficult to pursue.
524
 
Commenters also expressed differing views on proposed Rule 13d-5(b)(1)(ii). Some 
commenters expressly supported the proposal.
525
 One commenter stated that because information 
about a planned Schedule 13D filing is clearly material to investors, it makes sense to deem 
 
521
  See letter from Labor Unions. 
522
  See letter from STB. 
523
  See letters from AIMA; ICI I; SIFMA; SSC. 
524
  See letter from AIMA. 
525
  See letters from Perkins Coie; R. Rutkowski; Reilly Steel, Ph.D. Candidate, Department of Politics, 
Princeton University, and Zohar Goshen, Jerome L. Greene Professor of Transactional Law, Columbia Law 
School (May 22, 2023) (“R. Steel and Prof. Goshen”) (supporting the proposal conditionally, if Congress 
does not take the action that the commenter recommended as the primary course of action and if the 
Commission actively enforces the proposed rule and seeks expansive remedies); SCG. 

126 
tippers and tippees to be acting as a group even without an explicit agreement.
526
 Another 
commenter, while expressing the view that modifications should be made to the Commission’s 
overall proposed amendments relating to group formation, stated that the “definition of who 
should constitute a ‘group’ under the proposal . . . should only apply to the sharing of material 
nonpublic information related to not yet disclosed large positions instead of efforts to improve 
the long-term corporate governance of companies.”
527
 
Other commenters opposed the proposal.
528
 One commenter analyzed the proposed rule 
text and observed that linking “indirectly discloses” to the “with the purpose of causing” clause 
appears intended to establish a presumption, for all practical purposes, that an acquisition by 
“such other person” was “based on such information.”
529
 Another commenter similarly 
expressed the view that such a rule would be unfair given that an adviser may also have 
independently determined to acquire or even continue to hold the same securities and disclosure 
of the imminent Schedule 13D may have been outside of the adviser’s control and without his or 
her input or expression of approval.
530
 Another commenter similarly asserted that the proposed 
rule would place those who receive information from a blockholder at risk of inadvertently 
 
526
  See letter from SCG. 
527
  See letter from R. Rutkowski. 
528
  See letters from Dodge & Cox; EIM I; HMA I (stating its belief that “straightforward application of 
existing law” is sufficient); IAA; PSCM (citing proposed Rule 13d-5(b)(1)(iii) but apparently referring to 
proposed Rule 13d-5(b)(1)(ii)); SIFMA; SIFMA AMG.  
529
  See letter from SIFMA AMG (adding that this apparent presumption would be unfair, inappropriate, and 
poorly tailored, and citing to the example of a client acquiring shares from a dealer who also coincidentally 
acquires shares). 
530
  See letter from IAA (observing that that adoption of any such rule would be unfair absent some intent to 
form a group because certain parties could be restricted from buying shares just because a third party told 
an adviser that it was going to file a Schedule 13D). 

127 
becoming subject to group reporting obligations in circumstances that were “never intended to be 
covered by Section 13.”
531
 
Some commenters provided recommendations to revise the proposal.
532
 One commenter 
suggested the Commission alternatively “impose a prohibition on tipping by an activist as soon 
as it reaches the 5 percent disclosure threshold until it files a Schedule 13D.”
533
 One commenter 
recommended that the Commission address concerns that the proposal could result in a passive 
institutional investor becoming a member of a group with an activist simply because it met with 
the activist, heard its proposed plans, and signaled that it would likely use its voting power to 
support the activist’s proposed campaign by revising proposed Rule 13d-5(b)(1)(ii) to include its 
suggested alternative text.
534
 One commenter, who neither clearly supported nor opposed the 
proposal, stated that it would be “deeply troubled if the Commission were to invent a new, 
extremely difficult to establish element to insider trading law, such as a requirement that the 
recipient of the tip have an intention of coordinating with the tipper or make its purchases in 
reliance on the non-public information that the tipper provided.”
535
 A commenter objected to the 
concept of “indirect” disclosure within proposed Rule 13d-5(b)(1)(ii) on grounds that the term 
“indirect” is “intrinsically ill-defined” and could create a presumption that certain transactions in 
the ordinary course of a market-making business were executed “based on such [indirect] 
 
531
  See letter from PSCM. 
532
  See letters from AIMA; IAA; Prof. Gordon; SIFMA; SIFMA AMG; STB. 
533
  See letter from Prof. Gordon; see also letter from R. Steel and Prof. Goshen. 
534
  See letter from WLRK II. Another commenter, which objected to the proposed amendments to Rule 13d-5 
in the Proposing Release, specifically responded to that commenter’s recommended alternative, intimating 
that the Commission should not adopt this suggested change for a variety of reasons. See letter from Profs. 
Bishop and Partnoy II. 
535
  See letter from HMA I. 

128 
information.”
536
 Another commenter similarly suggested that the rule, if adopted, should only 
apply to situations where an express or implied intent by parties exists to form a group.
537
 
Commenters also expressed observations concerning the collateral consequences to an 
investor that received information about an impending Schedule 13D filing. One commenter 
implicitly asked the Commission to consider that once the tippee has the information, “[t]his 
quasi-lock-up period not only discourages other shareholders from meeting with the activist but 
also, effectively, removes the liquidity these other shareholders may provide to the market in that 
issuer.”
538
 Another commenter suggested the rule should clarify for how long a recipient of 
information that a Schedule 13D filing would be forthcoming must remain “frozen” from making 
further purchases, particularly if such filing does not get filed in the near term.
539
 
c. Commission Guidance 
As noted above, we are not adopting proposed Rule 13d-5(b)(1)(i) and ( ii) and (b)(2)(i). 
The Commission’s stated objectives were to (1) align the text of Rule 13d-5(b) with the statutory 
provisions that it serves to implement while clarifying and affirming its application and operation 
and (2) provide clarity on whether a group is formed if a person shares information about an 
upcoming Schedule 13D filing that the person is or will be required to make.
540
 T he proposed 
amendments were not intended to change how the Commission views what is meant by “act as a 
group” for purposes of sections 13(d)(3) and 13(g)(3). They were intended to codify through a 
rule amendment our views that “the determination of whether two or more persons are acting as 
 
536
  See letter from SIFMA.  
537
  See letter from IAA. 
538
  See letter from AIMA. 
539
  See letter from STB. 
540
  See Proposing Release at 13869. 

129 
a group does not depend solely on the presence of an express agreement and that, depending on 
the particular facts and circumstances, concerted actions by two or more persons for the purpose 
of acquiring, holding or disposing of securities of an issuer are sufficient to constitute the 
formation of a group.”
541
 Several commenters generally shared our view that the formation of a 
group does not depend on the presence of an express agreement.
542
 However, some commenters 
raised objections to the proposal based on their view that the amendments could result in a group 
being formed for purposes of sections 13(d)(3) and 13(g)(3) absent some evidence of agreement, 
arrangement, understanding, or concerted action. That was not the Commission’s intent. Upon 
consideration of the comments received, we believe that the better approach is not to adopt the 
proposed amendment to Rule 13d-5 but instead to provide guidance as to the application of the 
existing legal standard established in sections 13(d)(3) and 13(g)(3) with respect to the formation 
of a group.
543
 
i. Background of the Regulatory Framework 
Sections 13(d)(3) and 13(g)(3) are identical, and each of these provisions provides that 
“[w]hen two or more persons act as a . . . group for the purpose of acquiring, holding, or 
 
541
  Id. at 13868-69. 
542
  See, e.g., letters from EIM I (“[A]n agreement can be constituted informally, and without a writing. The 
Commission, in adopting Rule 13d-5 in 1977, selected the word ‘agreement’ rather than ‘contract’ for a 
reason—an agreement is a less formal arrangement, which is consistent with the requirement of Section 
13(d)(3) that the persons ‘act together.’”); PSCM (“Courts, whether looking to the existence of an 
agreement out of an interpretation that Rule 13d-5(b) requires it, or as an administrable evidentiary 
standard for establishing action in concert, have interpreted the term ‘agreement’ broadly to include 
informal and unwritten arrangements, and have relied on circumstantial evidence in order to establish that 
some manner of agreement existed.”); SIFMA (“[T]he existence of a group surely does not depend on the 
intent of the members to create and wear the label of a ‘Section 13(d) group.’ It does, however, depend on 
an intent to take the coordinated actions that will create that relationship.”). Cf., letter from ABA 
(explaining that an agreement need not be “written” or “formal” and acknowledging that Rule 13d-5(b) 
could be modified to add “arrangement or understanding” to address any concern that the term “agreement” 
has been misconstrued in the context of Rule 13d-5(b)).    
543
  In addition to the guidance set forth in this section, we provide additional guidance in section II.D.3 in 
connection with the discussion regarding our final disposition of the proposed exemptions under Rule 13d-
6.   

130 
disposing of securities of an issuer, such . . . group shall be deemed a ‘person.’” As the 
Commission noted in the Proposing Release, Congress enacted these provisions based on two 
practical considerations.
544
 First, sections 13(d)(1) and 13(g)(1), by their terms, apply to, and 
impose filing obligations upon, a single “person.”
545
 Second, Congress recognized the need to 
protect against the evasion of disclosure requirements by persons who collectively sought to 
change or influence control of an issuer yet who each acquired and held an amount of beneficial 
ownership at or just below the reporting threshold.
546
 
Congress sought to address this problem of coordinated circumvention by deeming two 
or more persons to be one person for purposes of sections 13(d) and 13(g). Based on the statutory 
treatment of two or more persons as if they were a single person when they “act as” a group for 
at least one of the three purposes specified in the statutory provisions (i.e., acquiring, holding, or 
disposing of securities of an issuer), the beneficial ownership collectively held by the group 
members is imputed to the group. If the aggregate amount of beneficial ownership exceeds five 
percent of a covered class, the group may be required to file a beneficial ownership report. The 
determination of which statutory provision (i.e., s  ection 13(d)(3) or 13(g)(3)) applies to a group 
depends on whether a non-exempt acquisition of beneficial ownership has been made that can be 
imputed to the group and, when on its own or added to any other beneficial ownership held by 
 
544
  See Proposing Release at 13865. 
545
  Because sections 13(d)(3) and 13(g)(3) “deem” a group to be a single “person,” the correct articulation of 
how the statutory framework applies in this context is to a “person, including any group” and not a “person 
or group.” Thus, under sections 13(d) and 13(g) and Regulation 13D-G, groups are regulated no differently 
from natural persons or companies described in the definition of “person” under section 3(a)(9) of the 
Exchange Act.  
546
  Section 13(d)(3) was enacted to prevent “easy avoidance of section 13(d)’s disclosure requirements by a 
group of investors acting together in their acquisition or holding of securities.” S. Rep. No. 550, at 8 
(1967); H.R. No. 1711, at 8-9 (1968); see also 113 C
ONG. REC. Bill S. 510 (Jan. 18, 1967) (noting that the 
specific provision applicable to groups was added to “close the loophole that now exists which allows a 
syndicate, where no member owns more than 10 percent, to escape the reporting requirements of the 
Securities Exchange Act”). 

131 
the group, results in the group’s beneficial ownership exceeding five percent of the covered 
class. If such an acquisition occurs, the group is subject to regulation under section 13(d).
547
 If 
no such acquisition attributable to the group has occurred, but the collective amount of beneficial 
ownership held by the group members exceeds five percent of a covered class at the end of a 
calendar year under current rules
548
 (or at the end of a calendar quarter based on the amendments 
to Rule 13d-1 we are adopting in this release), the group is subject to section 13(g).  
ii.   Guidance 
Neither the statute nor our rules provide a definition of a “group.” The appropriate legal 
standard for determining whether a group is formed is found in sections 13(d)(3) and 13(g)(3). 
While some may view the language of Rule 13d-5(b) as providing a definition of “group,” we 
reiterate that neither the current rule nor its predecessor
549
 was designed or adopted by the 
Commission to serve as a substitute for the legal standard expressly stated in sections 13(d)(3) 
and 13(g)(3) for determining when two or more persons form a group.
550
  
Whether two or more persons have formed a group as contemplated by sections 13(d)(3) 
and 13(g)(3) depends on a determination of whether they acted together for the purpose of 
 
547
  The operative term “after acquiring” in section 13(d)(1) makes the application of section 13(d) contingent 
upon the existence of an acquisition. Determining that an acquisition has occurred—in particular, an 
acquisition that is neither exempt nor otherwise not recognized under section 13(d)(1)—is thus necessary to 
establish the application of section 13(d).  
548
  See 17 CFR 240.13d-1. 
549
  The predecessor rule, Rule 13d-6, was redesignated Rule 13d-5 in 1978. See Filing and Disclosure Release. 
Unless otherwise noted, references to Rule 13d-5 in this section of the release also refer to the predecessor 
Rule 13d-6.   
550
  When proposing Rule 13d-5(b), the Commission did not present the rule as a proposed definition of 
“group,” solicit comment on the sufficiency or any limitations of any such definition, or use any reference 
to the term “group” in the proposed rule text. See Disclosure of Corporate Ownership, Release No. 34-
11616 (Aug. 25, 1975) [40 FR 42212 (Sept. 11, 1975)]. Instead, the Commission explained that it was 
proposing to define the term “acquisition” to address certain technical issues with respect to section 13(d) 
and the determination of the due date for a Schedule 13D. 

132 
“acquiring,” “holding,” or “disposing of” securities of an issuer.
551
 Such persons could be 
viewed as acting together if they are taking concerted actions in furtherance of any of these 
purposes.
552
 The determination depends on an analysis of all the relevant facts and circumstances 
and not solely on the presence or absence of an express agreement, as two or more persons may 
take concerted action or agree informally.
553
 This approach is consistent with the statutory 
language of sections 13(d)(3) and 13(g)(3) and with the purpose of these statutory provisions.
554
 
It also is  consistent with views previously expressed by courts and the Commission, which have 
determined that groups were established by activities that fell short of an   express agreement.
555
 
Indeed, the Commission recognizes that for a finder of fact, including the Commission itself, to 
 
551
  The Commission, in adopting Rule 13d-5(b)(1), indicated that it viewed the term “holding” as subsuming 
the term “voting,” but nevertheless expressly referenced the term “voting” in the rule for the avoidance of 
doubt. See Proposing Release at 13869 n.135 (citing Filing and Disclosure Release at 18492). 
552
  See, e.g., SEC v. Levy, 706 F. Supp. 61, 69 (D.D.C. 1989) (“In order to find that a ‘group’ exists under 
Section 13(d)(3), a court must find that two or more people have formed a combination in support of a 
common objective.”); In the Matter of John A. Carley, Release No. 34-50695 (Nov. 18, 2004) (“A group 
need not be formally organized, nor memorialize its intentions in writing . . . . All that is required is that its 
members combine in furtherance of a common objective.”); In the Matter of John Joslyn, Joseph Marsh, P. 
David Lucas, Steven Sybesma, Stanley Thomas and Jon Thompson, Release No. 34-50588 (Oct. 26, 2004). 
553
  Proposing Release at 13868. 
554
  Both the House and Senate Reports accompanying the bill reflect an effort to prevent circumvention of the 
reporting threshold in this situation with the inclusion of a provision “that would prevent a group of persons 
who seek to pool their voting or other interests from evading the . . . statute because no one individual owns 
more than [five] percent.” See Disclosure of Corporate Equity Ownership, H.R. Rep. No. 1711, at 9 (1968) 
and Full Disclosure of Corporate Equity Ownership and in Corporate Takeover Bid, S. 510, Report of the 
S. Comm. On Banking and Currency, 90th Cong. 1, 8 (1967). As such, the reports noted that section 
13(d)(3) “is designed to obtain full disclosure of the identity of any person or group obtaining the benefits 
of ownership [b]y reason of any contract, understanding, relationship, agreement or other arrangement” 
(emphasis added). S. Rep. No. 550, at 8 (1967); H.R. Rep. No. 1711, at. 8-9 (1968), as reprinted in 1968 
U.S.C.C.A.N.
 2811, 2818. Id. 
555
  Group activity may be demonstrated by circumstantial evidence. See Proposing Release at 13868, n. 132 
(citing SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1162 (D.C. Cir. 1978) and noting as indicia of group 
formation: (1) the presence of a common plan or goal, Fin. Gen. Bankshares, Inc. v. Lance, 1978 WL 1082, 
at *9 (D.D.C. 1978); (2) “considerable dissatisfaction” with certain officers and a “desire to reduce” those 
officers’ role in company management, Id. at *10; (3) strategy meetings with, among others, attorneys, SEC 
v. Levy, 706 F. Supp. 61, 70 (D.D.C. 1989); (4) a pattern of coordinated stock purchases, Hallwood Realty 
Partners, LP v. Gotham Partners, LP, 286 F.3d 613, 618 (2d Cir. 2002); (5) the solicitation of others to 
join the group, Wellman v.    Dickinson, 682 F.2d 355 363-364 (2d Cir. 1979), cert. denied sub. nom. 
Dickinson v. SEC, 460 U.S. 1069 (1983); or (6) the existence of communications between and among 
group members. Gen. Aircraft Corp. v. Lampert, 556 F.2d 90,
 
95
 (
1st Cir. 1977)); see also supra note 482. 

133 
determine that a group has been formed under section 13(d)(3) or 13(g)(3), the evidence must 
show, at a minimum, indicia, such as an informal arrangement or coordination in furtherance, of 
a common purpose to acquire, hold, or dispose of securities of an issuer.  If two or more persons 
took similar actions, that fact is not conclusive in and of itself that a group has been formed.
556
 
We therefore disagree with the comments raising constitutional concerns, as well as the 
comments concerning the scope of our authority under the Exchange Act and the APA. We note, 
however, that those comments were directed at the proposed amendment to Rule 13d-5 and the 
belief that the contemplated rule change meant the Commission was taking a position that a 
group could be formed without some type of an agreement, arrangement, understanding, or 
concerted action. As explained above, this is not the Commission’s view, and we are not 
adopting the proposed amendment to Rule 13d-5. Further, the commenters’ concerns are not 
implicated by the guidance we provide here. 
Relatedly, we recognize the concern expressed by some commenters that the 
Commission’s proposal to amend Rule 13d-5 could chill shareholder engagement, with, some 
commenters asserted, shareholders unable to communicate freely with each other or with the 
issuer’s management without forming a group. In response to some of the concerns raised by 
commenters, we provide guidance below on the application of the current legal standard found in 
section 13(d)(3) and 13(g)(3) to certain common types of shareholder engagement activities.
557
  
Question: Is a group formed when two or more shareholders communicate with each other 
regarding an issuer or its securities ( including discussions that relate to improvement of the long-
 
556
  The Commission recognizes that inadvertent or coincidental contact would not be sufficient to satisfy the 
standard given the absence of volitional acts made in concert or in coordination with others.      
557
  Each illustration assumes that the rules adopted in this release are in effect and that the securities of the 
subject company are in a covered class.  

134 
term performance of the issuer, changes in issuer practices, submissions or solicitations in 
support of a non-binding shareholder proposal, a joint engagement strategy (that is not control-
related), or a “vote no” campaign against individual directors in uncontested elections) without 
taking any other actions?  
Response: No. In our view, a discussion whether held in private, such as a meeting between two 
parties, or in a public forum, such as a conference that involves an independent and free 
exchange of ideas and views among shareholders, alone and without more, would not be 
sufficient to satisfy the “act as a . . . group” standard in sections 13(d)(3) and 13(g)(3). Sections 
13(d)(3) and 13(g)(3) were intended to prevent circumvention of the disclosures required by 
Schedules 13D and 13G, not to complicate shareholders’ ability to independently and freely 
express their views and ideas to one another. The policy objectives ordinarily served by Schedule 
13D or Schedule 13G filings would not be advanced by requiring disclosure that reports this or 
similar types of shareholder communications. Thus, an exchange of views and any other type of 
dialogue in oral or written form not involving an intent to engage in concerted actions or other 
agreement with respect to the acquisition, holding, or disposition of securities, standing alone, 
would not constitute an “act” undertaken for the purpose of “holding” securities of the issuer 
under section 13(d)(3) or 13(g)(3).  
Question: Is a group formed when two or more shareholders engage in discussions with an 
issuer’s management, without taking any other actions? 
Response: No. For the same reasons described above, we do not believe that two or more 
shareholders “act as a . . . group” for the purpose of “holding” a covered class within the 
meaning of those terms as they appear in section 13(d)(3) or 13(g)(3) if they simply engage in a 
similar exchange of ideas and views, alone and without more, with an issuer’s management. 

135 
Question: Is a group formed when shareholders jointly make recommendations to an issuer 
regarding the structure and composition of the issuer’s board of directors where (1) no discussion 
of individual directors or board expansion occurs and (2) no commitments are made, or 
agreements or understandings are reached, among the shareholders regarding the potential 
withholding of their votes to approve, or voting against, management’s director candidates if the 
issuer does not take steps to implement the shareholders’ recommended actions? 
Response: No. Where recommendations are made in the context of a discussion that does not 
involve an attempt to convince the board to take specific actions through a change in the existing 
board membership or bind the board to take action, we do not believe that the shareholders “act 
as a . . . group” for the purpose of “holding” securities of the covered class within the meaning of 
those terms as they appear in sections 13(d)(3) or 13(g)(3). Rather, we view this engagement as 
the type of independent and free exchange of ideas between shareholders and issuers’ 
management that does not implicate the policy concerns addressed by section 13(d) or section 
13(g).  
Question: Is a group formed if shareholders jointly submit a non-binding shareholder proposal 
to an issuer pursuant to Exchange Act Rule 14a-8   for presentation at a meeting of shareholders? 
Response: No. The Rule 14a-8 shareholder proposal submission process is simply another 
means through which shareholders can express their views to an issuer’s management and board 
and other shareholders. For purposes of group formation, we do not believe shareholders 
engaging in a free and independent exchange of thoughts about a potential shareholder proposal, 
jointly submitting, or jointly presenting, a non-binding proposal to an issuer in accordance with 
Rule 14a-8 (or other means) should be treated differently from, for example, shareholders jointly 
meeting with an issuer’s management without other indicia of group formation. Accordingly, 

136 
where the proposal is non-binding, we do not believe that the shareholders “act as a . . . group” 
for the purpose of “holding” securities of the covered class within the meaning of those terms as 
they appear in section 13(d)(3) or 13(g)(3). Assuming that the joint conduct has been limited to 
the creation, submission, and/or presentation of a non-binding proposal,
558
 those statutory 
provisions would not result in the shareholders being treated as a group, and the shareholders’ 
beneficial ownership would not be aggregated for purposes of determining whether the five 
percent threshold under section 13(d)(1) or 13(g)(1) had been crossed.  
Question: Would a conversation, email, phone contact, or meetings between a shareholder and 
an activist investor that is seeking support for its proposals to an issuer’s board or management, 
without more, such as consenting or committing to a course of action,
559
 constitute such 
coordination as would result in the shareholder and activist being deemed to form a group? 
Response: No. Communications such as the types described, alone and without more, would not 
be sufficient to satisfy the “act as a . . . group” standard in sections 13(d)(3) and 13(g)(3) as they 
are merely the exchange of views among shareholders about the issuer. This view is consistent 
with the Commission’s previous statement that a shareholder who is a passive recipient of proxy 
soliciting activities, without more, would not be deemed a member of a group with persons 
conducting the solicitation.
560
 Activities that extend beyond these types of communications, 
 
558
  The conclusion reflected in this example assumes the Rule 14a-8 or other non-binding shareholder proposal 
is submitted jointly and without “springing conditions” such as an arrangement, understanding, or 
agreement among the shareholders to vote against director candidates nominated by the issuer’s 
management or other management proposals if the non-binding proposal is not included in the issuer’s 
proxy statement or, if passed, not acted upon favorably by the issuer’s board.  
559
  Examples of the type of consents or commitments given in furtherance of a common purpose to acquire, 
hold (inclusive of voting), or dispose of securities of an issuer could include the granting of irrevocable 
proxies or the execution of written consents or voting agreements that demonstrate that the parties had an 
arrangement to act in concert.  
560
  Amendments to Beneficial Ownership Reporting Requirements, Release No. 34-39538 (Jan. 12, 1998) [63 
FR 2854, 2858 (Jan. 16, 1998)]. 

137 
which include joint or coordinated publication of soliciting materials with an activist investor 
might, however, be indicative of group formation, depending upon the facts and circumstances. 
Question: Would an announcement or a communication by a shareholder of the shareholder’s 
intention to vote in favor of an unaffiliated activist investor’s director nominees, without more, 
constitute coordination sufficient to find that the shareholder and the activist investor formed a 
group? 
Response: No. We do not view a shareholder’s independently-determined act of exercising its 
voting rights, and any announcements or communications regarding its voting decision, without 
more, as indicia of group formation. This view is consistent with our general approach towards 
the exercise of the right of suffrage by a shareholder in other areas of the Federal securities 
laws.
561
 Shareholders, whether institutional or otherwise, are thus not engaging in conduct at risk 
of being deemed to give rise to group formation as a result of simply independently announcing 
or advising others—including the issuer—how they intend to vote and the reasons why.  
Question: If a beneficial owner of a substantial block of a covered class that is or will be 
required to file a Schedule 13D intentionally communicates to other market participants 
(including investors) that such a filing will be made ( to the extent this information is not yet 
public) with the purpose of causing such persons to make purchases in the same covered class, 
and one or more of the other market participants make purchases in the same covered class as a 
direct result of that communication, would the blockholder and any of those market participants 
that made purchases potentially become subject to regulation as a group? 
 
561
  For example, public announcement of a voting intention qualifies for the exclusion from the definition of 
solicitation under 17 CFR 240.14a-1(l)(2)(iv). 

138 
Response: Yes. To the extent the information was shared by the blockholder with the purpose of 
causing others to make purchases in the same covered class and the purchases were made as a 
direct result of the blockholder’s information, these activities raise the possibility that all of these 
beneficial owners are “act[ing] as” a “group for the purpose of acquiring” securities of the 
covered class within the meaning of section 13(d)(3). Such purchases may implicate the need for 
public disclosure underlying section 13(d)(3) and these purchases could potentially be deemed as 
having been undertaken by a “group” for the purpose of “acquiring” securities as specified under 
section 13(d)(3).
562
 G iven that a Schedule 13D filing may affect the market for and the price of 
an issuer’s securities, non-public information that a person will make a Schedule 13D filing in 
the near future can be material.
563
 By privately sharing this material information in advance of 
the public filing deadline, the blockholder may incentivize the market participants who received 
the information to acquire shares before the filing is made.
564
 S uch arrangements also raise 
investor protection concerns regarding perceived unfairness and trust in markets.
565
 The final 
 
562
  While each group member individually bears a reporting obligation arising under Rule 13d-1(k)(2), a tippee 
would not become a member of a group, and thus would not incur a reporting obligation, until it makes a 
purchase of securities of the same covered class in response to having been tipped even if the tippee already 
is a beneficial owner of that class. 
563
  See Alon Brav, Wei Jiang, Frank Partnoy, and Randall S. Thomas, Hedge Fund Activism, Corporate 
Governance and Firm Performance, 61 J.
 FIN. 1729 (2008) (finding on average an abnormal short-term 
return of 7% over the window before and after a Schedule 13D filing); Marco Brecht, Julian Franks, 
Jeremy Grant, and Hammes F. Wagner, The Returns to Hedge Fund Activism: An International Study, 
C
ENTER FOR ECONOMIC POLICY RESEARCH, Discussion Paper No. 10507 (Mar. 15, 2015). 
564
  See, e.g., Susan Pulliam, Juliet Chung, David Benoit, and Rob Barry, Activist Investors Often Leak Their 
Plans to a Favored Few, W
ALL ST. J. (Mar. 26, 2014), available at 
https://www.wsj.com/articles/SB10001424052702304888404579381250791474792 (“Activists, who push 
for broad changes at companies or try to move prices with their arguments, sometimes provide word of 
their campaigns to a favored few fellow investors days or weeks before they announce a big trade, which 
typically jolts the stock higher or lower.”). 
565
  For example, any near-term gains made by these other investors attributable to information about the 
impending filing may cause uninformed shareholders who sell at prices reflective of the status quo to 
question the efficacy of existing regulatory framework. Even though the demand to acquire shares in the 
 
 

139 
determination as to whether a group is formed between the blockholder and the other market 
participants will ultimately depend upon the facts and circumstances, including (1) whether the 
purpose of the blockholder’s communication with the other market participants was to cause 
them to purchase the securities and (2) whether the market participants’ purchases were made as 
a direct result of the information shared by the blockholder.   
2. Proposed Rule 13d-5(b)(1)(iii) and (b)(2)(ii) 
a. Proposed Amendments 
The Commission proposed to amend Rule 13d-5 to expressly impute acquisitions made 
by a group member after the date of group formation to the group once the collective beneficial 
ownership among group members exceeds five percent of a covered class.
566
 Specifically, 
proposed Rule 13d-5(b)(1)(iii) would provide that a group under section 13(d)(3) will be deemed 
to have acquired beneficial ownership of equity securities of a covered class if any member of 
the group becomes the beneficial owner of additional equity securities of such covered class after 
 
covered class may increase as a direct result of the blockholder’s communications, and in turn increase the 
prices at which selling shareholders exit, such prices may be discounted in comparison to the price such 
shareholders would have realized had the information about the impending Schedule 13D filing been 
public. See, e.g. John C. Coffee, Jr. & Darius Palia, The Wolf at the Door: The Impact of Hedge Fund 
Activism on Corporate Governance, 41 J. C
ORP. L. 545, 596 (2016) (explaining that “the gains that 
activists make in trading on asymmetric information—before the Schedule 13D’s filing—come at the 
expense of selling shareholders [and] represent[ ] another wealth transfer”). Consequently, this 
informational imbalance could, to the extent some perceive it to be unfair, diminish trust in markets. See, 
e.g., Georgy Chabakauri et al., Trading Ahead of Barbarians’ Arrival at the Gate: Insider Trading on Non-
Inside Information (Colum. Bus. Sch. Rsch. Paper, Jan. 2022), available at 
https://ssrn.com/abstract=4018057 (finding a significant concurrence between purchases of stock by 
insiders of the issuer and purchases by an activist in the 60 days, and particularly in the last 10 days, 
preceding a Schedule 13D filing). 
566
  As the Commission noted, groups may form at a time when a class of equity securities is not yet registered 
under section 12 or the aggregate beneficial ownership held by the membership in the group on the date of 
its formation is 5% or below of a covered class. See Proposing Release at 13870. Expressly capturing post-
formation acquisitions of beneficial ownership by group members therefore can become important for 
purposes of assessing whether a group intentionally tried to evade the reporting process, determining 
whether an amendment was due for a pre-existing Schedule 13D filing, and evaluating the availability of 
the section 13(d)(6)(B) exemption. See id. 

140 
the date of the group’s formation. Similarly, proposed Rule 13d-5(b)(2)(ii) would contain nearly 
identical language, with conforming changes to address circumstances in which a member of a 
group under section 13(g)(3) becomes the beneficial owner of additional equity securities of a 
covered class after the date of the group’s formation. The Commission noted that absent an 
express provision that would treat post-formation acquisitions of beneficial ownership by group 
members as acquisitions by the group, the Commission or other affected parties must prove the 
acquisition is attributable to the group.
567
  
b.   Comments Received 
The Commission did not receive any comments on proposed Rule 13d-5(b)(1)(iii) and 
(b)(2)(ii). 
c.   Final Amendments 
For the reasons set forth in the Proposing Release,
568
 we are adopting the text of Rule 
13d-5(b)(1)(iii) and (b)(2)(ii) substantially as proposed. We also are redesignating these 
provisions as Rule 13d-5(b)(1)(ii) and (b)(2)(i) and slightly modifying them to account for the 
possibility that group members may make acquisitions in furtherance of the group’s common 
purpose on the same day the group has been formed. Accordingly, the rule text will now attribute 
acquisitions by group members to the group at any time after the group has been formed rather 
than after the date on which the group has been formed. 
3. Proposed Rule 13d-5(b)(1)(iv) and (b)(2)(iii) 
a. Proposed Amendments 
 
567
  Proposing Release at 13870. 
568
  See id. 

141 
The Commission proposed amendments to Rule 13d-5 to carve out from the purview of 
proposed Rule 13d-5(b)(1)(iii) and (b)(2)(ii) intra-group transfers of equity securities of a 
covered class.
569
 Specifically, proposed Rule 13d-5(b)(1)(iv) would provide that a group under 
section 13(d)(3) will not be deemed to have acquired beneficial ownership in a covered class if a 
member of the group becomes the beneficial owner of additional equity securities in such 
covered class through a sale by, or transfer from, another member of the group. Proposed Rule 
13d-5(b)(2)(iii) would contain nearly identical language, with conforming changes to address 
circumstances in which a member of a group under section 13(g)(3) becomes the beneficial 
owner of additional equity securities in a covered class through a sale by, or transfer from, 
another member of the group. 
b.   Comments Received 
The Commission did not receive any comments on proposed Rule 13d-5(b)(1)(iv) and 
(b)(2)(iii).  
c.   Final Amendments 
For the reasons set forth in the Proposing Release, we are adopting the text of Rule 13d-
5(b)(1)(iv) and (b)(2)(iii) substantially as proposed, but redesignating these provisions as Rule 
13d-5(b)(1)(iii) and (b)(2)(ii). We also are slightly modifying the rule text to account for the 
possibility that group members may make intra-group transfers on the same day but after the 
time at which the group has been formed instead of “after the date of group formation.” 
D.  Proposed Amendments to Rule 13d-6 to Create Certain Exemptions 
Congress granted the Commission the authority to issue exemptions from the application 
of sections 13(d) and 13(g). The Commission can, under section 13(d)(6)(D), exempt 
 
569
  Id. at 13870-71. 

142 
acquisitions “as not entered into for the purpose of, and not having the effect of, changing or 
influencing the control of the issuer or otherwise as not comprehended within the purposes of 
[section 13(d)].”
570
 Congress similarly granted the Commission authority, under section 
13(g)(6), to exempt any person or class of persons from section 13(g) “as it deems necessary or 
appropriate in the public interest or for the protection of investors.”
571
 The Commission 
exercised this authority when it adopted Rule 13d-6, titled “Exemption of certain acquisitions.” 
Rule 13d-6 currently sets forth one exemption from section 13(d) for the acquisition of securities 
of an issuer by a person who, prior to such acquisition, was a beneficial owner of more than five 
percent of the securities of the same class as those acquired, provided certain conditions are 
met.
572
  
1. Proposed Amendments 
In the Proposing Release, the Commission proposed to exempt certain circumstances 
from resulting in a person being deemed to have acquired beneficial ownership of, or otherwise 
to beneficially own, equity securities of a covered class for purposes of sections 13(d) and 13(g). 
Specifically, the Commission proposed to amend Rule 13d-6 to: 
• Add new paragraph (c) to create an exemption from sections 13(d)(3) and 13(g)(3) for 
certain circumstances in which two or more persons take concerted actions with respect 
to an issuer or a covered class; and 
 
570
  15 U.S.C. 78(m)(d)(6). 
571
  15 U.S.C. 78(m)(g)(6). 
572
  17 CFR 240.13d-6. 

143 
• Add new paragraph (d) to create an exemption from sections 13(d)(3) and 13(g)(3) for 
certain circumstances in which two or more persons enter into an agreement setting forth 
the terms of a derivative security. 
The Commission proposed these amendments to Rule 13d-6 to exempt certain actions 
taken by two or more persons from the scope of sections 13(d)(3) and 13(g)(3) if those actions 
do not have the purpose or effect of changing or influencing the control of an issuer and thus are 
not within the purpose of section 13(d). 
In light of the proposed amendments to Rule 13d-5, the Commission proposed to add 
new paragraph (c) to Rule 13d-6 to avoid potentially chilling communications among 
shareholders or impeding shareholders’ engagement with issuers where those activities are 
undertaken without the purpose or effect of changing or influencing control of the issuer (and are 
not made in connection with or as a participant in any transaction having such purpose or 
effect).
573
 Proposed Rule 13d-6(c) would provide that two or more persons would not be deemed 
to have acquired beneficial ownership of, or otherwise beneficially own, an issuer’s equity 
securities as a group solely because of their concerted actions related to an issuer or its equity 
securities, including engagement with one another or the issuer, provided they meet certain 
conditions. The Commission noted that such interactions, depending upon the level of 
coordination and degree to which the persons advocated in furtherance of a common purpose 
specified within the statutory framework, could be found to satisfy the “act as” a group standard 
under section 13(d)(3) or 13(g)(3) for the purpose of “holding” a covered class.
574
 To help ensure 
that the exemption is available only where such persons independently determine to take 
 
573
  Proposing Release at 13872.  
574
  Id. at 13873. 

144 
concerted actions, the proposed exemption would be available only if such persons are not 
obligated to take such actions (e.g., pursuant to the terms of a cooperation agreement or joint 
voting agreement).
575
 
In addition, the Commission proposed to add new paragraph (d) to Rule 13d-6, in light of 
proposed new Rule 13d-3(e), to avoid impediments to certain financial institutions’ ability to 
conduct their business in the ordinary course.
576
 Proposed Rule 13d-6(d) would have provided 
that two or more persons would not be deemed to have formed a group under section 13(d)(3) or 
13(g)(3) solely by virtue of their entrance into an agreement governing the terms of a derivative 
security. This exemption would have been available if the agreement is a bona fide purchase and 
sale agreement entered into in the ordinary course of business. Further, the exemption would 
have been available only if such persons did not enter into the agreement with the purpose or 
effect of changing or influencing control of the issuer, or in connection with or as a participant in 
any transaction having such purpose or effect. 
2. Comments Received 
Some commenters supported proposed Rule 13d-6(c),
577
 while others generally supported 
the proposal’s intent but expressed some reservations regarding Rule 13d-6(c) as proposed.
578
 
Some of those commenters generally indicated that the exemption (as proposed or as modified in 
 
575
  Id. 
576
  Id. 
577
  See, e.g., letters from Anonymous (Mar. 13, 2022) (“Anonymous 10”); Kerrie Waring, Chief Executive 
Officer, ICGN (June 27, 2023) (“ICGN”); Kyle (Mar. 13, 2022) (“Kyle”); Perkins Coie. 
578
  See, e.g., letters from Ceres (generally supporting the proposal, but stating that the rule, as proposed, could 
create some ambiguity as to the circumstances under which a group is formed and suggesting changes to 
the proposal); Jeff Mahoney, General Counsel, Council of Institutional Investors (Apr. 8, 2022) (“CII”) 
(same); ICI I (supporting the intent of the proposal, but stating that the exemption, as proposed, would be 
too narrow and could create additional uncertainty regarding the circumstances under which a group is 
formed); Shareholder Rights Group, Interfaith Center on Corporate Responsibility and The Shareholder 
Commons (Apr. 11, 2022) (“Interfaith Center, et al.”) (endorsing the comments in the letter from Ceres). 

145 
accordance with their recommendations) could provide clarity that would help prevent the 
chilling of communications among shareholders and shareholder engagement with issuers.
579
 In 
addition, one commenter appeared to support the inclusion of the “no obligation” to act concept 
in the second prong of the proposed exception and noted that when the institutional investors that 
are its members act jointly, they are acting independently, consistent with their fiduciary, legal, 
and other obligations to their fund participants and beneficiaries.
580
 
Other commenters opposed the proposed Rule 13d-6(c) exemption.
581
 Some commenters 
appeared to base their opposition on the argument that such an exemption would impliedly 
define what a group is by stating what it is not.
582
 Several commenters said that ambiguity in the 
proposed exemption could inhibit market participants’ ability to readily discern when a “purpose 
or effect of changing or influencing control” has been manifested.
583
 One commenter further 
submitted that the subjective “control intent” standard likely will create more uncertainty and 
confusion than it will resolve.
584
 One commenter indicated, in light of its comments on the 
 
579
  See letters from Ceres; CII; ICGN; ICI I; Perkins Coie. 
580
  See letter from CII. 
581
  See, e.g., letters from B. Mason; CIRCA I; Dennis and Mary Spohn (June 25, 2023); EIM I; NBG; Prof. 
Edwards, et al.; Prof. Gordon; Prof. Webber; see also letter from SIFMA AMG (describing the proposed 
exemption as “problematic” and recommending that it not be adopted if the Commission also does not 
adopt the proposed amendments to Rule 13d-5). 
582
  See letters from CIRCA I; Prof. Edwards, et al.; Prof. Webber. These commenters characterized the 
proposed exemption as setting forth the exclusive circumstances under which two or more persons may 
engage with one another or an issuer without being regulated as a group. One of these commenters further 
said that the Commission’s description of proposed Rule 13d-6(c) “indicate[d] that two shareholders of the 
same Covered Security that coordinate in any manner regarding the holding would be deemed to be a 
group” unless those shareholders qualify for the proposed exemption and that “[t]his is not consistent with 
the legislative history underlying the Williams Act.” See letter from CIRCA I. And, one of these 
commenters asserted that the effect of proposed Rule 13d-6(c), in tandem with the proposed amendments to 
Rule 13d-5, on shareholder communications could raise concerns under the First Amendment. See letter 
from Prof. Edwards, et al.; see also supra note 503 and accompanying text. 
583
  See letters from EIM I; SIFMA AMG. 
584
  See letter from EIM I. 

146 
proposed amendments to Rule 13d-5, that “[t]his rule [exemption] would chill the kind of 
shareholder communications that are central to a proxy contest” and stated that “[c]onsultation 
among fellow shareholders and discussion with the activist are . . . essential.”
585
 
A number of commenters made recommendations regarding proposed Rule 13d-6(c).
586
 
Some commenters requested that coordination with respect to Rule 14a-8 shareholder proposals 
be expressly made exempt.
587
 Several commenters requested that coordination with respect to 
“vote no” campaigns be expressly made exempt.
588
 Other commenters requested that it be made 
clear that the state of mind of one person would not be imputed to another for purposes of 
determining the availability of the exemption.
589
 Some commenters asked that the “in connection 
with [any change of control] transaction” language be removed from the exemption.
590
 One of 
those commenters stated that the “in connection with” language “might be read too broadly and 
have an unintended chilling effect of the sort of communications that routinely occur today.”
591
 
Some commenters indicated that the “indirectly obligated to act” standard was in need of clearly 
defined boundaries and/or should be deleted.
592
 One of these commenters asserted that the 
 
585
  See letter from Prof. Gordon. 
586
  See letters from AFREF; Ceres; CII; IAA; ICGN; ICI I; Interfaith Center, et al.; NBG; Prof. Edwards, et 
al.; SSC; STB. 
587
  See letters from AFREF; Ceres; ICI I; Interfaith Center, et al. 
588
  See letters from AFREF; Ceres; CII; Interfaith Center, et al. For example, one commenter expressed 
support for the recommendations of another commenter that “the Commission [should] clarify the Rule 
13d-6(c) exception to ensure it covers launching and participating in ‘vote no’ campaigns and 
communications with Schedule 13D filers post-filing.” See letter from AFREF (indicating support of a 
corresponding recommendation in the letter from CII). 
589
  See letters from ICI I; Interfaith Center, et al.; SSC. 
590
  See letters from Ceres; CII. 
591
  See letter from CII. The commenter stated “that the positive step taken by adopting Rule 13d-6(c) could be 
undercut if there is a concern among investors that communicating with a Rule 13D ‘group’ could expose 
investors to being considered as a part of that ‘group.’” Id. 
592
  See letters from Ceres; CII; ICI I. 

147 
“indirectly obligated” standard is vague and would engender additional uncertainty, and 
recommended that the Commission eliminate the proposed condition that “[s]uch persons, when 
taking such concerted actions, are not directly or indirectly obligated to take such actions.”
593
 
One commenter stated the Commission should consider the circumstances under which investors 
advocating for specific changes (e.g., board composition or diversity) might later be subjected to 
an inquiry about whether their communications or activities were protected by the exemptions 
given the terms in the proposal such as “solely,”  “only,” “ indirectly,” “ purpose,” “ effect,” and 
“contemplated.”
594
 
In response to the Commission’s solicitation for comments on proposed Rule 13d-6(d), 
several commenters expressed support for the proposal.
595
 One commenter stated that the 
proposal would “help investors understand when they could become subject to regulation as a 
‘group’ under these circumstances and avoid costly regulatory filings for activity in the ordinary 
course of business.”
596
  
Several other commenters opposed the proposed Rule 13d-6(d) exemption.
597
 Some of 
those commenters questioned whether the proposed exemption is necessary, and implied that the 
proposal’s inclusion in this rulemaking intimates that ordinary course of business transactions 
currently present risks of group formation.
598
 One of those commenters said that it was fairly 
settled that a bilateral transaction, negotiated at arm’s length, would not by itself be sufficient to 
 
593
  See letter from ICI I. 
594
  See letter from Prof. Edwards, et al. 
595
  See letters from ICGN; O’Melveny & Myers; Perkins Coie. 
596
  See letter from ICGN. 
597
  See letters from ABA; EIM I; Engineer; Gabriel Morales, Retail Investor (Feb. 23, 2022) (“G. Morales”); 
IAA; ICI I; J. Kennedy; PSCM; SIFMA AMG; STB. 
598
  See letters from ABA; ICI I; STB. 

148 
create a group absent other indicia of group status such as agreements to vote and other 
factors.
599
 Another of these commenters questioned whether this proposed provision or any 
explicit exemption is necessary or would instead create further uncertainty given that market 
participants have been entering into ordinary course derivatives transactions for years without 
treating these transactions as creating a group.
600
 One commenter expressed concerns regarding 
potential negative collateral effects of the exemption.
601
 This commenter said that proposed Rule 
13d-6(d) suggests that, “outside of the safe harbor,” the parties to a derivative security 
transaction may be deemed to form a “group” and implied that the exemption’s existence would 
create a risk of eroding the confidence of parties to any “ordinary” securities purchase and sale 
transactions that they do not constitute a “group.”
602
 
Some commenters indicated that few dealers or market participants would be able to rely 
on the exemption or that it would not serve its intended purpose.
603
 Another commenter similarly 
implied the exemption should not be adopted because “financial institutions would not just be 
apprehensive about, or marginally disincentivized from, entering into transactions with an 
activist counterparty” but instead “would avoid the risk altogether, and wholly refrain from 
engaging in these transactions that are economically useful and unrelated to the purposes of 
Section 13.”
604
 Another commenter echoed the concerns regarding the projected heightened level 
 
599
  See letter from STB. 
600
  See letter from ICI I. 
601
  See letter from ABA. 
602
  See id. 
603
  See letters from EIM I; IAA; STB. One of these commenters further reasoned that the exemption is 
arbitrary and capricious because it would treat similarly situated parties differently inasmuch as only a 
subset of dealer transactions may be viewed as having contributed to an activist’s goals. See letter from 
EIM I. 
604
  See letter from PSCM. 

149 
of risk arising in relation to the exemption and stated that the exemption would significantly 
impair ordinary-course derivatives transactions by dealers and financial institutions, even with 
counterparties who do not have any control intent.
605
 A similar criticism was offered by a 
commenter who explained that if the proposed exemption were adopted, an implication would be 
created that counterparties to a derivative transaction agreement that did not qualify for the 
exemption would be viewed as having formed a group.
606
 
Some commenters expressed doubt that proposed Rule 13d-6(d) would operate to only 
exempt legitimate business activity, suggesting the purpose of the proposed amendments 
regarding group formation and derivatives would be undermined.
607
 One of these commenters 
said that the proposal “sounds like this is an open invitation for high profile firms to actually 
work together as a group without [repercussion] of regulation.”
608
 Another of these commenters 
appeared to refer to proposed Rule 13d-6(d) and expressed concern that the proposed exemption 
“will get taken advantage of too easily and will obscure transactions that might substantially and 
singlehandedly affect a security.”
609
 A different commenter impliedly alluded to the undermining 
of the proposed change to Rule 13d-5(b) and speculated that no benefit of other proposed rule 
changes will be received if derivative position holders can claim an exemption under a different 
law.
610
 
3. Final Amendments 
 
605
  See letter from STB. The commenter added that “the uncertainty caused by proposed Rule 13d-6(d) may 
increase risks for market participants in otherwise established financial transactions which may inhibit such 
activity.” Id. 
606
  See letter from ABA. 
607
  See letters from Engineer; G. Morales; J. Kennedy. 
608
  See letter from J. Kennedy. 
609
  See letter from Engineer. 
610
  See letter from G. Morales. 

150 
We are adopting the proposed redesignation of current Rules 13d-6 and 13d-5(b)(2) as 
Rule 13d-6(a) and (b), respectively, for the reasons set forth in the Proposing Release and as 
discussed above.
611
 As discussed in more detail below, however, we are not adopting proposed 
Rule 13d-6(c) or (d). 
The Commission proposed Rule 13d-6(c) in connection with proposed Rule 13d-
5(b)(1)(i) and (b)(2)(i).
612
 As discussed above, we are not adopting those amendments.
613
 
Proposed Rule 13d-6(c) was intended to avoid potentially chilling communications among 
shareholders or impeding shareholders’ engagement with issuers where those activities are 
undertaken without the purpose or effect of changing or influencing control of the issuer (and are 
not made in connection with or as a participant in any transaction having such purpose or 
effect).
614
 Some commenters, however, expressed concern that the exemption would in fact have 
the opposite effect.
615
 This concern appears to be based on their view that the exemption would 
be too narrow and impliedly define what actions would be sufficient to constitute “acting as a 
group” (i.e., any actions that would not qualify for the proposed exemption).
616
 To address those 
concerns, and in light of the fact that we are not adopting the amendments to Rule 13d-5 that 
prompted the proposal of the exemption in Rule 13d-6(c), we are not adopting Rule 13d-6(c). 
We also believe that the discussion and guidance we provided in section II.C.1.c above will help 
 
611
  See supra note 22 for a discussion of our redesignation of current Rules 13d-6 and 13d-5(b)(2) as Rule 13d-
6(a) and (b), respectively. 
612
  Proposing Release at 13872.  
613
  See supra section II.C.1. 
614
  Proposing Release at 13872.  
615
  See supra notes 585-591 and accompanying text. 
616
  See supra notes 582-584 and accompanying text. 

151 
to address the Commission’s goals of preserving shareholder communications and engagement 
with issuers that are undertaken without the purpose or effect of changing or influencing control. 
Similarly, after considering the comments received regarding proposed Rule 13d-6(d),
617
 
we also do not believe adoption of that exemption is necessary. Under sections 13(d)(3) and 
13(g)(3), formation of a group requires that two or more persons be found to have acted as a 
group for the purpose of acquiring, holding, or disposing “of securities of an issuer.” Many cash-
settled derivatives, including those that were intended to be covered by proposed exemption, are 
not considered “securities of [the] issuer.” Those derivatives originate with persons other than 
the issuer and simply reference a class of an issuer’s securities. The holders of such cash-settled 
derivative securities are, therefore, generally not owed a fiduciary duty by the issuer and do not 
generally have legal standing to bring a claim against the issuer. Moreover, holders of such 
derivative securities are not, by virtue of those instruments, debt or equity holders of the issuer 
and are not entitled to a right to vote or dispose of any security “of an issuer” based on their 
investment in these derivatives. Absent the circumstances in which a holder of a derivative 
settled exclusively in cash that did not originate with the issuer could become a beneficial owner 
of the reference security,
618
 the Commission does not believe that persons who, in the ordinary 
course of business, acquire derivative securities settled exclusively in cash would generally be 
deemed to “act as a . . . group” under sections 13(d)(3) and 13(g)(3) with the financial 
institutions that sell such derivatives. Simply put, such persons cannot be found, as a matter of 
law, to have acquired, held, or disposed “of securities of an issuer” as that term is used in 
sections 13(d)(3) and 13(g)(3). 
 
617
  See supra notes 595-610 and accompanying text. 
618
  See supra section II.B.3 for a discussion of those circumstances. 

152 
While investors in a cash-settled equity-based derivative security, in order to acquire the 
derivative security, may need to enter into an agreement governing the terms of such instrument 
with a financial institution that, in the ordinary course of its business, acts as a counterparty to 
such investors, that agreement, without more, does not result in group formation. We believe that 
a bilateral transaction, negotiated at arm’s length and entered into solely for commercial 
purposes, as described, would not by itself introduce facts sufficient to find that a group exists. In 
our view, an agreement between an investor in a cash-settled derivative security and a 
counterparty entered into for the ordinary course of business would fail to satisfy the “act as a . . . 
group” element in sections 13(d)(3) and 13(g)(3) absent other indicia of group status such as 
agreements to vote or other factors.  
To offset any risk exposure to that derivative security, including any obligations that may 
arise at settlement, the financial institution counterparty may, in practice, purchase securities in 
the reference covered class and hold such reference security for the duration of the agreement. 
While it may be true that but for the joint actions of the parties in entering into the agreement, 
that specific acquisition of beneficial ownership in the covered class by the financial institution 
would not have occurred, we believe that if the counterparty acts on its own initiative and not at 
the direction of the investor or otherwise on its behalf, there is no basis to assert that the investor 
and counterparty acted in concert and thus subjected themselves to regulation as a group. As 
such, entry into such an agreement will not implicate sections 13(d)(3) and (g)(3) because the 
two persons cannot be viewed as acting as a group even given the financial institution’s 
foreseeable acquisition of securities of a covered class. Assuming that the investor and the 
financial institution did not enter into the agreement with the purpose or effect of changing or 
influencing control of the issuer, the regulatory purposes of sections 13(d) and 13(g) would not 

153 
be furthered by treating the investor and the financial institution as members of a group under 
section 13(d)(3) or section 13(g)(3) solely by virtue of their entrance—for strictly commercial 
purposes and not for purposes of acquiring, holding, or disposing of a covered class—into that 
agreement. Accordingly, we have elected not to adopt proposed Rule 13d-6(d) as the exemption 
is not needed in order for such ordinary course of business transactions in derivative securities to 
freely occur. 
E.  Amendment to Schedule 13D to Clarify Disclosure Requirements Regarding 
Derivative Securities 
Schedule 13D sets forth the information that beneficial owners reporting pursuant to 
section 13(d)(1) and Rule 13d-1(a) must disclose. Item 6 of Schedule 13D requires beneficial 
owners to “[d]escribe any contracts, arrangements, understandings or relationships (legal or 
otherwise) among the persons named in Item 2 [of Schedule 13D] and between such persons and 
any person with respect to any securities of the issuer” and sets forth a non-exclusive list of 
examples of such contracts, arrangements, understandings or relationships.
619
 Because cash-
settled derivative securities were not expressly included among these examples, questions may 
arise as to whether beneficial owners should report their holdings of these derivative securities as 
contracts “with respect to” an issuer’s securities under the rationale that (1) only a purely 
economic, but no legal, interest is generally held through such derivatives in any class of an 
issuer’s securities and (2) the issuer’s securities are only used as a reference security. Further, as 
discussed below, the current requirement could be interpreted as excluding the disclosure of 
cash-settled options not offered or sold by the issuer, or other derivatives not originating with the 
issuer, including other cash-settled derivatives such as SBS. 
 
619
  17 CFR 240.13d-101, Item 6. 

154 
1. Proposed Amendment 
In the Proposing Release, the Commission proposed to amend Schedule 13D to clarify 
the disclosure requirements with respect to derivative securities held by a person reporting on 
that schedule. The Commission noted that, at present, the formulation “with respect to securities 
of the issuer” in Item 6 might be read to suggest that contracts, arrangements, understandings or 
relationships that only create economic exposure to the issuer’s equity securities or are otherwise 
considered synthetic could be excluded.
620
 Accordingly, to remove any ambiguity as to the scope 
of the required disclosures, the Commission proposed to revise Item 6 to expressly state that the 
use of derivative securities, including cash-settled SBS and other derivatives settled exclusively 
in cash, which use the issuer’s securities as a reference security are included among the types of 
contracts, arrangements, understandings and relationships which must be disclosed.
621
 The 
Commission also proposed the amendment to clarify that the derivative security need not have 
originated with the issuer or otherwise be part of its capital structure in order for a disclosure 
obligation to arise.
622
 The proposed amendment thus specified that a person filing a Schedule 
13D would be required to disclose interests in all contracts, arrangements, understandings, or 
relationships, including derivative securities, that use the issuer’s equity security as a reference 
security.  
 
620
  Proposing Release at 13874. 
621
  Id. To further minimize any potential ambiguity regarding what interests need to be disclosed, the 
Commission also proposed to eliminate the “including but not limited to” regulatory text that precedes the 
itemization of the instruments or arrangements covered. Id. 
622
  Id. 

155 
2. Comments Received 
Commenters expressed various views on the proposed amendment to Item 6 of Schedule 
13D. Some commenters supported the proposed amendment.
623
 One commenter, which did not 
clearly support or oppose the proposal with respect to Item 6, appeared to indicate, in connection 
with a response to a request for comment with respect to Item 7, Exhibits, that Item 6 may 
already apply to cash-settled derivatives.
624
 
Other commenters opposed the proposed amendment to Item 6 of Schedule 13D, stating 
that requiring disclosure of SBS arrangements in Item 6 would be confusing and indicating that it 
did not believe this disclosure would serve any additional purpose.
625
 One commenter explained 
that determining which type of derivative security to include in different parts of Schedule 13D 
would present a logistical challenge.
626
 The commenter anticipated that the compliance-related 
challenge would arise, from an operational point of view, because of the regulatory inconsistency 
created by the exclusion of SBS from the beneficial ownership calculation under proposed Rule 
13d-3(e) but the inclusion of SBS under Item 6 (to the extent they use the issuer’s equity security 
as a reference security).
627
 The commenter expressed additional concern that requiring disclosure 
 
623
  See, e.g., letters from AFL-CIO; D. Pierce; Mark C. 
624
  See letter from STB. Specifically, the commenter said that the filing of the cash-settled derivative 
instruments as an exhibit to Schedule 13D is unnecessary because the “material terms of such arrangements 
. . . can be described in” Item 6. Id. The commenter also stated that the filing of such instruments as 
exhibits would present logistical difficulties if the proposed “compressed” timeframes for reporting 
Schedule 13D amendments are adopted. Id. 
625
  See, e.g., letters from IAA; Slade Thornburg (June 25, 2023) (“S. Thornburg”). 
626
  See letter from IAA. 
627
  Id. According to the commenter, “[n]ot only would this be confusing, but we do not believe such disclosure 
would serve any additional purpose.” Id. 

156 
of SBS arrangements under Item 6 would negate the benefits to these holders of non-disclosure 
of counterparties in proposed Schedule 10B.
628
  
3. Final Amendment 
We are adopting the amendment to Item 6 of Schedule 13D as proposed. Specifically, we 
are amending Rule 13d-101 to expressly state that derivative contracts, arrangements, 
understandings, and relationships with respect to an issuer’s securities, including cash-settled 
SBS and other derivatives which are settled exclusively in cash, would need to be disclosed 
under Item 6 of Schedule 13D in order to comply with section 13(d)(1) and Rule 13d-1(a). We 
also are eliminating the “including but not limited to” language in Item 6 that currently precedes 
the itemization of the instruments or arrangements covered to remove any implication that 
additional interests may need to be disclosed.  
We believe that investors could benefit from a more complete disclosure of a Schedule 
13D filer’s economic interests in the relevant issuer, including economic interests via positions in 
cash-settled derivatives. For example, disclosure of any such cash-settled derivatives may help 
investors evaluate whether their interests with respect to the issuer’s securities are aligned with 
the Schedule 13D filer’s. In addition, disclosure of this information is consistent with other 
interests required to be disclosed under Item 6, such as, for example, “division of profits or loss.”   
 
628
  Id. Specifically, the commenter noted that proposed “Schedule 10B . . . would not require identification of 
the swap counterparty” while “the instruction to Item 6 requires ‘naming the persons with whom such 
contracts, arrangements, understandings, or relationships have been entered into.’” Id. Schedule 10B is a 
proposed disclosure statement containing information regarding large SBS positions and other information 
that would be required by proposed 17 CFR 240.10B-101. The Commission proposed this disclosure 
statement in a proposing release titled Prohibition Against Fraud, Manipulation, or Deception in 
Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance 
Officers; Position Reporting of Large Security-Based Swap Positions, Release No. 34-93784 (Dec. 15, 
2021) [87 FR 6652 (Feb. 4, 2022)] (“Schedule 10B Proposal”). 

157 
Our adoption of the amendment also furthers the congressional purpose of section 
13(d)(1), as demonstrated by the legislative history accompanying Congress’ enactment of this 
provision.
629
 The disclosures required under Item 6 of Schedule 13D originated with a 
congressional mandate. Congress specified certain information within sections 13(d)(1)(A) 
through (E) that beneficial owners must report once they incur a filing obligation. In addition to 
the disclosure required under sections 13(d)(1)(A) through (E), Congress also authorized the 
Commission to require disclosure of “such additional information” it prescribes as “necessary or 
appropriate in the public interest or for the protection of investors.”
630
 Under section 13(d)(1)(E), 
Congress provided that a beneficial owner must report “information as to any contracts, 
arrangements, or understandings with any person with respect to any securities of the issuer, 
including [the] transfer of any of the securities, joint ventures, loan or option arrangements, puts 
or calls, guaranties of loans, guaranties against loss or guaranties of profits, division of losses or 
profits, or the giving or withholding of proxies.”
631
 Consistent with the mandate of section 
13(d)(1)(E), which forms part of the basis for the disclosure requirements of existing Item 6, this 
baseline disclosure requirement has existed in Schedule 13D since 1968.  
We note that one commenter opposed the proposed amendment to Item 6. The 
commenter stat ed, among other things, that requiring disclosure of SBS holdings in Item 6 would 
be confusing.
632
 Specifically, the commenter pointed out that proposed Rule 13d-3(e) would 
 
629
  See Disclosure of Corporate Equity Ownership, H.R. Rep. No. 1711, at 8 (1968) (“The purpose of section 
13(d) is to require disclosure of information by persons who have acquired a substantial interest, or 
increased their interest in the equity securities of a company by a substantial amount, within a relatively 
short period of time.” (Emphasis added)). 
630
  15 U.S.C. 78m(d)(1). 
631
  Id. 
632
  See supra notes 626-627 and accompanying text. 

158 
have excluded SBS and stated that there would be a “logistical challenge” associated with 
excluding SBS from the beneficial ownership calculation but including them in the narrative 
disclosure in response to Item 6.
633
 We disagree. Item 6 (as well as the other items in Schedule 
13D) already requires disclosure of various information that does not factor into calculating a 
Schedule 13D filer’s beneficial ownership.
634
 We do not believe that requiring disclosure in Item 
6 of SBS that may be excluded from a Schedule 13D filer’s beneficial ownership calculation 
would present any unique complications or be more complex than disclosure of this other 
information, and the commenter did not present any specific “logistical challenges” that could 
arise from this requirement. Moreover, we are not adopting proposed Rule 13d-3(e),
635
 further 
diminishing this concern about potential confusion. 
The commenter also noted that the proposed amendment to Item 6 would be unnecessary 
in light of, and could conflict with, the disclosure of SBS positions in proposed Rule 10B-1.
636
 
While the Commission will consider concerns about a potential conflict if it takes any final 
action with respect to proposed Rule 10B-1, we note that proposed Rule 10B-1 (along with 
proposed Schedule 10B) is intended to serve a purpose different from Item 6 of Schedule 13D. 
 
633
  See id. 
634
  For example, Item 6 requires a description of “any contracts, arrangements, understandings or relationships 
. . . with respect to any securities of the issuer, including . . . puts or calls.” 17 CFR 240.13d-101, Item 6. If 
any such “puts or calls” include call options with respect to the issuer’s covered class that are not 
exercisable within 60 days (and were not acquired with a change of control purpose or effect), then they 
would be required to be disclosed in response to Item 6, but they would not factor into the Schedule 13D 
filer’s beneficial ownership. See Rule 13d-3(d)(1)(i). Similarly, Item 4(a) of Schedule 13D requires a 
description of “any plans or proposals which the reporting persons may have which relate to or would result 
in . . . [t]he acquisition by any person of additional securities of the issuer, or the disposition of securities of 
the issuer.” 17 CFR 240.13d-101, Item 4(a). Although such plans for potential future acquisitions or 
dispositions of securities of the issuer could, if consummated, result in changes to the Schedule 13D filer’s 
beneficial ownership, they generally would not factor into the beneficial ownership amount reflected in the 
Schedule 13D filing in which such plans are disclosed. 
635
  See supra section II.B.3. 
636
  See supra note 628 and accompanying text. 

159 
The Commission proposed Rule 10B-1 to, among other things, provide market participants 
(including counterparties, issuers, and issuers’ stakeholders) and regulators with access to 
information that may indicate that a person (or a group of persons) is building up a large SBS 
position, and to alert market participants and regulators to the existence of concentrated 
exposures to a limited number of counterparties, which should inform those market participants 
and regulators of the attendant risks, allow counterparties to risk manage and lead to better 
pricing of the SBS with respect to transactions with persons holding large positions in those SBS 
(as a result of all market participants having access to the information about the positions).
637
 
Item 6 of Schedule 13D, on the other hand, is intended to implement section 13(d)(1)(E), where 
Congress specifically mandated that the disclosure statement filed would include information as 
to any contracts, arrangements, or understandings with any person with respect to any securities 
of the issuer, including the names of relevant parties, as part of its intent to require disclosures to 
security holders regarding persons with significant holdings. Thus, in light of that congressional 
mandate, we believe it is appropriate to require disclosure of such information pursuant to Item 6 
of Schedule 13D.  
F.   Structured Data Requirement for Schedules 13D and 13G 
Currently, the EDGAR Filer Manual requires Schedules 13D and 13G to be filed 
electronically on the Commission’s EDGAR system in HTML or ASCII format.
638
 HTML and 
 
637
  Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; 
Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large 
Security-Based Swap Positions, Release No. 34-93784 (Dec. 15, 2021) [87 FR 6652, 6667, 6678 (Feb. 4, 
2022)]. 
638
  EDGAR Filer Manual (Volume II) version 67 (Sept. 2023) (“EDGAR Filer Manual”), at 5-1 (requiring 
EDGAR filers generally to use ASCII or HTML for their document submissions, subject to certain 
exceptions). Schedule 13D and 13G filers are required, by rule, to comply with the requirements of the 
EDGAR Filer Manual. See 17 CFR 232.301 (“Filers must prepare electronic filings in the manner 
prescribed by the EDGAR Filer Manual, promulgated by the Commission, which sets forth the technical 
formatting requirements for electronic submissions.”). 

160 
ASCII are both unstructured data languages; thus, the disclosures reported on Schedules 13D and 
13G are not currently machine-readable.
639
 As a result, information disclosed on Schedules 13D 
and 13G is generally more difficult for investors and other market participants to access, 
compile, and analyze as compared to information that is submitted in a machine-readable data 
language. 
While the majority of EDGAR filings under the Commission’s rules are submitted in 
HTML or ASCII, certain EDGAR filings are submitted using machine-readable, XML-based 
languages that are each specific to the particular EDGAR document type being submitted.
640
 
This includes filings that, like Schedules 13D and 13G, are submitted by individuals and entities 
other than the registrant of the class of securities.
641
 For these EDGAR XML filings, filers are 
typically provided the option to either submit the filing directly to EDGAR in XML, or manually 
input their disclosures in a fillable web form as part of an online web application developed by 
the Commission that converts the completed form into an EDGAR-specific XML document.  
1. Proposed Amendment 
In the Proposing Release, the Commission proposed to require that beneficial ownership 
reports on Schedules 13D and 13G be filed using a structured, machine-readable data language. 
In particular, the Commission proposed to require that Schedules 13D and 13G be filed in part 
using an XML-based language specific to Schedules 13D and 13G (“13D/G-specific XML”).
642
 
 
639
  The term “machine-readable” is defined in 44 U.S.C. 3502 as “data in a format that can be easily processed 
by a computer without human intervention while ensuring no semantic meaning is lost.” 
640
  See Securities and Exchange Commission, Current and Draft Technical Specifications, available at 
https://www.sec.gov/edgar/filer-information/current-edgar-technical-specifications. 
641
  Examples include the section 16 beneficial ownership reports (Forms 3, 4, and 5) and Form 13F. See id. 
642
  The Commission noted that this would be consistent with the approach used for other XML-based 
structured data languages created by the Commission for certain EDGAR Forms, including the data 
languages used for reports on each of Form 13F, Form D and the section 16 beneficial ownership reports 
(Forms 3, 4, and 5). Proposing Release at 13874, n. 154. 

161 
For both Schedules, all disclosures, including quantitative disclosures, textual narratives, and 
identification checkboxes, would be structured in 13D/G-specific XML under the proposal, with 
the exception of the exhibits to the Schedules, which would remain unstructured. The 
Commission stated that a structured data requirement for the disclosures reported on Schedules 
13D and 13G would greatly improve the accessibility and usability of the disclosures, allowing 
investors to access, aggregate and analyze the reported information in a much more timely and 
efficient manner.
643
 
2. Comments Received 
Commenters largely supported the proposed structured data requirement for Schedules 
13D and 13G.
644
 Other commenters objected to the proposed structured data requirement for 
Schedules 13D and 13G, with one commenter expressing concern that the proposed structured 
data requirement would be unduly burdensome for small beneficial owners.
645
 
Some of the supporting commenters asserted that the proposed structured data 
requirement would improve the fairness and transparency of the markets.
646
 One commenter 
asserted that the proposal would be a fundamental step toward ensuring that the beneficial 
ownership reporting requirements remain modern and comprehensible.
647
 One commenter noted 
 
643
  Id. at 13875. These considerations are generally consistent with objectives of the Financial Data 
Transparency Act of 2022, which directs the establishment by the Commission and other financial 
regulators of data standards for collections of information. Such data standards must meet specified criteria 
relating to openness and machine-readability and promote interoperability of financial regulatory data 
across members of the Financial Stability Oversight Council. See James M. Inhofe National Defense 
Authorization Act for Fiscal Year 2023, Pub. L. 117-263, tit. LVIII, 136 Stat. 2395, 3421-39 (2022). 
644
  See, e.g., letters from Aaron Leonard (June 28, 2023); Anonymous 12; Benjamin Ng (Feb. 21, 2022) (“B. 
Ng”); Convergence; David Kraft (June 26, 2023); FundApps; HMA I; IAA; ICI I; J. Kennedy; J. Pieper; J. 
Soucie; Mike Slavens, Retail Investor and Mechanical Engineer (Feb. 19, 2022) (“M. Slavens”); Mark C.; 
P. Worts; Todd; XBRL US (Apr. 11, 2022) (“XBRL”). 
645
  See, e.g., letter from A. Day; see also letters from B. Mason; S. Thornburg. 
646
  See letters from Anonymous 12; J. Kennedy; M. Slavens. 
647
  See letter from B. Ng. 

162 
that the proposed structured data requirement would not impose significant costs to beneficial 
owners of more than five percent of a covered class and stated that the requirement would allow 
the Commission to make use of advancing technologies in order to reduce costs to taxpayers and 
more speedily provide the public with the information it needs to accurately assess the conditions 
of the market.
648
 Another commenter asserted that the proposal would enable the Commission to 
process filings instantaneously and therefore allow for real-time analysis and if necessary, 
remedial action and stated that any data which cannot be easily processed by machines will 
become largely useless as the century progresses.
649
 In addition, one commenter agreed with the 
Commission that tagging the data reported on Schedules 13D and 13G will make it easier for 
investors and other market participants to access, compile, and analyze this information and 
expressly supported the Commission’s development of electronic “style sheets” that, when 
applied to the reported XML data, would represent that data in “human readable” format.
650
 
Some of the supporting commenters also made recommendations to the Commission 
regarding the proposed structured data requirement. One commenter requested that the 
Commission release the taxonomy at least six months in advance of the date by which any 
revised Schedules 13D or 13G must be filed so that reporting persons can incorporate the 
taxonomy into their filing system.
651
 Similarly, other commenters recommended that the 
Commission provide for a test period in which reporting persons can make test filings using the 
taxonomy in advance of the date by which the revised schedules must be filed.
652
 Finally, one 
 
648
  See letter from J. Soucie. 
649
  See letters from Convergence; FundApps. 
650
  See letter from ICI I. 
651
  Id. 
652
  See letters from IAA; ICI I. 

163 
commenter suggested that the Commission opt for the XBRL data language, rather than creating 
an XML schema designed specifically for beneficial ownership reporting as proposed.
653
 
3. Final Amendment 
We are adopting the structured data requirement for Schedules 13D and 13G as proposed. 
Specifically, we are replacing the current HTML or ASCII requirement for Schedules 13D and 
13G in the EDGAR Filer Manual with a requirement to use 13D/G-specific XML for the 
disclosures reported on those Schedules.
654
 As is the case with other EDGAR XML filings, 
reporting persons will be able to, at their option, submit filings directly to EDGAR in 13D/G-
specific XML or use a web-based reporting application developed by the Commission that will 
generate the Schedule in 13D/G-specific XML in connection with the submission of the filing to 
EDGAR.
655
 
In adopting the structured data requirement as proposed, we note that commenters 
overwhelmingly supported the proposal.
656
 Although one commenter opposed the proposed 
structured data requirement on the basis that it would be unduly burdensome for small beneficial 
owners,
657
 we believe the web-based reporting application that will generate the Schedule in 
 
653
  See letter from XBRL. The commenter asserted that, among other purported benefits, an XBRL-based 
standard will result in significantly lower costs and efficiencies across both reporting entities and data 
users, consistent datasets that can be easily commingled with other datasets, and enhanced validation 
capabilities to improve data quality. Id. 
654
  Section 13(g)(5) of the Exchange Act provides, in part, that “the Commission shall take such steps as it 
deems necessary or appropriate in the public interest or for the protection of investors . . . to tabulate and 
promptly make available the information contained in any report filed pursuant to this subsection in a 
manner which will, in the view of the Commission, maximize the usefulness of the information to . . . the 
public.” 15 U.S.C. 78m(g)(5). The requirement proposed in this section would be consistent with this 
mandate. Although this statutory language applies only to beneficial ownership reports filed pursuant to 
section 13(g)—i.e., a Schedule 13G filed by an Exempt Investor—we believe these public benefits would 
be furthered by applying the requirement proposed in this section to all Schedule 13D and 13G filers. 
655
  In addition, the Commission’s staff intends to develop electronic “style sheets” that, when applied to the 
reported XML data, will represent that data in human-readable form on EDGAR.  
656
  See supra section II.F.2. 
657
  See supra note 645 and accompanying text. 

164 
13D/G-specific XML should serve to reduce the burden of preparing a Schedule 13D or 13G for 
small beneficial owners (and other Schedule 13D and 13G filers), as compared to the current 
system whereby beneficial owners generally use third-party software to prepare their Schedule 
13D or 13G.
658
 In addition, because 13D/G-specific XML lends itself more readily to the 
development of a web-based reporting application on EDGAR than XBRL does, we believe 
13D/G-specific XML is more suitable than XBRL for structuring Schedules 13D and 13G.
659
 In 
response to commenters requesting a test period for the revised Schedules and requesting a 
taxonomy (i.e., schema) release at least six months before compliance is required, we are 
providing an extended voluntary compliance period during which the schema will be publicly 
available.
660
 The compliance period is discussed in further detail in section II.G below. 
G.   Compliance Dates 
The Commission did not propose a transition period for any of the Proposed 
Amendments. Some commenters suggested, however, that the Commission should provide for an 
extended compliance period with respect to the proposed structured data requirement for 
Schedules 13D and 13G.
661
 Based on this feedback, we believe that an extended transition period 
for compliance with the structured data requirement is appropriate. As such, compliance with the 
structured data requirement for Schedules 13D and 13G will not be required until December 18, 
2024. We welcome, however, early compliance with this requirement, and Schedule 13D and 
 
658
  For example, this web-based reporting application will contain and prompt a beneficial owner to respond to 
the Schedule 13D and 13G disclosure requirements, as set forth in Rules 13d-101 and 13d-102, 
respectively, which should make the preparation process more streamlined and convenient. 
659
  See also infra section IV.D.3. 
660
  See supra notes 651-652 and accompanying text. 
661
  See id. 

165 
13G filers may begin to voluntarily comply with the structured data requirement on December 
18, 2023.  
In order to further reduce some of the potential burdens that commenters described, 
compliance with the revised Schedule 13G filing deadlines under Rules 13d-1 and 13d-2 will not 
be required before September 30, 2024. Thus, notwithstanding the fact that the final amendments 
will become effective on February 5, 2024, beneficial owners will continue to be required to 
comply with the current Schedule 13G filing deadlines through September 29, 2024. Beginning 
on September 30, 2024, however, beneficial owners will be required to comply with the revised 
Schedule 13G filing deadlines. For example, under Rule 13d-2(b), as amended, a Schedule 13G 
filer will be required to file an amendment within 45 days after September 30, 2024, if, as of end 
of the day on that date, there were any material changes in the information the filer previously 
reported on Schedule 13G.   
III.   Other Matters 
If any of the provisions of these amendments, or the application thereof to any person or 
circumstance, is held to be invalid, such invalidity shall not affect other provisions or the 
application of such provisions to other persons or circumstances that can be given effect without 
the invalid provision or application. 
Pursuant to the Congressional Review Act, the Office of Information and Regulatory 
Affairs has designated these amendments a “major rule,” as defined by 5 U.S.C. 804(2). 
IV. Economic Analysis 
A.  Overview  
As discussed in section II, the final amendments generally shorten the filing deadlines for 
initial Schedule 13D and 13G filings, together with other changes described below. These filings 

166 
are required in accordance with sections 13(d) and 13(g) of the Exchange Act. Section 13(d) was 
enacted in 1968 with the intent to alert issuers and the marketplace to rapid accumulations of 
equity securities by persons who would then have the potential to change or influence control of 
the issuer.
662
 Section 13(g), subsequently enacted in 1977, was intended, together with section 
13(d), to provide a “comprehensive disclosure system of corporate ownership” applicable to all 
persons who are the beneficial owners of more than five percent of a covered class.
663
 
The efficiency of financial markets rests on material information becoming public in a 
timely fashion. In addition to protecting investors, greater availability of information allows 
securities prices to better reflect their issuers’ fundamental value, and ultimately promotes capital 
formation. The widespread enactment of laws and regulations that restrict the use of information 
obtained by virtue of insider status, as well as regulations that restrict selective disclosure to 
certain persons in the absence of public disclosure, point to the public-good nature of rules 
requiring public disclosure. 
This same principle motivates the requirement to disclose beneficial ownership of 
significant shareholders with the potential to change or influence control of the issuer. 
Knowledge of who is influencing control is highly material.
664
 Investors benefit from this 
information just as they benefit from material information regarding their investments more 
broadly. The five-business day deadline balances the interest of investors to be in possession of 
material information with the interest of investors seeking changes in control that may benefit 
 
662
  See H.R. Rep. No. 1711, at 8 (1968).  
663
  See S. Rep. No. 114, at 14 (1977). 
664
  For the purpose of this economic analysis, the term “significant shareholders” is used to represent persons 
with a large shareholding in a particular issuer. The terms “blockholders” and “significant stockholders” 
were used to represent such persons in the Proposing Release. 

167 
shareholders, and is longer than the filing deadline for other settings involving ownership 
changes, such as for Form 4 under Exchange Act section 16 reporting.
665
  
Moreover, as we discuss below, studies suggest that traders other than the filer may be in 
a position to become aware of a potential activist campaign and buy stock of the target issuer 
immediately prior to a Schedule 13D filing, thereby benefiting directly from foreknowledge of 
the filing rather than their own efforts.
666
 Shortened filing deadlines may lessen the opportunity 
for these traders to gain such an advantage, as discussed below, which could enhance trust in 
markets and thereby capital formation. Finally, shortening the deadline is expected to reduce 
overall informational asymmetries in the market. Both theoretical and empirical studies have 
connected information asymmetry, and in particular the presence of informed traders, to wider 
bid-ask spreads.
667
 We therefore expect shortening the initial Schedule 13D filing deadline to 
improve liquidity.
668
  
Shortening the initial Schedule 13D filing deadline will have costs. Specifically, activist 
investors will have less time in which to accumulate shares before the filing deadline and, 
therefore, before the price of the stock reflects their plans. This may reduce their expected profit, 
and accordingly some of the incentives for activism. However,  although we cannot predict with 
 
665
  Some commenters indicated that the Commission failed to appropriately justify the shortened filing 
deadlines or identify an associated market failure, or stated that the information asymmetry between a filer 
and the market is not a market failure or otherwise problematic. See, e.g., letters from AIMA; EIM I; IAA; 
ICM; Profs. Bishop and Partnoy I; Profs. Eccles and Rajgopal; Profs. Swanson, Young, and Yust; SIFMA; 
SIFMA AMG; TIAA. We agree that the initial information asymmetry between a prospective filer and the 
market is not a market failure because in its absence, the filer may not be sufficiently rewarded for the 
expenses of its efforts expended in information acquisition and in pursuing changes at the issuer, which 
often have market-level benefits. Nevertheless, an earlier resolution of this information asymmetry is 
expected to have the benefits discussed in this economic analysis. 
666
  See infra section IV.C.1.a.iii. 
667
  See infra section IV.C.1.a.iv. 
668
  See id. 

168 
precision the magnitude of the ultimate effect on activism and how the overall markets and 
activists themselves will respond to these changes, we believe it is likely that the shortened 
deadline will not significantly reduce the level of activism as we expect most campaigns will not 
be affected by the amended deadline, based on our analysis of historical campaigns, and most 
activists will have ability to adapt to the shortened deadline through various alternatives.   
We are also, among other things, revising the filing deadlines for Schedule 13D and 13G 
amendments and amending Item 6 of Schedule 13D, which requires the disclosure of certain 
contracts, arrangements, understandings, and relationships, to remove any implication that a 
person is not required to disclose interests in all derivative securities that use a covered class as a 
reference security. Each of these final amendments may allow investors and other market 
participants to make better-informed decisions by accelerating the disclosure of information or 
expanding the amount of information disclosed. The final amendments also require that Schedule 
13D and Schedule 13G be filed using a structured, machine-readable data language, which may 
facilitate the extraction and analysis of information in the filings, and make technical changes to 
Regulation S-T associated with extending the filing “cut-off” time from 5:30 p.m. to 10 p.m., 
which may ease the compliance costs for filers. 
We are mindful of the costs and benefits of the final amendments.
669
 Below, we discuss 
in more detail the economic effects of the final amendments, including their anticipated costs and 
benefits and, integrated into that discussion, the likely effects of the final rules on efficiency, 
 
669
  Section 3(f) of the Exchange Act [17 U.S.C. 78c(f)] requires the Commission, when engaging in 
rulemaking where it is required to consider or determine whether an action is necessary or appropriate in 
the public interest, to consider, in addition to the protection of investors, whether the action will promote 
efficiency, competition, and capital formation. Further, section 23(a)(2) of the Exchange Act [17 U.S.C. 
78w(a)(2)] requires the Commission, when making rules under the Exchange Act, to consider the impact 
that the rules would have on competition, and prohibits the Commission from adopting any rule that would 
impose a burden on competition not necessary or appropriate in furtherance of the Exchange Act. 

169 
competition, and capital formation.
670
 We also analyze the potential costs and benefits of 
significant alternatives to the final amendments. 
B.  Baseline 
The baseline against which the costs, benefits, and the effects on efficiency, competition, 
and capital formation of the final amendments are measured consists of the current state of the 
market and the current regulatory framework. The economic analysis considers existing 
regulatory requirements, including recently adopted rules, as part of its economic baseline 
against which the costs and benefits of the final amendments are measured.
671
  
1. Current Schedule 13D and 13G Filing Requirements 
The current Schedule 13D and Schedule 13G filing requirements are discussed in detail 
in section II.A above.
672
 Briefly, an initial Schedule 13D is currently required to be filed within 
 
670
  Several commenters raised concerns about the Proposing Release’s discussion of potential effects on 
efficiency, competition, and/or capital formation. See, e.g., Craig Lewis, Review of the Economic Analysis 
for Proposed Rule Amendments to Modernize Beneficial Ownership Reporting, exhibit to letter from EIM I 
(“Lewis Study I (exhibit to letter from EIM I)”) (stating that the discussion of efficiency, competition, and 
capital formation in the Proposing Release “appears to be an afterthought and glosses over or fails to 
address many important points”); see also letters from AIMA; B. Sharfman; Profs. Schwartz and Shavell I ; 
Profs. Schwartz and Shavell II. Our analysis of potential effects on efficiency, competition, and capital 
formation has been revised and expanded from the Proposing Release and has been integrated into the 
discussion of the benefits and costs of the final amendments. 
671
  See, e.g., Nasdaq v. SEC, 34 F.4th 1105, 1111-15 (D.C. Cir. 2022). This approach also follows 
Commission staff guidance on economic analysis for rulemaking. See Staff’s “Current Guidance on 
Economic Analysis in SEC Rulemaking” (Mar. 16, 2012), available at 
https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf (“The economic 
consequences of proposed rules (potential costs and benefits including effects on efficiency, competition, 
and capital formation) should be measured against a baseline, which is the best assessment of how the 
world would look in the absence of the proposed action.”); Id. at 7 (“The baseline includes both the 
economic attributes of the relevant market and the existing regulatory structure.”). The best assessment of 
how the world would look in the absence of the proposed or final action typically does not include recently 
proposed actions, because that would improperly assume the adoption of those proposed actions.  
672
  Other disclosure requirements may also apply to significant shareholders. For example, persons deemed 
beneficial owners of more than 10% of any class of equity securities (other than certain exempted 
securities) registered under Exchange Act section 12 are also considered to be insiders for the purpose of 
Exchange Act section 16 and subject to the associated disclosure requirements. For example, these persons 
must file with the Commission an initial report on Form 3 either within 10 days after becoming an insider 
 
 

170 
10 days after any acquisition of beneficial ownership of a covered class that results in a person 
directly or indirectly being the beneficial owner of more than five percent of the covered class.
 
Among other disclosures, the reporting person must describe, pursuant to Item 6 of Schedule 
13D, any contracts, arrangements, understandings, or relationships among the reporting persons 
or between the reporting persons and any other person with respect to any securities of the issuer. 
In addition, a Schedule 13D amendment must be filed “promptly” upon any material change in 
the facts reported in the Schedule 13D filing, inclusive of any amendments thereto.
673
 
The initial filing deadline for the initial Schedule 13G varies by investor category. QIIs 
and Exempt Investors must file an initial Schedule 13G within 45 days after the end of the 
calendar year in which their beneficial ownership exceeds five percent of a covered class at the 
end of the last day of that calendar year. Further, if a QII beneficially owns more than 10 percent 
of a covered class as of the last day of any month, then the initial Schedule 13G must be filed 
within 10 days after the end of that month. Passive Investors must file an initial Schedule 13G 
within 10 days of acquiring beneficial ownership of more than five percent of a covered class. 
For all Schedule 13G filers, if, as of the end of the calendar year, there are any changes in 
the information previously reported in a Schedule 13G filing, a Schedule 13G amendment must 
 
of an issuer that already has a class of equity securities registered under section 12, or upon the issuer’s 
initial registration of the class of equity security under section 12. 15 U.S.C. 78p(a)(2)(A)-(B). Also, 
acquisitions of ownership stakes exceeding certain dollar thresholds trigger the premerger notification 
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Public Law 94–435, 90 Stat. 
1383 (1976), as administered by the Federal Trade Commission and Department of Justice. In general, we 
do not expect these additional disclosure requirements to significantly affect the costs and benefits of the 
final rules. 
673
  As noted supra in section II.A.3 the Commission has expressed that under the current standard, “[a]ny 
delay beyond the date the filing reasonably can be filed may not be prompt” and an amendment to a 
Schedule 13D reasonably could be filed in as little as one day following the change (citing In re Cooper 
Laboratories, Release No. 34-22171 (June 26, 1985)). Some commenters indicated that the requirement for 
Schedule 13D amendments to be made “promptly” has generally been understood to mean within two 
business days. See letters from EIM I; IAA. 

171 
be filed within 45 days after the end of that calendar year. In addition, QIIs must file a Schedule 
13G amendment within 10 days after the end of the first month in which their beneficial 
ownership either exceeds 10 percent of a covered class, or, once across that threshold, increases 
or decreases by more than five percent of the covered class. Similarly, Passive Investors must 
“promptly” file a Schedule 13G amendment upon acquiring beneficial ownership of more than 
10 percent of a covered class, or, once across that threshold, if they increase or decrease their 
beneficial ownership by more than five percent of the covered class. 
2. Market Trends 
There have been significant changes in the technological, financial market, and 
regulatory environment since the enactment of the Williams Act.
674
 In particular, various new 
technologies developed over this time period facilitate the filing process, including both the 
preparation and submission of a filing. For example, communications have become easier and 
faster over this time, facilitating the gathering of information to be disclosed and any necessary 
coordination among parties. Further, information technologies used to compile the necessary 
data and prepare and transmit filings may have helped to reduce the time required to produce and 
submit filings. Also, electronic submission relieves filers of the need to mail or hand deliver 
filings. On the other hand, as some commenters noted, some of the tasks necessary for filers’ 
preparation and submission of filings have not been automated or otherwise accelerated.
675
 
 
674
  See Proposing Release at 13851. Several commenters identified trends that were not discussed in the 
Proposing Release or indicated that the economic analysis in the Proposing Release could have been 
enhanced by considering additional evidence regarding changes over time. See letters from Charlie Penner 
and Bob Eccles (Apr. 12, 2022) (“C. Penner and Prof. Eccles”); CIRCA I; CIRCA IV; ICM; Prof. Gordon; 
PSCM; SCG; Lewis Study I (exhibit to letter from EIM I) (requesting “evidence that efficiency 
enhancements have increased the pace at which investors build beneficial ownership positions”). In 
response to these comments, this discussion has been expanded relative to the discussion in the Proposing 
Release with respect to changes since the enactment of the Williams Act. See supra notes 138-141 and 
accompanying text. 
675
  See infra notes 866-867 and accompanying text. 

172 
Further, as one commenter noted, information technologies have also facilitated easier and faster 
access to filings, which may reduce the time for the information in filings to reach market 
participants even under the same deadline.
676
 Modern information technologies and the faster 
pace of communication may also allow investors and other market participants to react more 
quickly to disclosures, such that they may benefit more from disclosures being made a few days 
earlier than they might have in earlier decades, when decision-making may have proceeded at a 
slower pace. 
In addition to the ease of communication, the introduction of electronic trading, new 
types of financial contracts and instruments, and advances in order-splitting and other trade 
execution optimization techniques, as well as the rise of dark pools,
677
 may facilitate an investor 
accumulating a large equity stake more quickly than at the time of the enactment of the Williams 
Act. On the other hand, we also recognize that accumulating significant ownership could instead 
be more difficult in the face of modern algorithmic and high-frequency trading, more 
sophisticated surveillance of equity trading and ownership by other traders, market participants, 
and issuers,
678
 and the defenses and tactics currently used by issuers with respect to potential 
unsolicited takeover bids or shareholder activism.
679
  
 
676
  See letter from CIRCA IV. 
677
  See letter from SCG. A dark pool is a private forum for trading securities. See also Order Competition 
Rule, Release No. 34-96495 (Dec. 14, 2022) [88 FR 128 (Jan. 3, 2023)] (for further discussion on dark 
pools). 
678
  See letter from ICM. 
679
  Researchers have found that the increased use of low-threshold poison pills within the last decade or two 
could increase the difficulty of accumulating an equity stake beyond a certain size. See, e.g., Ofer Eldar et 
al., The Rise of Anti-Activist Poison Pills (Working Paper, Jan. 2023), available at 
https://ssrn.com/abstract=4198367; Nicole Boyson & Pegaret Pichler, Hostile Resistance to Hedge Fund 
Activism, 32 R
EV. FIN. STUD. 771 (2019) (“Boyson & Pichler 2019 Study”). Commenters discussed an 
increased use of poison pills as well as a more general increase in anti-takeover or “anti-activist” defenses. 
See letters from CIRCA I; EIM III; ICM; Prof. Gordon; PSCM. 

173 
At least one study presents evidence that, despite variations in the number of filings from 
month to month and from year to year, the absolute number of initial or total Schedule 13D 
filings made per year did not increase overall from 1985 to 2012.
680
 Commission staff analysis of 
more recent filings supports the observation that the number of total filings made per year has 
not increased over recent decades; in fact, the number of Schedule 13D filings has decreased 
somewhat in the most recent decade.
681
 Further, according to academic research examining 
different time periods and subsets of filings from 1985 through 2018, there has been no 
significant change in the average level of beneficial ownership of a covered class reported in 
individual initial Schedule 13D filings over that time horizon.
682
 Commission staff analysis of 
 
680
  See, e.g., Ulf von Lilienfeld-Toal & Jan Schnitzler, What is Special About Hedge Fund Activism? Evidence 
from 13-D Filings, Swedish House of Fin. Rsch.  Paper No 14-16 (June 4, 2014), available at 
https://ssrn.com/abstract=2506704 (“Lilienfeld-Toal and Schnitzler 2014 Study”) (plotting, in Figure 1 
therein, the number of initial and total Schedule 13D filings per month from 1985 through 2012, and 
demonstrating substantial month-to-month variation and a slight overall downward trend overall in initial 
and total Schedule 13D filings). 
681
  Staff reviewed the number of Schedule 13D and 13D/A filings on EDGAR each year from 1997 (the first 
full year after the phase-in of electronic filing was complete) through 2022, available at 
https://www.sec.gov/dera/data/dera_edgarfilingcounts, and found no clear trend in the number of these 
filings per year over the last decade, but found that the rate of Schedule 13D filings over the last decade 
was somewhat lower than the rate in the earlier part of the sample period. For example, for the years 1997 
through 2010, the average number of filings per year were approximately 2,800 and 5,200 for initial and 
amended Schedule 13D filings respectively, which are generally consistent with the monthly rates of filings 
reported for 1985 through 2012 in the Lilienfeld-Toal and Schnitzler 2014 Study. In contrast, for the years 
2011 through 2022, the average number of filings per year were roughly 1,400 and 4,100 for initial and 
amended Schedule 13D filings respectively. This decline is roughly commensurate with the decline in the 
number of publicly listed companies. Staff also reviewed the number of Schedule 13G filings on EDGAR 
each year from 1997 through 2022, from the same source, and found no clear trend in the number of such 
filings per year over this period. 
682
  See, e.g., Lilienfeld-Toal and Schnitzler 2014 Study (based on data from all Schedule 13D filings from 
1985 through 2005, including data from paper filings obtained via Thomson Research); Lucian Bebchuk et 
al., Pre-Disclosure Accumulations by Activist Investors: Evidence and Policy, 39 J. C
ORP. L. 1, 14-17 
(2013) (“Bebchuk et al. 2013 Study”) (based on data from Schedule 13D filings by hedge funds from 1994, 
the advent of electronic trading, through 2007). Subsequent research on more recent samples of Schedule 
13D filings by hedge funds shows reported average ownership levels consistent with the Bebchuk et al. 
2013 Study. See, e.g., Alon Brav et al., Governance by Persuasion: Hedge Fund Activism and Market-
Based Shareholder Influence, O
XFORD RSCH. ENCYCLOPEDIA OF ECON. AND FIN.  (2022) (“Brav et al. 2022 
Study”) (based on data from Schedule 13D filings by hedge funds from 1994 through 2018). 

174 
more recent filings supports the observation that the average level of beneficial ownership 
reported in initial Schedule 13D filings has not meaningfully changed in recent decades.
683
  
There is also research that addresses whether other developments may have changed the 
significance of lower ownership stakes in an issuer’s securities over time. For example, some 
observers have stated that the increase in stock ownership by institutional investors, the rise of 
proxy advisory services,
684
 and regulatory and legal developments regarding shareholder 
communications may have made it easier for an investor with a lower ownership stake to 
influence other shareholders, and, ultimately, the issuer.
685
 On the other hand, others have stated 
that the increased presence of institutional investors may make it more difficult for an investor 
with a lower ownership stake to exert control, without the support of these institutional 
investors.
686
 Overall, it is unclear whether regulatory, legal, and market developments have led 
activist campaigns by investors with lower ownership stakes to become more or less effective 
over time.
687
 That said, researchers have noted that today’s market for corporate control, in 
 
683
  See sections IV.B.3.a.i and ii below for details on the filings analyzed by staff. 
684
  Proxy advisory firms (or proxy voting advice businesses) provide voting services that can help 
shareholders, primarily investment advisers and institutional investors, manage their substantive and 
procedural proxy voting needs with respect to the public companies they own, including assisting these 
shareholders in making their voting determinations on behalf of their own clients and handling other 
aspects of the voting process. See, e.g., Exemptions from the Proxy Rules for Proxy Voting Advice, Release 
No. 34-89372 (July 22, 2020) [85 FR 55082 (Sept. 3, 2020)]. 
685
  See, e.g., John C. Coffee, Jr. & Darius Palia, The Wolf at the Door: The Impact of Hedge Fund Activism on 
Corporate Governance, 41 J. C
ORP. L. 545, 553-71 (2016); see also letter from SCG (stating that “activists 
today have more resources, often win the support of highly influential proxy advisors, can readily share 
their views on financial news networks, and have access to ... modern financial instruments that they can 
use to postpone disclosure”). 
686
  See, e.g., Ian Appel et al., Standing on the Shoulders of Giants: The Effect of Passive Investors on Activism, 
32 R
EV. FIN. STUD. 2720 (2019) (“Appel et al. 2019 Study”). 
687
  It is difficult to measure how the effectiveness of activist campaigns may have changed over time because, 
among other things, the outcomes of campaigns are heterogeneous and thus difficult to compare, the costs 
of most campaigns are not observable, and the threat of a campaign can have significant effects without 
being associated with an observable campaign. Commenters expressed mixed views on whether activist 
 
 

175 
contrast to that at the time of the enactment of the Williams Act and the Commission’s original 
adoption of the related rules, prominently features investors with minority interests in issuers 
who seek to influence these issuers’ governance or corporate policies by convincing other 
shareholders to support their causes instead of pursuing direct control of issuers through majority 
ownership.
688
  
3. Affected Parties and Current Market Practices
689
 
The parties affected by the final amendments include: all investors that are required or 
potentially required to report their beneficial ownership of covered classes on Schedules 13D and 
13G; the issuers of covered classes; shareholders of these issuers who are not Schedule 13D or 
13G filers; and other investors, market participants, and issuers. Below we provide information 
about the current nature of Schedule 13D and Schedule 13G filings and filers, which has not 
changed markedly since publication of the Proposing Release. 
 
campaigns have become more or less effective over time. See, e.g., letters from WLRK II (describing an 
“increasing effectiveness of activist campaigns and their decreased cost”); Profs. Bishop and Partnoy I 
(stating that “the impact that shareholder activists are having on corporate America is modest and in 
decline” and citing a practitioner study “describing the number of board seats secured by activists as ‘lower 
than in recent years’” and “describing the number of activist campaigns in 2021 as ‘in line with 2020’s 
slower pace’”). 
688
  See, e.g., Brav et al. 2022 Study; see also letter from Profs. Bishop and Partnoy I (stating that “public 
company boards are no longer monitored by hostile takeovers, so activism is the remaining recourse”). 
689
  Commenters specifically suggested the Commission consider the interaction between the final amendments 
and the Short Position Reporting Proposal, its proposal relating to the reporting of securities loans, and the 
security-based swap reporting portion of the Schedule 10B Proposal. See letters from Profs. Bishop & 
Partnoy I; EIM IV at 4-5; ICI II at 7 n. 13; see also Reporting of Securities Loans, Release No. 34-94315 
(Feb. 25, 2022) [87 FR 11659]. These proposals, or portions of proposals, have not been adopted and thus 
have not been considered as part of the baseline here. To the extent those proposals or portions of proposals 
are adopted in the future, the baseline in those subsequent rulemakings will reflect the regulatory landscape 
that is current at that time. 

176 
a. Schedule 13D Filings 
i. Number of Filings, Filer Types, and Time to File 
During calendar year 2022, the Commission received a total of 5,179 Schedule 13D 
filings, including 1,161 initial filings and 4,018 amendments.
690
 Overall, these initial filings and 
amendments involved 2,194 unique lead filers.
691
 Additional details specific to the initial filings, 
including their breakdown and characteristics by filer type, are presented in Table 1.
692
  
 
690
  These estimates are based on staff analysis of EDGAR filings. The Proposing Release reported that the 
Commission received 10,542 Schedule 13D filings (2,288 initial filings and 8,254 amendments) in calendar 
year 2020. As noted in the DERA Memorandum, based on further staff review of these reported statistics, 
we believe they included duplicate records, and that the actual number of unique Schedule 13D filings 
received in 2020 was 5,288 filings (1,148 initial filings and 4,140 amendments), which is similar to the 
counts provided for 2022 above. One commenter addressing the DERA Memorandum questioned whether 
data pertaining to other filing years used in the analyses in that memorandum include “similar double 
counting.” See letter from EIM IV. Staff reviewed to verify that duplicate records were not included in the 
statistics and analyses in the DERA Memorandum or in this economic analysis. 
691
  This estimate is based on staff analysis of EDGAR filings. “Lead filer” indicates the filer that submits a 
filing to the Commission, though the same filing may include information about additional co-filers and 
their beneficial ownership of securities.  
692
  These estimates are based on staff analysis of EDGAR filings. The “Prominent Activists” category is based 
on the classification of the filer as either (or both) (i) a member of the Insightia (previously Activist Insight) 
“Activist Top Ten” list in any of the 10 years (2014 to 2023) that this list has been published, which 
represent Insightia’s ranking of the most influential activists over the past year, based on the quantity, size, 
and performance of their activist investments; or (ii) a “Sharkwatch 50” activist in the FactSet 
SharkRepellent database as of 2021, which represents FactSet’s compilation of the 50 most significant 
activists based on, e.g., the number and impact of their campaigns as of that date. The “Other Institutions” 
category is based on filings by institutions (primarily partnerships, corporations, investment advisors, and 
banks) that do not fall in the “Prominent Activist” category. The “Other Individuals” category is based on 
filings that report holdings of individuals and no other filer type and that do not fall in the “Prominent 
Activist” category; filings that report holdings of individuals who are co-filing as affiliates or part of a 
group with institutions (none of whom fall in the “Prominent Activist” category) are included in the “Other 
Institutions” category. Information about the number of days from the trigger date to the filing date of the 
Schedule 13D and the beneficial ownership percentage reported in the Schedule 13D, respectively, are 
based on a subset of filings (about 98% of the filings) for which we were able to extract the required 
information. The “median ownership reported in filing” row represents the median, across filings, of the 
maximum beneficial ownership percentage separately reported in a filing and may thus understate the 
aggregate ownership of a group of co-filers. Based on hand-collection of aggregate ownership in a random 
subsample of 2021 filings, we estimate that this approach does not fully aggregate all of the ownership 
reported by a group of co-filers in approximately 7% of the filings. In contrast, alternative algorithms we 
considered to aggregate ownership reported in different fields in a given filing very often vastly overstated 
ownership due to the double-counting of shares whose beneficial ownership could be attributed to multiple 
affiliates. 

177 
Table 1 
Initial Schedule 13D Filings in 2022 by Filer Type 
 
Prominent 
Activists 
Other 
Institutions 
Other 
Individuals 
All 
Filings 
Number of unique lead filers 22 720 252 994 
Number of initial filings 60 843 258 1,161 
Median calendar days from trigger 
date* to filing date 
9 10 11 10 
Median ownership reported in filing 6.6% 15.0% 10.5% 13.0% 
*    The trigger date is the date on which the investor has acquired beneficial ownership of more than 5% of a class 
of equity securities described in section 13(d)(1) of the Exchange Act and Rule 13d-1(i), or, for an investor 
previously eligible to file a Schedule 13G in lieu of a Schedule 13D pursuant to Rule 13d-1(b) or (c), the date on 
which the investor becomes ineligible to report on Schedule 13G. 
We present the breakdown of filer type in the initial Schedule 13D filings under the 
baseline in Table 1 to characterize the affected parties. We did not limit our analyses of costs and 
benefits to any of these categories.
693
 
A detailed day-by-day breakdown of the percentage of the filings made each day after the 
trigger date is provided in Figure 1 below.
694
 
 
693
  See letter from EIM IV (stating that the categorization of filers by type in the DERA Memorandum implied 
that “activists (prominent or otherwise) warrant separate regulatory scrutiny”). This commenter also raised 
concerns about the reliability of the FactSet SharkRepellent database used to identify “prominent activists,” 
including whether the data is “accurate and current.” We note that the FactSet SharkRepellent database 
including the “Sharkwatch 50” is used, currently, by both academics (see, e.g., Ian Appel & Vyacheslav 
Fos, Short Campaigns by Hedge Funds (Working Paper, Feb. 2023), available at 
https://ssrn.com/abstract=3242516) and practitioners (see, e.g., the activist surveillance tool offered at 
Activist Surveillance, T
HE CONFERENCE BOARD, https://www.conference-board.org/proxyvoting) to 
identify prominent activists. We also note that the categorization “prominent activist” is used in the 
production of descriptive statistics that characterize Schedule 13D filings and the affected parties but does 
not contribute to key results or estimates of our analyses. Nevertheless, given this commenter’s concerns, 
staff revised its approach to identifying “prominent activists” by supplementing the “Sharkwatch 50” with 
an annual ranking of top activists published by Insightia (including a total of 34 “top ten” activists over 10 
years) to compile a broader list of “prominent activists.” See supra note 692. This revision resulted in the 
addition of five Schedule 13D filers from our 2011-2021 sample to the category of “prominent activists.” 
694
  This figure is based on staff analysis of EDGAR filings and reflects the subset of filings (1,136 of the total 
1,161 filings reported in Table 1) for which required information could be extracted. 

178 
Figure 1. Days between trigger date and the filing of initial Schedule 13D filings in 2022  
 
About 71 percent of all of the initial Schedule 13D filings in 2022 were filed within the 
existing 10-day filing window (represented by the dark grey bars),
695
 with about 34 percent of 
the filings being made on the filing deadline.
696
 Approximately 29 percent of the initial Schedule 
13D filings, representing about 41 percent of all of the initial Schedule 13D filings that were 
filed by the current filing deadline, were filed within the amended five-business day deadline.  
 
695
  We note that approximately 42% of the Schedule 13D filings in Figure 1 were made after the tenth day 
following the trigger date. However, not all of these filings are considered late by the Commission. By rule, 
the Commission accepts as timely any filing that, if the calendar due date falls on a weekend or holiday, is 
received by the next business day. 17 CFR 240.0-3(a) (“[I]f the last day on which [a filing] can be accepted 
as timely filed falls on a Saturday, Sunday or holiday, such [filing] may be [made] on the first business day 
following.”). Therefore, after accounting for weekends and holidays, we preliminarily estimate that about 
29% of the filings (represented by the light grey bars) were late. 
696
  This statistic includes the 20.7% of initial Schedule 13D filings made on the 10
th
 day after the trigger date 
(i.e., the dark gray bar for day 10 in Figure 1) as well as those filings made after the 10
th
 day but still 
considered timely due to holidays or weekends (i.e., the dark gray portion of the bar for days 11-14 in 
Figure 1). See supra note 695. 

179 
ii. Types of Filings 
An initial Schedule 13D filing obligation is triggered by the acquisition of beneficial 
ownership of more than five percent of a covered class, which can be achieved through various 
means, including via the purchase of shares on the open market as well as the receipt of shares 
through events involving off-market transactions. Initial Schedule 13D filings are required in a 
number of different circumstances, only some of which reflect shareholder activism, as noted by 
commenters.
697
 As discussed further below, filings involving the acquisition of shares as a result 
of certain corporate actions and other off-market transactions (e.g., compensatory equity grants 
to executives) are less likely to be characterized as announcements of activist campaigns.  
Based on staff review of over a decade of Schedule 13D filings,
698
 we believe that the 
nature of transaction history disclosures, which are required pursuant to Item 5(c) of Schedule 
13D,
699
 provide a reasonable means of distinguishing, in a large sample, those filings that are 
likely to reflect the acquisition of beneficial ownership through corporate actions or other off-
market transactions as opposed to those that are more likely to represent activist campaigns.
700
 In 
 
697
  See, e.g., letter from STB (stating that “the Commission should recognize that the investors who file on 
Schedule 13D are by no means all activist investors engaging in the types of activities the Williams Act 
seeks to regulate”). 
698
  Staff analyzed initial Schedule 13D filings from EDGAR from calendar years 2011 to 2021 through 
programmatic text analysis and manual review. In particular, programmatic search terms were designed to 
identify text or data associated with transactions or with beneficial ownership obtained through various 
kinds of events (such as initial public offerings (“IPOs”) and equity-based compensation awards). 
Programmatic text analysis was also used to extract transaction history data reported in tabular form. 
Manual review of the extracted text and data and of the filings was used to better understand the nature of 
different filings and to what extent the extracted text and data were systematically related to the different 
types of underlying filings. 
699
  See 17 CFR 240.13d-101, Item 5(c) (requiring reporting persons to “[d]escribe any transactions in the class 
of securities reported on that were effected during the past sixty days or since the most recent filing of 
Schedule 13D”). 
700
  We also note that the nature of transaction history disclosures affects staff’s ability, in practice, to include 
filings in certain analyses. In particular, data on the share accumulation patterns of the filer could only be 
systematically extracted from filings when it was presented in tabular form, and such data is required for 
the analyses presented in Tables 5 and 6 below (in sections C.1.a.iii and C.1.b.i). 

180 
particular, for those filings for which we could not extract a history of transactions in tabular 
form, we found that most reported only one or two transactions, representing off-market transfers 
of shares.
701
 We found that these filings are typically associated with beneficial ownership 
acquired in events such as the consummation of negotiated mergers and acquisitions, IPOs, other 
restructurings, private placements, or compensation awards.
702
 We therefore categorize these 
filings as “corporate action filings.”
703
 In contrast, we found that filings that report a transaction 
history pursuant to Item 5(c) in tabular form are typically associated with the accumulation of 
shares in open-market trading through a series of multiple transactions and are more likely to 
discuss potential plans and proposals that are commonly viewed as characteristic of activist 
campaigns.
704
 We therefore categorize the filings for which we are able to extract a transaction 
 
701
  This observation is based on staff review of initial Schedule 13D filings from EDGAR from calendar years 
2011 to 2021 through programmatic text analysis and manual review. In particular, staff used 
programmatic text analysis to extract potential transaction dates outside of any tabular disclosure by 
searching for any text in the format of a date that seemed to be accompanied by a price and/or a quantity of 
shares. Among the filings for which a tabular history of transactions was not extracted, no more than two 
potential transaction dates were extracted for about 70% of the filings. Upon manual review of the 
remaining 30% of the filings for which a tabular history of transactions was not extracted, staff found that a 
large number of the additional potential transaction dates that were programmatically extracted do not 
actually reflect transactions. We therefore believe that a significant fraction of these remaining filings also 
reflect no more than two transactions. 
702
  This observation is based on staff review of initial Schedule 13D filings from EDGAR from calendar years 
2011 to 2021 through programmatic text analysis and manual review, including significant manual review 
of the disclosures pursuant to Item 3 of the Schedule 13D filings to confirm the source of the shares 
acquired. See supra note 698 for more detail on the analysis and review undertaken. 
703
  While we label all of these filings as “corporate action filings” for simplicity, we acknowledge that some of 
these filings represent transfers that are not strictly related to corporate actions, such as bequests of shares, 
and that our classification methodology is subject to some possible error. For example, 3% of these filings 
reflected in Table 2 below are made by Prominent Activists, as described supra note 692, (representing 
28% of all of the filings by Prominent Activists in Table 1 above) and it is possible that such filings may 
represent activist campaigns incorrectly classified as corporate action filings. 
704
  This observation is based on staff review of initial Schedule 13D filings from EDGAR from calendar years 
2011 to 2021 through programmatic text analysis and manual review, including significant manual review 
of the disclosures pursuant to Item 4 of the Schedule 13D filings regarding the purpose of the transaction. 
See supra note 731 for more detail on the analysis and review undertaken. Examples of plans and proposals 
that were considered characteristic of activist campaigns include potential discussions or recommendations 
with respect to board composition, other governance matters, business strategy, capital structure and 
dividend policies, and a potential sale process for the issuer or a segment of the issuer. 

181 
history in tabular form as “non-corporate-action filings,” which we view as more likely to 
involve activist campaigns, acknowledging that we may be somewhat over-inclusive in our 
application of the term “activist campaign.”
705
 We present a breakdown of the percentages of 
initial Schedule 13D filings in calendar years 2011 through 2021 that we characterize as “non-
corporate-action filings” or “corporate action filings” based on the nature of transaction histories 
extracted from the filings in Table 2.
706
 
Table 2 
Types of Initial Schedule 13D Filings in 2011-2021 
  
Percentage 
of All 
Filings 
Breakdown by Filer Type 
 
Number 
of Filings 
Prominent 
Activists 
Other 
Institutions 
Other 
Individuals 
Non-Corporate-Action 
Filings* 
3,067 20% 28% 65% 7% 
Corporate Action 
Filings** 
12,657 80% 3% 67% 30% 
*  Filings for which tabular trading histories were extracted are categorized as “Non-Corporate-Action Filings” due 
to the results of our staff’s programmatic and manual review of such filings. See note 705 regarding some of the 
limitations of this approach. About 11% of these filings were filed late relative to the current deadline (see note 
706). 
** Filings for which tabular trading histories were not extracted are categorized as “Corporate Action Filings” due to 
the results of our staff’s programmatic and manual review of such filings. See note 703 regarding some of the 
limitations of this approach. About 34% of filings in this category were filed late relative to the current deadline 
(see note 706).
 
The categorization of filings presented in Table 2 was also included by staff in the DERA 
Memorandum. One comment letter addressing the DERA Memorandum indicated that the 
 
705
  In a manual review of these filings, our staff did observe many instances of beneficial ownership held for 
investment purposes, with no stated plans or proposals, which are nonetheless included in our category of 
non-corporate-action filings by virtue of their filing on Schedule 13D (rather than Schedule 13G) and their 
inclusion of a tabular transaction history. In general, our classification methodology is subject to some 
possible error. Further, a filer might not consider itself an “activist investor” or be viewed as such even if it 
is involved in what we label as a non-corporate-action filing and characterize as a potential activist 
campaign for purposes of this memorandum. 
706
  These estimates are based on staff analysis of EDGAR filings, including programmatic text analysis to 
extract tabular trading histories. See supra note 692 regarding the filer type classifications. The 
classification of filings as late (in the notes accompanying the table) accounts for the effect of weekends 
and holidays. See supra note 695. 

182 
analysis presented in that memorandum (which is similar to analysis included in this economic 
analysis) was not replicable because it is “not based on publicly available information,” citing 
staff’s references to programmatic text analysis and manual review.
707
 To clarify, the analyses in 
the DERA Memorandum and this economic analysis are based on publicly available filings and 
datasets. The reliance of the staff’s analysis on programmatic text analysis is limited primarily to 
the extraction of trigger dates, the reported level of beneficial ownership, and the tabular trading 
histories (as discussed in this section) from public initial Schedule 13D filings from EDGAR. 
This data or other data that would allow us to understand the share accumulation patterns of 
fil  ers is not available from any third-party sources that we are aware of, and our extraction of this 
data is not novel; other researchers have extracted similar transaction history data from public 
Schedule 13D filings for the purpose of academic studies.
708
 Further, the manual review (as well 
as certain additional programmatic text analysis) discussed in this section and elsewhere in this 
economic analysis is used to validate our methodologies and not to generate the results of the 
analyses. 
Another commenter addressing the DERA Memorandum raised concerns about potential 
errors in the classification of filings as “non-corporate-action filings” category, as acknowledged 
by staff in the DERA Memorandum, and questioned why the magnitude of any overstatement of 
this category is not quantified.
709
 In the discussion above, we acknowledge that some filings 
 
707
  See letter from Profs. Bishop and Partnoy III. 
708
  See, e.g., Pierre Collin-Dufresne & Vyacheslav Fos, Do Prices Reveal the Presence of Informed Trading?, 
70 J.
 FIN. 1555 (2015) (“Collin-Dufresne & Fos 2015 Study”); Yu Ting Forester Wong, Wolves at the 
Door: A Closer Look at Hedge Fund Activism, 66 M
GMT. SCI. 2347 (2020) (“Wong 2020 Study”). 
709
  See letter from EIM IV. That commenter also stated that the categorization of filings presented in the 
DERA Memorandum would, in some cases, result in “potential double counting” whereby “Schedule 13D 
filings with respect to a single M&A transaction would likely end up in both categories.” Id. We do not 
 
 

183 
classified as non-corporate-action filings do not state plans and proposals typical of activist 
campaigns. That said, these filings are still due consideration. That is, to the extent the share 
accumulation patterns reported in these filings would be affected by a shortened deadline, and to 
the extent these filings are associated with abnormal stock returns, they may still be important to 
consider in evaluating the costs and benefits quantitatively analyzed in this economic analysis. 
We also acknowledge above that some non-corporate-action filings may be incorrectly 
categorized as corporate action filings.
710
 While we acknowledge the potential noise in our data, 
we believe that any large dataset or classification approach applied to a large dataset would be 
subject to some degree of error. Another commenter suggested that we consider using an 
alternative database, stating that it “includes a more comprehensive dataset on non-corporate 
action filings and activist campaigns than that created by DERA.”
711
 O ur initial dataset includes 
all Schedule 13D filings on EDGAR, so we expect it to be fully comprehensive. As discussed 
above, the subset of these filings that are categorized as non-corporate-action filings may not 
include every filing that some may consider to represent an “activist campaign.” However, it is 
not practical to extend the key analyses conducted later in this economic analysis to additional 
 
believe there is a risk of double-counting in this sample given that it is limited to initial Schedule 13D 
filings and each filing appears only in a single category. If a person that is a potential acquiror in an M&A 
transaction files an initial Schedule 13D while assembling an initial position, and then files a Schedule 13D 
amendment upon consummation of the acquisition of the issuer, only the initial Schedule 13D would 
appear (in a single category) in our analysis.  
710
  One commenter suggested that staff “could have alternately analyzed a set of Schedule 13D filed by 
prominent activists to avoid assignment errors.” See Craig Lewis, Review of the Supplemental Data and 
Analysis on Certain Economic Effects of Proposed Amendments Regarding the Reporting of Beneficial 
Ownership, exhibit to letter from EIM IV (“Lewis Study II (exhibit to letter from EIM IV)”). We note that 
prominent activists are responsible for a minority of non-corporate-action filings (per Table 2) and that we 
do not believe it would be appropriate to limit our assessment of costs and benefits to this subgroup of filers 
given that filings by less prominent activist investors and filers that do not consider themselves to be 
“activist” investors are also due consideration and may be associated with similar types of costs and 
benefits. Further, it is not necessarily the case that filings by prominent activists are misclassified as 
corporate action filings, as many of these filers engage in a variety of activities which could include 
involvement in corporate actions of the types listed above.  
711
  See letter from CIRCA IV (recommending the use of the 13D Monitor database). 

184 
filings because staff was, by definition, unable to systematically extract transaction history data 
for the filings classified as corporate action filings, and data on the share accumulation patterns 
of the filer are required for these analyses.
712
 We do not believe that potential misclassifications 
have a meaningful impact on the results or interpretation of the analyses in this economic 
analysis.
713
 
iii. Timing of Share Accumulation 
Because the final amendments will shorten the window between the trigger date and 
filing deadline for an initial Schedule 13D filing, we also consider current practices under the 
baseline with respect to the timing of the filer’s accumulation of shares during the filing window.  
As discussed above, for those initial Schedule 13D filings that we classify as “corporate 
action filings,” which represent about 80 percent of initial Schedule 13D filings (per the second 
row of Table 2), we found that most reported only one or two transactions representing off-
market transfers of shares.
714
 These transfers typically took place on or very close to the trigger 
date.
715
 We found that very few of these transfers occur following the fifth day after the filer
716
 
crosses the five percent threshold.
717
 
 
712
  See Tables 5 and 6 below (in sections C.1.a.iii and C.1.b.i). 
713
  For example, staff found that many filings by prominent activists that were categorized as “corporate action 
filings” did not involve the accumulation of shares on the open market during the filing window, which is 
why staff could not extract a tabular transaction history. This finding also means that the risk that the filer’s 
acquisition of its beneficial ownership interest could be affected by the shortened filing deadline is limited. 
714
  See supra note 701. 
715
  This observation is based on staff review of initial Schedule 13D filings from EDGAR from calendar years 
2011 to 2021 through programmatic text analysis (to extract potential transaction dates, as discussed supra 
note 701, and to extract trigger dates) and manual review. 
716
  References to the term “filer” in this economic analysis are inclusive of the beneficial owner before the 
person actually made a Schedule 13D filing. 
717
  References to a filer “crossing the five percent threshold” in this economic analysis mean that the filer just 
completed acquiring beneficial ownership totaling more than five percent of a covered class or otherwise 
 
 

185 
For initial Schedule 13D filings that we classify as “non-corporate-action filings,” we use 
data extracted from the filings to examine filers’ current patterns of share accumulation. We 
extracted such data from the 3,067 non-corporate-action filings from 2011 through 2021 
reflected in the first row of Table 2. We further refined the sample of filings to exclude late filers 
and filers with no beneficial ownership reported as of the filing date and to adjust for multiple 
filings on the same date.
718
 Our refinements resulted in a sample size of 2,370 non-corporate-
action filings, which we use for Figures 2, 3a, 3b, and Table 3 below. Figure 2 displays the 
percentage of non-corporate-action filings for which filers completed acquiring the total 
beneficial ownership reported in their initial Schedule 13D filing by the specified day after the 
trigger date.
719
   
 
triggered a responsibility to file an initial Schedule 13D. Based on staff analysis of EDGAR filings through 
programmatic text analysis (to extract potential transaction dates, as discussed supra note 701, and to 
extract trigger dates), we estimate that about 2% of the potential transaction dates extracted from the text of 
corporate action filings between 2011 and 2021 occurred between the fifth day after the filer crosses the 5% 
threshold and the subsequent filing date. However, upon manual review, we found that many of these dates 
do not actually reflect transactions (i.e., the dates were extracted because they seemed to relate to a number 
of shares and/or a price, but they reflect information other than specific transactions, as in the case of a 
summary of holdings as of the filing date that appears in the body of the filing). 
718
  When multiple filings were made on the same date and pertain to the same issuer, only the filing reporting 
the largest stake is included in the analysis. 
719
  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis (to 
extract trigger dates, the reported levels of beneficial ownership, and transaction histories, which were all 
used to determine share accumulation patterns; and to categorize filings, as discussed in the previous 
section). See supra section IV.B.3.a.ii. 

186 
Figure 2. Percentage of non-corporate-action filings from 2011-2021 for which filers 
complete share accumulation as of a given day by calendar days after trigger date 
 
The dark grey bars in Figure 2 represent filers that completed acquiring their total 
reported stake by the amended deadline, i.e., five business days after their trigger date.
720
 
Summing the dark grey bars of the figure,
721
 we find that about 80 percent of the filers 
completed acquiring their reported stake by the amended deadline. The remaining approximately 
20 percent of filers (represented in the light grey bars) continued accumulating shares after the 
amended deadline. 
We next explore the significance of additional accumulations of shares after the amended 
deadline. Figures 3a and 3b display, for the same sample of filings as in Figure 2, the percentage 
 
720
  See supra note 695. 
721
  Typically, five business days translates to seven calendar days after weekends are accounted for. 
Occasionally, five business days includes more than seven calendar days because of federal holidays. For 
instance, if an investor crosses the 5% threshold on a Friday and the following Monday is a federal holiday, 
then five business days will equate to 10 calendar days.  

187 
of filers that complete acquiring 90 percent and 75 percent, respectively, of their stake on the 
indicated day after the trigger date.
722
 
Figure 3a. Percentage of non-corporate-action filings from 2011-2021 for which filers 
achieve 90% of their total reported share accumulation as of a given day by calendar days 
after trigger date 
 
 
722
  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis (to 
extract trigger dates, the reported levels of beneficial ownership, and transaction histories, which were all 
used to determine share accumulation patterns; and to categorize filings, as discussed in the previous 
section). See section IV.B.3.a.ii. As discussed above, we use the maximum ownership separately reported 
in a filing as our measure of the total reported ownership, and, in some cases (approximately 7% of all of 
the Schedule 13D filings in Table 2 above), this approach may understate the aggregate ownership of a 
group of co-filers. See supra note 692. Because this measure of total reported ownership is used as the 
denominator to determine the percentage accumulation by a given day in these figures, our estimate of the 
percentage of reported ownership that is accumulated after the fifth business day following the trigger date 
may be overestimated in some cases. For example, we manually reviewed all filings categorized in the light 
grey bars of Figure 3b (those with 25% or more of their reported ownership accumulated after the amended 
deadline) and determined that 1 out of 16 filings in the light grey bars, or 6% of these filings, would not 
have been categorized in this group if our algorithm to extract total reported ownership from the filing was 
as precise as our manual review of the documents. 

188 
Figure 3b. Percentage of non-corporate-action filings from 2011-2021 for which filers 
achieve 75% of their total reported share accumulation as of a given day by calendar days 
after trigger date 
 
The dark grey bars in Figures 3a and 3b represent filers that completed acquiring 90 
percent or 75 percent, respectively, of their reported stake by the amended deadline. Summing 
the dark grey bars of Figure 3a, we find that about 97 percent of the filers completed acquiring 
90 percent of their reported stake by the amended deadline, while the remaining three percent of 
filers (represented in the light grey bars) continued to accumulate shares constituting 10 percent 
or more of their reported stake after the amended deadline. Similarly, summing the dark grey 
bars of Figure 3b, we find that about 99 percent of the filers completed acquiring 75 percent of 
their reported stake by the amended deadline, while the remaining one percent of filers continued 
to accumulate shares representing 25 percent or more of their reported stake after that date. 
The number and percentage of non-corporate action filings with different degrees of 
accumulation from Figures 2, 3a, and 3b are summarized in Table 3.
723
 
 
723
  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis. See 
supra notes 719 and 722. 

189 
Table 3 
Degree of Accumulation by Amended Deadline 
Non-Corporate-Action Filings of Initial Schedule 13D (2011-2021) 
 
Percent of Stake Accumulated by Amended 
Deadline 
 
(1) 
100% 
(full stake) 
(2) 
<100% 
 
(3) 
<90% 
subset of (2) 
(4) 
<75% 
subset of (3) 
Number of campaigns in sample 1,907 463 78 16 
Percent of campaigns in sample 80% 20% 3% 1% 
Average number of campaigns/year 173 42 7 1 
Column 1 of Table 3 (representing the same filings as those in the dark grey bars of 
Figure 2) presents information about campaigns in which the filer completed accumulating their 
shares by the amended deadline (five business days after crossing the five percent threshold). 
Column 2 (representing the same filings as those in the light grey bars of Figure 2) presents 
information about the remainder of the campaigns, in which the filer continued accumulating 
shares after the amended deadline. Columns 3 and 4 (representing the same filings as those in the 
light grey bars of Figure 3a and 3b respectively) present the subsets of the campaigns in Column 
2 in which the filer had accumulated less than 90 or 75 percent, respectively, of their stake by the 
amended deadline (i.e., 10 percent or 25 percent, respectively, or more of their stake was 
accumulated between the amended deadline and their actual filing date).
724
 
b.   Schedule 13G Filings 
During  calendar  year  2022,  the  Commission  received  a  total  of  26,523 Schedule  13G  
 
724
  The figures in Tables 3, 5, and 6 use the same methodology as in Table 2 and as discussed in section 
IV.B.3.a.ii for identifying non-corporate action filings. A different methodology, such as those proposed in 
some comment letters (see supra notes 710-711), would likely yield different campaign counts and 
percentages in Table 3.  

190 
filings,  including  8,433 initial  filings  and  18,090 amendments.
725
  Overall,  the  initial  filings  and  
amendments involved 4,321 unique lead filers.
726
 Additional details specific to the initial filings, 
including their breakdown and characteristics by filer type, are presented in Table 4.
727
 
Table 4 
Initial Schedule 13G Filings in 2022 by Filer Type 
 
QII  
Exempt 
Investor  
Passive 
Investor  Total 
Number of unique lead filers* 567  1,340  793  2,633 
Number of initial filings* 4,660  1,508  2,222  8,433 
Median calendar days from trigger 
date** to filing date 
40  45  10  39 
Median ownership reported in filing 6%  15%  6%  7% 
% filers also filing Form 13F 84%  10%  31%  30% 
*    The total numbers of unique lead filers and of initial filings reported in the table each differ from the sum across 
columns because the same filer may fall into multiple categories and filer type could not be determined for about 
0.5% of the filings. 
** For Passive Investors, the trigger date is the date on which the investor has acquired beneficial ownership of more 
than 5% of a covered class. QIIs and Exempt Investors each have different initial Schedule 13G filing trigger dates 
and filing deadlines. See section II.A.2 above for more detail. 
 
725
  These estimates are based on staff analysis of EDGAR filings. The Proposing Release reported that the 
Commission received 44,059 Schedule 13G filings (12,838 initial filings and 31,221 amendments) in 
calendar year 2020. As noted in the DERA Memorandum, based on further staff review of these reported 
statistics, we believe they included duplicate records, and that the actual number of unique Schedule 13G 
filings received in 2020 was 22,080 filings (6,436 initial filings and 15,644 amendments), which are similar 
to the counts provided for 2022 above. 
726
  This estimate is based on staff analysis of EDGAR filings. “Lead filer” indicates the filer that submits a 
filing to the Commission, though the same filing may include information about additional co-filers.  
727
  These estimates are based on staff analysis of EDGAR filings. Information about the number of days from 
the trigger date to the filing date of the Schedule 13G and the beneficial ownership percentage reported in 
the Schedule 13G, respectively, are based on a subset of filings (about 95% of the filings) for which staff 
was able to extract the required information. We note that staff’s methodology for identifying the filer type 
associated with a given filing has been refined since the publication of similar statistics for 2021 in the 
DERA Memorandum. The Proposing Release reported that, at that time, it was impracticable to produce 
statistics on the median days to file for different types of filers. Our staff has since structured the underlying 
data into a more readily analyzable format and we have included these statistics in the table. See supra note 
692 for details on the extraction of percentage beneficial ownership data from filings. 

191 
Table 4 demonstrates that initial Schedule 13G filings are somewhat concentrated among 
QIIs, who represent about one fifth of the filers but are responsible for over half of the filings.
728
 
Per the second row of the table, QIIs are also more likely to report their ownership of securities on 
a quarterly basis on Form 13F, with 84 percent of QIIs filing a Form 13F (compared to 30 percent 
for all initial Schedule 13G filers).
729
 
C.  Economic Effects of the Final Rules 
In this section, we discuss the anticipated benefits and costs of the final rules, some of 
which cannot be quantified for reasons discussed below. We considered all of these costs and 
benefits in their entirety. We have integrated our discussion of potential effects on efficiency, 
competition, and capital formation within our discussion of the other benefits and costs of the 
final amendments. Our analysis of the economic effects includes certain quantifiable elements 
based on historical data.
730
 These elements may provide insights into certain benefits and costs—
including with quantitative data and also with non-quantifiable benefits and costs—but those 
insights are conditional on, and constrained by, the reactions of market participants to the final 
amendments. Finally, we have indicated where quantitative data discussed in our analysis do not 
represent the Commission’s cost or benefit estimates of the final amendments. 
1. Shortened Initial Schedule 13D Filing Deadline 
The final amendment to Rule 13d-1(a) shortens the initial Schedule 13D filing deadline 
from 10 calendar days to five business days after the date of the acquisition that results in a 
 
728
  Per the first row of the table, QIIs represent 567 out of 2,633 unique lead filers, or about 22% (567/2,633) 
of the unique lead filers. Per the third row of the table, QIIs are responsible for 4,660 out of 8,433 initial 
filings, or about 55% (4,660/8,433) of the initial filings. 
729
  Institutional investment managers that use the United States mail (or other means or instrumentality of 
interstate commerce) in the course of their business and that exercise investment discretion over $100 
million or more in section 13(f) securities must file Form 13F. 
730
  See infra section IV.C.1.a.iii, Table 5 and section IV.C.1.b.i, Table 6. 

192 
person’s beneficial ownership of a covered class exceeding five percent of that class. The final 
amendments to Rule 13d-1(e), (f), and (g) similarly shorten the initial Schedule 13D filing 
deadline for investors who are no longer eligible to file Schedule 13G in lieu of Schedule 13D. 
a. Benefits 
The disclosures required under Schedule 13D consist, among other matters, of 
information related to significant shareholders and potential changes of corporate control. An 
earlier filing deadline for Schedule 13D will allow information to be incorporated into securities 
prices sooner and allow market participants to make better-informed investment decisions. 
Shortened filing deadlines may lessen the opportunity for what we have termed “informed 
bystanders” to gain advantages over the average selling shareholder, as further discussed below, 
which could ultimately enhance trust in markets and thereby capital formation. Finally, we 
expect that shortening the deadline will reduce overall informational asymmetries in the market, 
thereby improving liquidity, which benefits all market participants, including activists. While we 
think the benefits to market participants arising from the final amendments will be significant, 
these benefits are not quantifiable.  
i.  Extent of Earlier Disclosure of Information  
This subsection provides some data about the extent of information that may be revealed 
to the market more quickly under the final amendments, as support for the discussion of benefits 
in the subsections that follow.
731
 As discussed in section IV.B.3 above, among initial Schedule 
13D filings that were timely filed in 2022 in accordance with the existing filing deadline, roughly 
 
731
  See infra sections IV.C.1.a.ii through iv. 

193 
41 percent were already filed within the amended filing deadline.
732
 The final amendments may 
thus result in earlier filing for about 59 percent of timely Schedule 13D reports.  
For those initial Schedule 13D filings that would be filed earlier under the amended filing 
deadline, the amount of market-moving information that could be revealed more quickly under 
the final rules varies across filings. To better understand the extent of information that could be 
more quickly incorporated into market prices under a shortened filing deadline, we explore how 
the stock market reacts on and around Schedule 13D filing dates for different types of filings. 
Figure 4 presents the average pattern in abnormal returns
733
 for filings from 2011 through 2021 
that we classify as “non-corporate-action filings,” using the methodology described in section 
IV.B.3.ii.
734
 In order to align the trigger and filing dates across the filings reflected in the graph, 
we limit the filings included in the figure to those that used the full 10-day filing window to 
file.
735
  
 
732
  About 71% of initial Schedule 13D filings are timely filed in accordance with the existing filing deadline. 
See section IV.B.3.a above. Our analyses of costs and benefits generally exclude the remaining roughly 
29% of filings, which are filed late based on the existing filing deadline, because it is difficult to predict 
how filers that are not in compliance with the current filing deadline will react to a change in this deadline. 
733
  Throughout this subsection (and sections IV.C.1.a.iii and IV.C.1.b.i below, as well as statements in other 
sections referencing the results of the data analyses presented in these sections), an issuer’s “abnormal 
return” represents the difference between the issuer’s market stock return and the Center for Research in 
Security Prices (“CRSP”) value-weighted market index. We acknowledge that abnormal returns for a given 
issuer may be sensitive to the choice of benchmark and affected either positively or negatively by other 
market or issuer events during the horizon of the analysis, though the impact of such confounding effects 
may be reduced when looking at the average abnormal returns across many issuers. References in other 
subsections to “abnormal returns” in the context of academic studies reflect the definitions of this term in 
each individual study (which may use different models to compute benchmark or “normal” returns for the 
purpose of isolating the “abnormal” portion of the returns). 
734
  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis as well 
as data from the CRSP database. 
735
  Figure 4 reflects a total of 534 filings, in all of which filers used the full 10-day filing window to file. To 
arrive at this figure from the total 3,067 non-corporate-action filings in Table 2, we retained only one filing 
when multiple filings were made for the same issuer on the same day and limited the sample to filings for 
which stock return data is available. These restrictions led to a sample of 2,553 non-corporate-action 
filings. The additional requirement that the filer used the full 10-day filing window to file results in the 
 
 

194 
Figure 4. Cumulative abnormal return around filing date for “non-corporate-action 
filings” (from Table 2) from 2011-2021 that were filed 10 calendar days after trigger date 
 
Figure 4 demonstrates that the stocks of issuers that are the subject of these filings 
experience an abnormal return of roughly three percent from day seven—the approximate 
number of calendar days corresponding to five business days—following the trigger date to the 
day after the filing date.
736
 This pattern of returns suggests that, for this group of filings, there is 
market-moving information that is currently not fully incorporated into market prices as of the 
amended filing deadline, and which would be likely to be revealed earlier if similar filings were 
 
figure reflecting about 21% of this sample of 2,553 filings. If we instead consider the subset of the 2,553 
non-corporate-action filings that were filed after the amended filing deadline but not after the current filing 
deadline (i.e., the subsample that would be more likely to be affected by a change in the filing deadline), 
the figure reflects about 37% of this subsample of filings. Data on the abnormal returns between five 
business days after the trigger date to the actual filing date for additional subsets of non-corporate-action 
filings is presented in Table 5 below. 
736
  The amended deadline corresponds to approximately 7.25 calendar days: (365.25 calendar days per year ÷ 
252 business days per year) × (5 business days). 

195 
made under the amended filing deadline.
737
 We estimate that about 43 percent of timely non-
corporate-action filings are currently filed by the amended filing deadline, such that the 
remaining 57 percent of timely non-corporate-action filings would be subject to earlier disclosure 
under the final amendments and are expected to generate the benefits discussed in the following 
subsections.
738
 
We next consider the filings that we classify as “corporate action filings.” The average 
pattern in abnormal returns for these filings from 2011 through 2021 is presented in Figure 5.
739
 
In order to align the trigger and filing dates across filings reflected in the graph, we again limit 
the filings included in the figure to those that used the full 10-day filing window to file.
740
 
 
737
  One commenter stated that the DERA Memorandum included “no discussion of what may cause [the gains 
after the filing date in the figure], or, importantly, whether, if the filing period is shortened, the gains that 
the Commission labels as ‘abnormal’ in the five-day window prior to filing will simply shift to the period 
after the amended filing deadline.” See letter from EIM IV. We note that the pattern of some additional 
positive price movement, or price drift, after the filing date is consistent with what has been found in 
academic studies and that researchers generally use an event window including a period after the filing date 
(such as from 20 days prior to 20 days after a Schedule 13D filing date) to capture what is believed to be 
the full abnormal return associated with a Schedule 13D filing. See, e.g., Brav et al. 2022 Study. Such post-
disclosure abnormal return patterns have been found to be associated with a wide variety of types of 
corporate news. See, e.g., David Hirshleifer et al., Driven to Distraction: Extraneous Events and 
Underreaction to Earnings News, 64 J.
 FIN. 2289 (2009) (stating that “[i]n several kinds of tests, there is on 
average a delayed price reaction to news that has the same sign as the immediate response”). However, we 
continue to believe that it is reasonable to expect that, all else equal, an accelerated filing date would be 
likely to accelerate the returns between the amended filing date and the day after the current actual filing 
date (which, per Figure 4, is concentrated around the actual filing date itself) rather than the returns shifting 
to the period after the amended filing deadline because this abnormal return likely reflects the immediate 
market reaction to the filing. 
738
  These estimates are based on staff analysis of EDGAR filings. The estimates are based on the same sample 
of non-corporate-action filings from 2011 through 2021 used in Figures 2, 3a, and 3b above (i.e., the 
sample refined to exclude late filers and filers with no beneficial ownership reported as of the filing date 
and to adjust for multiple filings on the same date).
 
See supra note 718 and accompanying text. 
739
  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis (to 
categorize filings, as discussed in section IV.B.3.a.ii above, and to extract the required dates) as well as 
data from the CRSP database. 
740
  Figure 5 reflects a total of 1,492 filings, in all of which filers used the full 10-day filing window to file. To 
arrive at this figure from the total 12,657 corporate action filings in Table 2, as in the case of Figure 2, we 
retained only one filing in cases where multiple initial Schedule 13D filings were made on the same day for 
the same issuer. The figure is also limited to filings for which stock return data is available (generally, 
 
 

196 
Figure 5. Cumulative abnormal return around filing date for “corporate action filings” 
(from Table 2) from 2011-2021 that were filed 10 calendar days after trigger date 
 
Figure 5 demonstrates that, in contrast to the pattern observed for non-corporate-action 
filings, the vast majority of the market stock price reaction to corporate action filings occurred 
close to the day on which the filers crossed the five percent ownership threshold, triggering the 
requirement for a Schedule 13D filing. The limited market reaction between the amended 
deadline—five business days after the trigger date (or approximately seven calendar days)—and 
the day after the actual filing date implies that little market-moving information is revealed 
during this period. We did not conduct a systematic analysis to investigate potential explanations 
for this pattern of abnormal returns. However, it is possible that this pattern may reflect the 
existence of other disclosures about the associated events (outside of the Schedule 13D filing) 
 
issuers listed on the NYSE, NYSE American, NASDAQ, and NYSE Arca exchanges). These restrictions 
led to a sample of 6,125 corporate action filings. The additional requirement that the filer used the full 10-
day filing window to file resulted in the figure reflecting about 24% of this sample of 6,125 filings. If we 
instead consider the subset of the 6,125 corporate action filings that were filed after the amended filing 
deadline but not after the current filing deadline (i.e., the subsample that would be more likely to be 
affected by a change in the filing deadline), the figure reflects about 41% of this subsample of filings. 

197 
that are made public on or close to the trigger date.
741
 To the extent that the most value-critical 
information contained in the filing is already known to the market prior to the amended filing 
date (through legal means, such as other disclosures made outside the Schedule 13D), we do not 
expect the amended filing deadline to result in the earlier revelation of significant new 
information for corporate action filings. 
ii. Improved Information Content of Stock Prices  
The amended Schedule 13D initial filing deadline will get material information to 
investors faster. This will allow new information contained in Schedule 13D filings to be 
incorporated into market prices earlier,
742
 allowing investors and issuers to make better-informed 
decisions.  
Commenters agreed that the acceleration of filing deadlines would allow market prices to 
incorporate the information contained in a filing earlier,
743
 investors to make better-informed 
decisions,
744
 and issuers to make better-informed decisions in responding to the presence of a 
 
741
  Staff reviewed a small number of individual filings and confirmed the existence of such disclosures, such 
as a Form 8-K disclosure on or within a day of the trigger date of a merger agreement or a bankruptcy, in 
the cases that were reviewed. However, we did not conduct more comprehensive or systematic analysis of 
such disclosures or other potential explanations for why the vast majority of the market stock price reaction 
for this group of filings occurred close to the trigger date and before the Schedule 13D was filed. 
742
  One commenter stated that our use of the term “market efficiency” to describe the earlier incorporation of 
information in market prices were in fact references to “strong-form market efficiency wherein share prices 
fully reflect all public and private information” which is viewed “as an idealized and unobtainable 
standard” in contrast to semi-strong market efficiency (wherein prices reflect all public information). The 
commenter noted that “defining mispricing in terms of private information that is not currently reflected in 
share price is a misleading characterization of price formation that serves as an impractical basis for 
regulation.” See Lewis Study I (exhibit to letter from EIM I). Some commenters similarly questioned 
whether a delay in market prices reflecting a significant shareholder’s investment constituted a mispricing 
that warranted correction. See letters from AIMA; CIRCA I; Dodge & Cox; EIM I; Prof. Gordon; Profs. 
Schwartz and Shavell I. To avoid confusion, we no longer use the term “market efficiency” in this context, 
focusing instead on the earlier updating of market prices and resulting effects on decision-making (and 
thereby efficiency of resource allocation). We also no longer refer to prices that do not yet reflect the 
information in a Schedule 13D filing before it is filed as “mispricing.” 
743
  See letters from AFREF; Nasdaq; TIAA. 
744
  See letters from AFREF; HMA I; Hoak; Nasdaq; TIAA. 

198 
new significant shareholder.
745
 On the other hand, some commenters questioned whether a 
shortened filing deadline would enhance market efficiency or requested further evidence or 
analysis of the effects on market efficiency.
746
 
As suggested by a commenter,
747
 we have considered patterns in abnormal returns around 
Schedule 13D filings to better assess the potential effect of the accelerated filing deadline on 
market prices (and, thereby, on decision-making by market participants). We note that decision-
making and the efficiency of resource allocation are unlikely to materially improve with a 
shortened deadline for corporate action filings because, as discussed in the previous section, the 
vast majority of any market price reaction around the time of these filings seems, on average, to 
occur well before the amended deadline.
748
  
By contrast, we documented that for non-corporate-action filings there are, on average, 
meaningful abnormal returns between the amended filing deadline and the day after the filing 
date.
 749
 These abnormal returns patterns suggest that market-moving information is revealed 
during this period. A shortened deadline will accelerate the remaining market price reaction with 
respect to non-corporate-action filings, as investors incorporate the new information into their 
buying and selling decisions. Investors and issuers, with earlier access to the information and an 
updated stock price, may then be able to make better-informed investment and resource 
allocation decisions. At the level of the economy as a whole, better investment and resource 
 
745
  See letters from NIRI; SCG. 
746
  See letters from AIMA; Dodge & Cox; EIM I; Rice Management. 
747
  See Lewis Study I (exhibit to letter from EIM I) (stating that “the Commission could have analyzed equity 
trading activity and abnormal returns around triggering and announcement dates to properly assess 
potential gains to market efficiency”). 
748
  See supra section IV.C.1.a.i. 
749
  See id. 

199 
allocation decisions by individual issuers and investors under the amended filing deadline may 
improve the efficiency of resource allocation overall.  
As discussed in the previous section, about 57 percent of timely non-corporate-action 
initial Schedule 13D filings, or about 122 filings of this type per year, are currently filed after the 
amended deadline.
750
 Based on this historical filing behavior, we expect the amended deadline 
may give rise to an earlier market reaction than would otherwise have been experienced for 
approximately this number of filings per year. Thus, investors, issuers, and other market 
participants may have access to updated stock prices and the information disclosed in a Schedule 
13D up to three days earlier for over 120 such events per year according to current estimates, 
allowing them to make better-informed decisions in each of those periods.    
Some commenters stated that the market cannot impound new information into a price if 
that information has not been developed, or more generally indicated that the benefits of a 
shortened deadline were predicated on investors not forgoing investments that may give rise to a 
Schedule 13D filing in response to the amended deadline.
751
 We continue to believe that, holding 
the content of the filings constant, amending the deadline will allow for more informed decision-
making and improve the information content of stock prices, with associated benefits for 
investors, issuers, and other market participants. We acknowledge that the improvement in the 
efficiency of resource allocation at the economy level could be mitigated to the extent that some 
of the research and/or investment activities giving rise to these filings are reduced or otherwise 
change after the adoption of the final amendments (see section IV.C.1.b).   
 
750
  See supra section IV.C.1.a.i. 
751
  See letters from CIRCA I; EIM I; Profs. Schwartz and Shavell I; Profs. Schwartz and Shavell II. 

200 
iii. Transfers from Selling Shareholders and Trust in 
Markets  
In the days between the trigger date for an initial Schedule 13D and the filing date of that 
Schedule 13D under the current 10-day deadline, various investors may buy and sell shares of 
the subject issuer. The resulting trading losses and gains (whether or not the trading is based on 
information from or about the Schedule 13D filer) generally represent wealth transfers
752
 among 
individual investors, not net costs to investors (and market makers) as a group. However, the 
possession of an informational advantage regarding the future control or potential strategic or 
operational changes at an issuer, together with the knowledge of the precise date of informational 
revelation, creates a near-arbitrage opportunity. The incentives to gain access to such 
information, and thus profit from it, can be strong. An extended window of time between the 
trigger date and the date on which the filer’s beneficial ownership and plans are made public on 
Schedule 13D may increase the likelihood of information leakage to “informed bystanders”
753
 
who may then buy shares during the window of time just before the filing of the Schedule 13D. 
Such informed bystanders can thus profit from access to this information rather than from their 
own fundamental research or effort to improve the issuer’s performance. We acknowledge, 
however, that some of these informed bystanders may be associated with shareholder value 
 
752
  We use the term “transfer” to distinguish the trading losses and gains from costs and benefits that may 
result from rule. See Current Guidance on Economic Analysis in SEC Rulemakings (Mar. 16, 2012) 
(available at https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf) at n.32.  
753
  In a similar analysis in the DERA Memorandum, staff used the term “opportunistic traders” to reference 
these parties. We have revised the term used in response to a comment that this term seemed pejorative as 
well as comment letters that appeared to presume that the term was inclusive of the filer. See, e.g., letters 
from CIRCA IV; EIM IV.  

201 
creation to the extent they may represent the entry of additional “activism-friendly” shareholders, 
which academic researchers have associated with greater returns to activism.
754
 
Investors may possess information regarding activism for a variety of reasons. Some may 
emerge from fundamental research. For example, some investors may use research to identify 
companies that are likely to be targeted by activists. These investors may be able to glean 
information about the likelihood of an activist campaign from, for example, unexpected increases 
in trade volume. However, information leakage that creates a near-arbitrage opportunity for some 
investors (who themselves have not performed fundamental research to generate the information) 
is likely to erode trust in markets, reducing participation and capital formation.
755
 We would 
expect that amending the filing deadline would increase perceptions of fairness in the markets, 
which could, in turn, lead to benefits in participation and liquidity. These benefits cannot be 
quantified but are nonetheless important.
 
 
Academic research provides evidence consistent with informed bystanders buying shares 
just prior to Schedule 13D filings. For example, studies have identified unusual EDGAR search 
activity during the 10 days prior to a Schedule 13D filing
756
 and abnormally high trading volume 
on the same day the filer crosses the five percent threshold
757
 as evidence of certain traders other 
 
754
  See, e.g., Simi Kedia et al., Institutional Investors and Hedge Fund Activism, 10 REV. CORP. FIN. STUD. 1 
(2021) (“Kedia et al. 2021 Study”) (finding that a one-standard-deviation increase in the pre-existing 
“activism-friendly” ownership is associated with an increase in the 36-month buy-and-hold returns of 7.8% 
to 15.5%); Wong 2020 Study (finding that a proxy for a dispersed group of investors aligned with the 
activist buying shares before the Schedule 13D filing, measured based on abnormal trading volume on the 
date the activist exceeds 5% ownership, is associated with an increase in the buy-and-hold return over the 
course of an activist campaign of 5.5% to 8.4%). 
755
  See, e.g., Luigi Guiso et al., Trusting the Stock Market, 63 J. FIN. 2557 (2008).  
756
  See Ryan Flugum et al., Shining a Light in a Dark Corner: Does EDGAR Search Activity Reveal the 
Strategically Leaked Plans of Activist Investors?, J. F
IN. QUANT. ANALYS. (forthcoming 2023), available at 
https://ssrn.com/abstract=3612507 (“Flugum et al. 2023 Study”). 
757
  See, e.g., Wong 2020 Study. 

202 
than the filer being aware of the filer’s intentions. While the researchers note that some of the 
trading behavior investigated in these studies may simply reflect the reaction of sophisticated 
investors to unusual, public market data (such as that associated with the filer’s purchases) in 
advance of a Schedule 13D filing, further evidence led them to suggest that at least some of the 
increased trading is by informed parties.
758
 
Other research identifies specific types of informed bystanders or more direct evidence of 
those traders’ source of information. For example, one study presented evidence suggesting that 
the broker of a filer may leak information about the filer’s trades to other traders before the 
Schedule 13D filing.
759
 Another study observed a correlation between purchases by insiders and 
by the filer before the Schedule 13D filing, and suggested this trading reflected inside 
information and insiders’ surveillance of trading volume and ownership data for the issuer’s 
stock.
760
 
Several commenters indicated that the economic analysis in the Proposing Release lacked 
evidence or quantitative analysis with respect to potential effects on selling shareholders under 
 
758
  For example, the researchers found that institutions unusually accessing EDGAR filings for issuers prior to 
Schedule 13D filings each appeared to engage in this activity primarily for Schedule 13D filings pertaining 
to a particular filer, rather than predicting Schedule 13D filings in general. See Flugum et al. 2023 Study. 
Also, both this study and the abnormal volume study discussed above found evidence of abnormal trading 
activity even in the case of Schedule 13D filings made by previous Schedule 13G filers, which are less 
likely to be accompanied by unusual market activity associated with trades by the filer. See Flugum et al. 
2023 Study; Wong 2020 Study.  
759
  See Marco Di Maggio et al., The Relevance of Broker Networks for Information Diffusion in the Stock 
Market, 134 J.
 FIN. ECON. 419 (2019) (finding that the “best clients” of the broker used by a filer, i.e., those 
generating a large share of the broker’s business, buy more of the target stock than other institutional 
investors in the 10 days prior to a Schedule 13D filing). 
760
  See Georgy Chabakauri et al., Trading Ahead of Barbarians’ Arrival at the Gate: Insider Trading on Non-
Inside Information (Colum. Bus. Sch. Rsch. Paper, Jan. 2022), available at 
https://ssrn.com/abstract=4018057 (finding a significant concurrence between purchases of stock by 
insiders of the issuer and purchases by an activist in the 60 days, and particularly in the last 10 days, 
preceding a Schedule 13D filing). 

203 
the current Schedule 13D filing deadline.
761
 Others questioned the magnitude of any effects with 
respect to selling shareholders.
762
 To better understand the potential effects of a shortened 
deadline on the type of activity discussed in these studies, we designed a quantitative analysis 
intended to estimate the wealth transfers, under the current rules, from selling shareholders to 
potential informed bystanders between the amended filing deadline and the actual filing dates. 
Our analysis focuses on those initial Schedule 13D filings that we classify as “non-
corporate-action filings,” which represent about 20 percent of initial Schedule 13D filings (per 
the first row of Table 2).
763
 For filings that we classify as “corporate action filings,” we found 
that there was limited stock price movement, on average, between the amended deadline and the 
day after the actual filing date.
764
 We therefore expect that it is unlikely that there would have 
been material wealth transfers from selling shareholders to informed bystanders just prior to the 
actual filing date of these filings. 
 
761
  See, e.g., Lewis Study I (exhibit to letter from EIM I) (stating that the Commission could have attempted to 
quantify the intended benefits of the rule change to selling shareholders by “[e]stimat[ing] losses to selling 
shareholders with one of the trading models used to estimate damages in shareholder 10b-5 actions,” 
wherein “[h]igh end estimates of costs could assume that all shares sold (after adjusting for estimates of 
dealer activity) during this period came from sales made by investors that would have benefited from 
having the information on Schedule 13D earlier”); letter from Profs. Swanson, Young, and Yust (discussing 
investors that sell prior to a Schedule 13D filing and related statistics and stating that “the forgone returns 
seem too small in of themselves to justify a change”); Profs. Bishop and Partnoy I (stating that “an intuitive 
concern about investors who might be disadvantaged by selling during the window before such filings” is 
unsupported by evidence).  
762
  For example, some commenters stated that any cost borne by selling shareholders is minor relative to 
benefits to other shareholders of the Schedule 13D filer’s actions. See letters from AIMA; CIRCA I; EIM I; 
ICM; Profs. Schwartz and Shavell II; S. Lorne. We consider the potential benefits to shareholders from a 
filer’s actions in section IV.C.1.b.i below. 
763
  We make the same exclusions from the full sample of non-corporate-action filings as in the case of Figures 
2, 3a, 3b, and Table 3 above (excluding late filers and filers with no beneficial ownership reported as of the 
filing date and retaining only one filing among multiple filings on the same date), resulting in a sample of 
non-corporate-action filings consisting of 2,370 filings from 2011 through 2021. See supra note 718 and 
accompanying text for more information on the sample restrictions in the analysis. 
764
  See supra section IV.C.1.a.i. 

204 
For the sample of non-corporate-action filings, we first examine abnormal
765
 trading 
volumes in the days prior to an initial Schedule 13D filing to identify trading activity that could 
be curtailed by a shortened filing window. We focus on trading before the filing date to exclude 
trading in reaction to the information in the filing and use information on the filer’s trades from 
Schedule 13D to exclude their trading activity from this analysis. 
For non-corporate-action filings from 2011 to 2021, Figure 6 compares the average 
trading volume excluding the filer’s accumulations (“Total Non-Filer Trading Volume”) to the 
filers’ average pattern of accumulations (“Filer Trading Volume”).
766
 Both measures are scaled 
by the normal level of daily trading volume in the issuer’s stock such that a value of one for 
“Total Non-Filer Trading Volume” would mean there is zero abnormal trading volume outside of 
the filer’s trades while a value of two for “Total Non-Filer Trading Volume” would mean that 
trading volume is double the usual level (i.e., there is an amount of abnormal trading volume 
equal to the amount of normal trading volume). Because we exclude trading on or after the filing 
date, the graph ends before day 10. 
 
765
  We focus on abnormal trading volume rather than total trading volume because it is likely that the trades 
comprising the normal amount of trading volume represent investors making an exchange based on the 
same information set, even though ex post it may appear that the buyer turned out to be “lucky” and the 
seller “unlucky,” as would be the case before the revelation of other positive news. 
766
  The estimates in the figure are based on staff analysis of EDGAR filings through programmatic text 
analysis (to categorize filings, as discussed in section IV.B.3.a.ii above, and to extract the required dates) as 
well as data from the CRSP database. The figure reflects the 1,686 non-corporate-action filings out of the 
total 2,370 filings in our analysis that had trading volume data available (generally reflecting issuers listed 
on the NYSE, NYSE American, NASDAQ, and NYSE Arca exchanges). Abnormal trading volume is 
computed as the excess of trading volume over the average daily trading volume in the 60-day period 
beginning 120 days prior to the given date.  

205 
Figure 6. Trading volumes around trigger date for non-corporate-action filings from 2011-
2021, excluding trading volume on or after actual Schedule 13D filing date 
 
Abnormal trading volume in an issuer’s stock by traders other than the filer peaks on the 
same day the filer’s trading peaks (i.e., on the trigger date, when the filer crosses the five percent 
threshold). However, abnormal trading volumes continue to remain elevated for the rest of the 
10-day filing window, including after the amended filing deadline, which occurs at 
approximately day seven after the trigger date, which may represent purchases by informed 
bystanders that were aware of the impending campaign. We note that there is also abnormal 
trading well in advance of the trigger date, and that this and other abnormal trading volume in the 
graph could reflect trading by informed bystanders, but could also reflect other traders simply 
reacting to the same news, market conditions, or trends in issuer performance that may have 
attracted the filer to engage in its transactions. 
To understand the potential transfers from selling shareholders to informed bystanders 
that may be prevented or reduced by a shortened deadline, we focus on abnormal trading volume 
by traders other than the filer in the days between the fifth business day after the filer crosses the 
five percent threshold and the actual filing date. As in the case of Figure 6, we exclude trading on 

206 
the actual filing date because there is typically significant trading volume in reaction to the filing 
on that date. While it is possible that there is additional trading by informed bystanders on the 
actual filing date but before the actual time that the filing becomes public, we are unable to 
distinguish any such trading from trading in reaction to the filing. For this reason, we exclude 
this trading, and our analysis will not include the transfers between informed bystanders and 
selling shareholders on the filing date.
767
 
In order to estimate potential transfers from selling shareholders to informed bystanders, 
we also collected information on abnormal returns to understand the amount of appreciation 
obtained by potential informed bystanders by trading prior to the filing becoming public 
information. The pattern of abnormal returns
768
 varies across scenarios in which the filer 
completed accumulating their reported stake by five business days after the trigger date but 
submitted their Schedule 13D filing later, and those in which the filer was still accumulating 
shares after five business days. Figures 7a and 7b present the average pattern of abnormal returns 
for these two scenarios separately. In order to align the trigger and filing dates across filings in 
the graph, we limit the filings in the figure to those that used the full 10-day filing window to 
file.
769
 
 
767
  Given that the measured abnormal trading volume trends down over the filing window, as demonstrated in 
Figure 6, we expect that the effect of excluding this potential intra-day abnormal trading volume is 
relatively small. 
768
  As discussed above, throughout this section (as well as section IV.C.1.a.i above and section IV.C.1.b.i 
below), an “abnormal return” represents the difference between an issuer’s market stock return and the 
CRSP value-weighted market index. See supra note 733. 
769
  Besides the sample restrictions described supra note 763, Figures 7a and 7b are also limited to filings for 
which stock return data is available (generally, issuers listed on the NYSE, NYSE American, NASDAQ, 
and NYSE Arca exchanges). This restriction leads to a sample of 2,097 non-corporate-action filings. Filers 
of 1,669 of these filings completed acquiring their reported stake by the amended deadline, while the filers 
of the remaining 428 filings continued to accumulate part of their reported stake afterwards. The additional 
requirement in Figure 7a that the filer used the full 10-day filing window to file results in Figure 7a 
 
 

207 
Figure 7a. Cumulative abnormal return around filing date for non-corporate-action filings 
from 2011-2021 filed 10 days after trigger date, and without filer purchases after amended 
filing deadline 
 
 
reflecting 294 non-corporate-action filings, or 18% of the subsample that completed acquiring their stake 
by the amended deadline. The similar requirement in Figure 7b results in this figure reflecting 205 non-
corporate-action filings, or 48% of the subsample that continued to accumulate part of their reported stake 
after the amended deadline.  

208 
Figure 7b. Cumulative abnormal return around filing date for non-corporate-action filings 
from 2011-2021 filed 10 days after trigger date, and with filer purchases after amended 
filing deadline 
 
 
The transfers from a selling shareholder to a potential informed bystander between the 
amended filing deadline and the current filing date would consist of the stock return between the 
day that they sell and the day after the filing date, when the information previously known to 
their trading counterparty is known to the whole market. Based on Figures 7a and 7b, there are 
meaningful abnormal returns between the amended filing deadline (which occurs around day −3 
in the figure, as five business days generally corresponds to seven calendar days) and the day 
after the actual filing date for both subsamples of the filers in our analysis, with a greater 
abnormal return when the filer is still accumulating shares after five business days (i.e., Figure 
7b). 
To estimate transfers from selling shareholders to informed bystanders that may be 
occurring between the amended filing deadline and actual filing dates, and thus might be avoided 
under the final rules, we used the data discussed above to conduct the analysis presented in Table 

209 
5.
770
 As discussed in detail in s ection IV.C.1.b below, the extent of filer share accumulation after 
the amended deadline may be associated with the likelihood that filers may modify or forgo 
these types of campaigns after the effective date of the final amendments. We therefore estimate 
the transfers separately for filings with the different patterns of filer share accumulation from 
Table 3.
771
  
 
770
  The estimates in the table are based on staff analysis of EDGAR filings through programmatic text analysis 
(to categorize filings, as discussed in section IV.B.3.a.ii above, to extract the data necessary to determine 
share accumulation patterns, as discussed supra note 719, and to extract the required dates) as well as data 
from the CRSP database. Estimates of abnormal returns and abnormal trading volumes (Rows 2 and 3) are 
based on the campaigns for which the required data was available. The estimate of transfers assumes trades 
on a given day are executed at the average of the closing price on that day and the closing price on the 
previous day and that the wealth transfer per share traded is the abnormal return experienced based on that 
starting price until one day after the filing date. For the aggregate estimate of the transfers from selling 
shareholders, the estimated average transfers from selling shareholders per campaign (in Row 5) is used as 
a proxy for the transfers from selling shareholders in campaigns for which the data required to produce this 
estimate was unavailable (about 19% to 49% of campaigns in any given category). Abnormal trading 
volume is computed as the excess of trading volume over the average daily trade volume in the 60-day 
period beginning 120 days prior to the given date. We note that one commenter stated that, based on the 
description of the estimate of transfers in the DERA Memorandum, a more accurate estimate would 
“account for abnormal price changes by adjusting for overall stock market variations.” See Lewis Study II 
(exhibit to letter from EIM IV). The description in the DERA Memorandum was imprecise on this point. 
The estimates of transfers in the memorandum as well as the estimates presented here are based on 
abnormal returns that do in fact adjust for market variations. See supra notes 733 and 768. Another 
commenter stated that “CRSP volume is known to be inaccurate for NYSE-listed stocks because the CRSP 
data source rounds volume to the nearest hundred.” See letter from Profs. Bishop and Partnoy III. We 
acknowledge this potential issue in CRSP volume data but note that the average and aggregate statistics 
that we present in the table should not be meaningfully affected by such rounding error. 
771
  The columns of Table 5 reflect the same subsamples of filings as the corresponding columns of Table 3 
with the additional restriction that filings are only included if there would have been an opportunity to trade 
on a day between the amended deadline and the actual filing date.   

210 
Table 5 
Analysis of Potential Transfers from Selling Shareholders to Informed Bystanders 
by Degree of Filer Accumulation by Amended Filing Deadline, Annualized (2011-2021) 
 Percent of Stake Accumulated by Filer 
by Amended Deadline 
 (1) 
100% 
(full stake) 
(2) 
<100% 
 
(3) 
<90% 
subset of (2) 
(4) 
<75% 
subset of (3) 
(1) Average number of campaigns / 
year with potential transfers 
between amended deadline and 
filing date* 
54 41 7 1 
Filer/Campaign Characteristics:     
(2) Median abnormal return from 
amended deadline to day after 
filing 
.5% 1.9% 3.1% 6.9% 
Analysis of Transfers:      
(3) Average total abnormal trading 
volume other than filer’s trades 
between amended deadline and 
filing date (% shares outstanding) 
.8% .7% 1.5% 2.6% 
(4) Average transfers from selling 
shareholders, per campaign** 
$425K $640K $1.8M $5.1M 
(5) Aggregate transfers from selling 
shareholders for this category 
$23M/year $26M/year $13M/year $7M/year 
*   These campaigns represent the subset of the filings in Table 3 for which there are trading days between the fifth 
day after the trigger date and the filing date. 
** Transfers are computed as the sum across days of the abnormal trading volume (less the filer’s trades) in shares 
on a given day between the amended and actual filing date times the abnormal return from that day to the day 
after the filing date. See note 770 for additional details.  
Rows 2 and 3 of Table 5 present information on the abnormal returns and abnormal 
trading volume between five business days after the trigger date (the amended deadline) and the 
filing date in each subset of campaigns. Both the abnormal returns (which would drive the extent 
of wealth transferred by trading with an informed bystander in this timeframe) and the abnormal 
volume (which characterizes the potential number of such trades) are higher for campaigns in 

211 
which the filer is still accumulating a significant portion of their stake after five business days 
following the trigger date.  
The estimates in Row 5 of Table 5 represent potential transfers from selling shareholders 
to informed bystanders after five business days following the trigger date for each subset of 
campaigns based on a day-by-day analysis of the abnormal volume and the potential forgone 
return for each underlying campaign.
772
 For example, the aggregate estimate of potential 
transfers to informed bystanders that could be avoided by shortening the filing deadline to five 
business days if no filers forgo campaigns (and filers do not adapt in such a way that these 
transfers may still occur) is about $49 million per year ($23 million from Column 1 plus $26 
million from Column 2). Alternatively, if we assume that filers accumulating 25 percent or more 
of their stake after five business days forgo such campaigns, the aggregate estimate of potential 
transfers to informed bystanders that could be avoided would be about $42 million per year ($49 
million, as computed above, minus $7 million from Column 4).
773
 We note that the wealth 
transfer estimates in Table 5 do not represent estimates of the benefit of the final rule 
amendments. Rather, the estimates provide insight into an informational disparity that could 
weaken trust in the market and consequently market participation and capital formation. 
The estimates in Table 5 assume that abnormal trading volume on the days between the 
amended deadline and the actual filing date, other than that representing the filer’s own trades, 
represents trades by informed bystanders. It is possible that the abnormal trading volume 
represents other traders’ reactions to similar news, market conditions, and trends as those to 
 
772
  We acknowledge that the estimates in Row 5 of Table 5 are approximate and may be sensitive to the 
methodology for estimating abnormal returns. See supra note 733. 
773
  Similarly, if we assume that filers accumulating 10 percent or more of their stake after five business days 
forgo such campaigns, the aggregate estimate of potential wealth transfers that could be avoided would be 
about $36 million per year ($49 million, as computed above, minus $13 million from Column 3). 

212 
which the filer was reacting.
774
 For example, researchers have found that filers time their 
accumulations to coincide with significant selling by institutions, so it is possible that some of 
this abnormal volume may represent the extent of the institutional selling pressure.
775
 We also 
acknowledge that informed bystanders, like filers,
776
 may adapt to the final amendments by 
condensing their trades to five business days following the trigger date. 
Staff presented a similar quantitative analysis with respect to potential transfers from 
selling shareholders to informed bystanders under the current rule in the DERA Memorandum. 
Some commenters stated that the analysis in the DERA Memorandum demonstrated that a 
shortened filing window would reduce “harms” or “costs” to selling shareholders.
777
 Others 
 
774
  One commenter addressing a similar analysis in the DERA Memorandum stated that “there is no attempt to 
exclude from this analysis any returns that accrued because the Schedule 13D filer publicly disclosed its 
intent after the trigger date but before filing the Schedule 13D – which is not an uncommon occurrence.” 
See letter from EIM IV; see also Lewis Study II (exhibit to letter from EIM IV). We acknowledge that a 
press release by a filer disclosing a campaign in advance of a Schedule 13D filing could provide an 
alternate explanation for abnormal trading volume (and/or abnormal returns) between the trigger date and 
filing date of an initial Schedule 13D. However, staff reviewed one year of filings and concluded that such 
disclosures are relatively rare and are thus not likely to meaningfully affect the estimates presented in Table 
5. In particular, staff used EDGAR’s full text search function to identify initial Schedule 13D filings made 
in 2021 that included the term “press release,” and then reviewed the resulting filings to determine whether 
the filer disclosed its plans or proposals between the trigger date and filing date of the initial Schedule 13D. 
(The instructions to Item 7 of Schedule 13D specify that the filer shall file as exhibits to the Schedule 13D, 
among other things, “copies of all written . . . plans or proposals relating to . . . the acquisition of issuer 
control, liquidation, sale of assets, merger, or change in business or corporate structure, or any other matter 
as disclosed in Item 4 [of Schedule 13D].”) Staff identified three initial Schedule 13D filings in 2021 for 
which the filer disclosed the campaign in a press release between the trigger date and filing date (all of 
which involved a press release made by the filer on the trigger date). None of these filings was included in 
the sample of Schedule 13D filings analyzed in Table 5 (which includes 101 filings from 2021) based on 
the sample restrictions that apply to this analysis. Specifically, in two cases, the filings were made on or 
before the first business day after the amended filing deadline, and in one case the requisite financial 
information to be included in the analysis was not available for the filing. Overall, given the limited number 
of filings for which earlier disclosure was identified, we do not believe that identifying and removing such 
filings from the full eleven-year sample would meaningfully affect the results. 
775
  See, e.g., Nickolay Gantchev & Chotibhak Jotikasthira, Institutional Trading and Hedge Fund Activism, 64 
M
GMT. SCI. 2930 (2018) (“Gantchev & Jotikasthira 2018 Study”) (finding that the timing of Schedule 13D 
share accumulations is closely tied to institutional liquidity shocks, in that activist purchases closely track 
institutional sales at the daily frequency). 
776
  See section IV.C.1.b.i below for a discussion of how filers may adapt to the amended deadline. 
777
  See letters from AFREF II; Better Markets II; SCG & NIRI. 

213 
stated that the DERA Memorandum’s characterization of selling shareholders as “harmed” was 
inappropriate and did not account for the benefits these selling shareholders experienced in terms 
of, for example, price improvement and improved liquidity as a result of the impending activist 
campaign.
778
   
We acknowledge, as mentioned by commenters, that most investors selling shares during 
the filing window seem to benefit from the impending activist campaign. In particular, as 
demonstrated in Figures 7a and 7b, we observe a meaningful amount of stock price appreciation 
during the filing window for non-corporate-action filings, some of which would accrue to selling 
shareholders. Despite the assertions of a commenter,
779
 the analysis in the DERA Memorandum 
and the similar analysis in this economic analysis do not characterize the trading between the 
Schedule 13D filer and a selling shareholder as harmful; in both cases, the analyses focus only 
on trading between informed bystanders (who are not the filer) and selling shareholders. We also 
acknowledge concerns that it may be inappropriate to construe the failure to benefit from future 
stock appreciation when selling shares to the filer as a harm to the selling shareholders, given 
that the stock appreciation in question results from the actions of the filer and, if there is a more 
limited opportunity to receive some of the economic benefits resulting from their actions, the 
filer may have a more limited incentive to initiate a campaign. We do not include sales to the 
 
778
  See letters from CIRCA IV; EIM IV; Profs. Bishop and Partnoy III. In the economic analysis of the 
Proposing Release, the Commission made somewhat broader statements about effects on selling 
shareholders, suggesting that all investors who sell their shares during the 10-day window may be harmed. 
Commenters addressing the Proposing Release made similar statements regarding the characterization of 
“harm” being inappropriate and selling shareholders benefiting from the activity underlying the filing. See 
letters from AIMA; CIRCA I; EIM I; ICM; Pershing Square; Profs. Schwartz and Shavell I; Profs. 
Schwartz and Shavell II; Profs. Swanson, Young, and Yust; S. Lorne; TRP. Further, some commenters 
asserted that the notion that these selling shareholders should be able to sell at prices that reflect 
information in the Schedule 13D filings would entail an unjustified windfall to those selling shareholders, 
and a transfer of valuable information from the Schedule 13D filer, who expended the effort to research and 
develop that information. See letters from Dodge & Cox; EIM I; ICM; Prof. Gordon.  
779
  See letter from CIRCA IV. 

214 
filer in this analysis. Our analysis quantifies the transfer between selling shareholders and 
informed bystanders that results from the price change between the day of the sale and the day 
after the filing date. That is, an earlier deadline would potentially benefit these selling 
shareholders to the detriment of the informed bystanders.  
Some commenters addressing the DERA Memorandum indicated that staff provided 
insufficient evidence of the existence of informed bystanders.
780
 One of these commenters added 
that activists have significant incentives to maintain the confidentiality of their strategies until 
they are ready to make a public disclosure.
781
 We believe the academic studies discussed above 
support the conclusion that informed bystanders purchase shares in issuers shortly before the 
filing of Schedule 13D reports pertaining to such issuers. Some of the researchers suggest that 
filers themselves, in some cases, may leak information about their impending filing; others 
specifically identify other channels for information leakage unbeknownst to the activist.
782
 
However, the methodologies used in these studies to identify informed bystanders in specific 
cases cannot be expanded to reliably identify trades by all informed bystanders in a broad 
sample. One comment letter suggested that we use Consolidated Audit Trail (“CAT”) data in the 
analysis of “informed” trading but did not specify what methodology we should use.
783
 We do 
not believe this data would allow us to identify which trades may involve a counterparty that 
 
780
  See letters from EIM IV (stating that the presence of harmful conduct is assumed, not demonstrated); Profs. 
Bishop and Partnoy III (stating that the memorandum provides no support “for the assertion that purchasers 
other than the 13D filer are more informed than sellers during the relevant period”). 
781
  See letter from EIM IV; see also Lewis Study II (exhibit to letter from EIM IV) (stating that the analysis 
“assumes that the activist has informed select investors about the upcoming campaign before its public 
announcement”). 
782
  See supra notes 756-760 and accompanying text. 
783
  See Lewis Study II (exhibit to letter from EIM IV) (stating that “DERA could have used consolidated audit 
trail (‘CAT’) data that contains information on which traders were participating in the market to estimate a 
precise measure of the impact but did not do so” and that “the analysis of ‘informed’ trading is an obvious 
setting to utilize CAT data”); letter from EIM IV. 

215 
benefited from information leakage. We recognize that our own analysis does not directly 
identify informed bystanders, and may, for example, represent buyers who have learned of the 
probability of activism through fundamental research. However, we acknowledge those 
limitations and are unaware of approaches that would allow us to obtain a better estimate of 
trades by informed bystanders. 
Some commenters criticized the DERA Memorandum for failing to describe the likely 
characteristics or nature of the selling shareholders and their reasons for selling.
784
 S ome 
commenters responding to the Proposing Release indicated that it was likely that the selling 
shareholders were not retail investors but rather sophisticated institutions who could 
appropriately weigh the possibility that an activist investor may be buying up shares,
785
 with one 
providing an analysis supporting this assertion.
786
 We acknowledge that the potential effects of 
reducing transfers from selling shareholders may be tempered somewhat to the extent the 
counterparties of the potential informed bystanders are, for example, institutions with liquidity 
needs, and that there is some evidence that this may be common.
787
 However, gains by informed 
 
784
  See letters from CIRCA IV (stating that “it is possible that any such shareholder is selling because it needs 
cash and thus may be helped and not harmed by the availability of activist buyers”); Profs. Bishop and 
Partnoy III; see also Lewis Study II (exhibit to letter from EIM IV) (stating that the analysis “overlook[s] 
market makers and day traders (trading participants who open and close their position between the 
proposed deadline and the filing date)” and that such traders “would not be impacted”). 
785
  See letters from Profs. Bishop and Partnoy I; CIRCA III; see also letter from 65 Professors (suggesting that 
the Commission could examine whether particular categories of investors are net sellers, and therefore are 
not harmed in aggregate, during the period prior to the filing of Schedule 13Ds). 
786
  See letter from Profs. Bishop and Partnoy I; see also Ekkehart Boehmer et al., Tracking Retail Investor 
Activity, 76 J. F
IN. 2249 (2021) (introducing the algorithm for identifying retail order flow used in the cited 
comment letter). We note that questions have recently been raised as to the reliability of this algorithm for 
producing an unbiased estimate of retail order flow. See, e.g., Yashar Barardehi et al., Uncovering the 
Liquidity Premium in Stock Returns Using Retail Liquidity Provision (Working Paper, 2023), available at 
https://ssrn.com/abstract=4057713. 
787
  Studies have found that Schedule 13D filer accumulations are timed, on average, coincident with 
institutional selling pressure. See, e.g., Gantchev & Jotikasthira 2018 Study. 

216 
bystanders may be viewed by some market participants as unfair regardless of the counterparties 
bearing the other side of these transfers.  
Some commenters raised concerns related to the statement in the DERA Memorandum 
that lessening an informational advantage that some market participants may perceive to be 
unfair could enhance trust in the securities markets and promote capital formation.
788
 In 
particular, one commenter indicated a lack of evidence that activism is contributing to an erosion 
of trust in the markets,
789
 while another requested evidence that the acceleration of filing 
deadlines in other contexts changed the investors’ behavior or enhanced their level of trust in the 
market.
790
 This commenter did not suggest how we might gather such evidence, however, and 
trust has been shown to be an important determinant of participation.
791
   
One comment letter presented an alternative analysis of the effects on selling 
shareholders based on the computation of abnormal net selling activity, which they state better 
“separates any allegedly ‘harmed’ selling . . . from other trading” than the analysis in the DERA 
Memorandum.
792
 In particular, these commenters categorize trades as either seller-initiated or 
buyer-initiated in order to compute abnormal net selling. The commenters concluded that there is 
 
788
  See letters from CIRCA IV; EIM IV. 
789
  See letter from EIM IV. 
790
  See letter from CIRCA IV. 
791
  See L. Guiso, P. Sapienza, and L. Zingales, Trusting the Stock Market, J. OF FIN., 63 (6) (Dec. 2008), at 
2557-2600. 
792
  These commenters used an algorithm from academic studies to categorize trades in the New York Stock 
Exchange Trade and Quote (“NYSE TAQ”) dataset as either seller-initiated or buyer-initiated. They then 
computed abnormal net selling (seller-initiated volume minus buyer-initiated volume, scaled by total 
trading volume and converted into a percentage by adjusting for lagged net selling volume and the 
logarithm of market capitalization) for the days around Schedule 13D filing for a sample of activist events 
from 2011 to 2021. See letter from Profs. Bishop and Partnoy III (further explaining that “if, for every 
seller-initiated trade, there is an equal and opposite sized buyer-initiated trade, then we cannot 
meaningfully infer that any alleged ‘harm’ has occurred. However, if there is a net order imbalance, with 
more selling activity than buying activity, then we may be able to infer alleged ‘harm.’”). 

217 
no statistically significant evidence of systematic net selling during the five days preceding the 
filing
793
 such that they “cannot meaningfully infer that any alleged ‘harm’ has occurred.”  
We note that signing trades as seller- and buyer-initiated is generally intended to reflect 
which side of the trade is demanding liquidity, as opposed to providing liquidity. Net order 
imbalances therefore provide information about which type of traders (sellers or buyers) are 
demanding liquidity on a given day, while the opposite side of any order imbalance is borne by 
liquidity providers (historically, these would be market makers, but today other investors 
including high-frequency traders typically play this role). An analysis of net order imbalances in 
the days around Schedule 13D filings can therefore provide information about wealth transfers 
on these days between those investors that are demanding liquidity versus those providing 
liquidity.
794
 However, we do not believe that trades that are signed as seller-initiated versus 
buyer-initiated provides sufficient information about which trades are more likely to involve a 
buyer that has a one-sided informational advantage because of their knowledge of another 
investor’s share accumulations, which is the focus of our analysis. 
In summary, informed bystanders may profit, as a result of information leakages rather 
than from their own fundamental research or effort to improve the issuer’s performance, from a 
 
793
  This analysis in the comment letter focused on the proposed amendment to the filing deadline—five 
calendar days—rather than five business days. We note that this analysis appears to focus on the five days 
before a Schedule 13D filing date regardless of the number of days that have elapsed since the trigger date. 
As such, the window analyzed varies relative to the trigger date rather than consistently representing the 
sixth to tenth days after the trigger date. 
794
  That is, we would interpret a lack of systematic net selling in the days before a Schedule 13D filing to 
indicate that there are no significant transfers between investors demanding liquidity and those providing 
liquidity as a result of trades during this period and the subsequent price changes. The commenters describe 
the analysis as identifying the effect on “natural buyers” as opposed to market makers. See letter from 
Profs. Bishop and Partnoy III. We note that the positive but statistically insignificant abnormal net selling 
these commenters identified on nine out of the 10 days preceding a filing is consistent with academic 
research cited above finding that Schedule 13D filers time their accumulations coincident with institutional 
selling pressure. See supra note 775. 

218 
near-arbitrage opportunity during the window of time between the trigger date and the date on 
which the filer’s beneficial ownership and plans are made public on a Schedule 13D. In this 
section, we have presented a quantitative analysis based on historical data that, subject to certain 
assumptions and limitations, provides a reasonable basis to believe that wealth transfers from 
selling shareholders to potential informed bystanders can be significant under the current rules.  
iv. Information Asymmetries and Liquidity 
Shortening the Schedule 13D filing deadline and thereby more quickly resolving an 
information asymmetry between some market participants and the rest of the market is likely to 
enhance liquidity.  
Some commenters to the Proposing Release agreed that a shortened filing deadline would 
reduce information asymmetries.
795
 Others stated that the academic paper cited in the Proposing 
Release to support the relation between information asymmetry and liquidity is not applicable to 
the setting at hand,
796
 or more generally questioned the basis of statements in the economic 
analysis of the Proposing Release indicating that the shortened deadline would result in increased 
liquidity.
797
 In response to these comments, we have expanded the literature that we review. We 
continue to believe that the amendments will reduce information asymmetries and improve 
liquidity.   
 
795
  See letters from ABA; AFREF; Better Markets I; FreeportMcMoRan; NIRI. 
796
  See letters from Profs. Bishop and Partnoy; Profs. Schwartz and Shavell II (referring to Lawrence Glosten 
and Paul Milgrom, Bid, Ask, and Transaction Prices in a Specialist Market with Heterogeneously Informed 
Investors, 14 J. FIN. ECON. 71-100 (1985)). 
797
  See Lewis Study I (exhibit to letter from EIM I); letters from 65 Professors; AIMA; Profs. Bishop and 
Partnoy. 

219 
Specifically, empirical and theoretical work point to a linkage between information 
asymmetry and measures of liquidity such as bid-ask spreads and price impact.
798
 Generally, a 
greater proportion of strategic information-based trading (i.e., trading based on private, or non-
public, information) in contrast to “noise trading” (i.e., trading based on, for example, liquidity 
needs rather than private information) lowers liquidity in an issuer’s securities, as other market 
participants adjust their behavior in light of the risk of adverse selection (i.e., a situation in which 
the buyer of an issuer’s security has more information than the seller, or vice versa, about the 
true value of the security).
799
 In contrast, liquidity should generally increase when there is a 
lower proportion of information-based trading to noise trading. For example, a reduced risk of 
trading with the informed bystanders discussed in the previous section may lead liquidity 
providers to charge lower bid-ask spreads, resulting in higher liquidity.
800
 
We would expect the amended deadline to improve liquidity by lowering information 
asymmetry. While one study finds theoretically mixed results of shortening the filing deadline 
with respect to liquidity and efficiency during the period prior to the filing, this study does not 
address the period subsequent to the now-earlier date.
801
 A nother study shows that empirical 
 
798
  See, e.g., Albert S. Kyle, Continuous Auctions and Insider Trading, 53 ECONOMETRICA 1315 (1985) 
(theoretically modeling a market with informed trading to investigate, among other things, the liquidity 
characteristics of a speculative market); David Easley et al., Liquidity, Information, and Infrequently 
Traded Stocks, 51 J.
 FIN. 1405 (1996) (investigating, empirically, the economic importance of information-
based trading on bid-ask spreads); see also Order Competition Rule, Release No. 34-96495 (Dec. 14, 2022) 
[88 FR 128 (Jan. 3, 2023)] (for further discussion and analysis on the relationship between adverse 
selection risk and bid-ask spreads). 
799
  Id. 
800
  See supra section IV.C.1.a.iii. 
801
  See Kerry Back et al., Activism, Strategic Trading, and Liquidity, 86 ECONOMETRICA 1431 (2018) 
(presenting a model of a specialist market with an activist trader and finding that the association between 
liquidity and a reduced number of days for the activist to trade based on their asymmetric information—
which in their model is equivalent to reducing the rate of “noise trading” or uniformed trading during the 
same trading window—may be indeterminate during the filing window because of competing effects 
 
 

220 
proxies for liquidity are higher than otherwise on days that the activist is accumulating shares, 
concluding that this is so both because activists submit limit orders and because activists 
strategically trade when liquidity is higher.
802 
This study also does not address the period 
subsequent to the now-earlier filing date. Reducing the number of days prior to the filing should 
reduce information asymmetry in the period after the filing (through the date the disclosure 
would otherwise have been made) because after the filing is made the information about a filer’s 
holdings and intentions is public. Thus, liquidity should improve in this period.
803
 
We expect that liquidity benefits are more likely to be associated with the types of filings 
that we classify as “non-corporate-action filings,” and not with “corporate action filings.”  
Indeed, the abnormal stock return patterns presented in Figures 4 and 5 above demonstrate that 
the latter are, on average, not associated with a meaningful stock price reaction between the 
amended deadline and the day after the actual filing date. Because only the non-corporate-action 
filings seem to be associated with significant new information that is not already incorporated in 
market prices earlier in the filing window, these are the filings that are likely to be associated 
with meaningful information asymmetries whose duration could be reduced by the shortened 
filing deadline. As noted above, about 68 percent of timely non-corporate-action filings, or about 
152 initial Schedule 13D filings of this type per year, are currently filed after the amended 
deadline. Based on this historical filing behavior, we expect that the amended filing deadline to 
result in earlier public disclosure, and thus an earlier stock price reaction and resolution of the 
 
related to, for example, the potentially increased proportion of informed to uninformed trades in a shorter 
filing window versus the decreased information asymmetry regarding the activist’s shareholding resulting 
from less noise trading). 
802
  See Collin-Dufresne & Fos 2015 Study (finding that illiquidity and measures of adverse selection are lower 
on days that the activist trades, due to market timing and the use of limit orders—i.e., liquidity provision—
by activists). 
803
  See supra note 798. 

221 
related asymmetric information than would otherwise have been experienced, for approximately 
this number of filings per year, thus enhancing liquidity. 
Some commenters stated that an information asymmetry between the filer and the market 
should not be viewed as problematic,
804
 with some referring to such information asymmetries as 
simply a feature of a functioning market.
805
 Some commenters responding to the DERA 
Memorandum raised similar concerns about the usage of “information asymmetries” in that 
document and a potential implication that these information asymmetries were problematic. 
We acknowledge that benefits may stem from the information asymmetry between a 
Schedule 13D filer and the market. The informational advantage of Schedule 13D filers results, 
in general, from their own expenditures on research and analysis or from their efforts and 
expenditures to pursue changes at the issuers in which they accumulate these shareholdings. 
With a reduced ability to receive some of the economic benefits of their actions, the filer may 
have reduced incentives to initiate a campaign.
806
 Consistent with this view, we have expanded 
our analysis of the potential costs with respect to reduced activism in section IV.C.1.b below. We 
have also narrowed the consideration of selling shareholders in the previous section vis-à-vis the 
Proposing Release to focus on those trading with informed bystanders who are not the filer and 
yet may profit from the advance knowledge or suspicion of a filer’s potential actions, rather than 
from their own fundamental research or effort to improve the issuer’s performance.
  807
 We have 
also expanded our consideration of the literature regarding liquidity beyond what was considered 
 
804
  See letters from AIMA; CIRCA I; Dodge & Cox; EIM I; ICM; Prof. Gordon; Profs. Schwartz and Shavell 
I; Profs. Schwartz and Shavell II; S. Lorne. 
805
  See letters from EIM I; Profs. Schwartz and Shavell I. 
806
  See, e.g., Sanford Grossman & Oliver Hart, Takeover Bids, the Free-Rider Problem, and the Theory of the 
Corporation, 11 B
ELL J. ECON 42 (1980)  
807
  See supra section IV.C.1.a.iii. 

222 
in the Proposing Release to reflect additional findings pertinent to the setting of activist 
campaigns.
808
 We believe that the literature cited in the Proposing Release still has relevance in 
considering, for example, the potential impacts of trading by informed bystanders.
809
 
b.   Costs 
An earlier filing deadline for Schedule 13D may affect significant shareholders seeking to 
affect control of an issuer. There may be indirect effects as well, as we describe below. We also 
expect the final amendments to impose relatively minor compliance costs on all Schedule 13D 
filers.  
i.  Potential Effects on Activism 
By shortening the initial Schedule 13D filing deadline, the final amendments may 
increase costs of activist campaigns. Commenters expressed mixed views as to whether a 
shortened filing deadline would reduce activism. Some commenters stated that a shortened filing 
deadline would not significantly impair activism.
810
 Others, however, stated that a shortened 
filing deadline was likely to reduce the number of activist campaigns,
811
 and expressed 
disagreement with statements in the Proposing Release as to why such a reduction or the impact 
 
808
  See supra note 801 and accompanying text. 
809
  See Lawrence Glosten & Paul Milgrom, Bid, Ask, and Transaction Prices in a Specialist Market with 
Heterogeneously Informed Investors, 14 J.
 FIN. ECON. 71 (1985) (presenting a theoretical model of a 
specialist market with trading by insiders, and describing generally how a specialist must recoup the losses 
suffered in trades with the well informed by gains in trades with noise traders, and that these gains are 
achieved by setting a spread). 
810
  See letters from ABA; AFL-CIO; Better Markets I; Labor Unions; SCG; Sen. Baldwin, et al.; see also infra 
note 818 and accompanying text. 
811
  See letters from AIMA; C. Penner and Prof. Eccles; CIRCA I; Dodge & Cox; EIM I; ICM; M. Frampton; 
MFA; Prof. Gordon; Profs. Schwartz and Shavell II; Profs. Swanson, Young, and Yust; Profs. Eccles and 
Rajgopal; Rep. Torres, et al.; Rice Management; S. Lorne; STB; TRP. 

223 
of any reduction would be limited.
812
 Some commenters indicated that the economic analysis in 
the Proposing Release could have been enhanced by further consideration of the potential effects 
on activist campaigns, including a quantitative analysis.
813
 
A Quantitative Analysis of Historical Activist Campaigns: Assumptions, Findings, and 
Limitations 
We use the data presented in section IV.B.3.a.iii above on filers’ current patterns of share 
purchases to provide some insight into the number and type of filings that have historically 
involved trading between the amended deadline and their actual filing date.
814
 
Our analysis focuses on those 3,067 Schedule 13D filings from 2011 through 2021 that 
we classify as “non-corporate-action filings” (as opposed to “corporate action filings”),
815
 which 
 
812
  See, e.g., letter from AIMA (stating that the fact that some filers already file within five days “does not 
justify accelerating the reporting timeline” because it may merely reflect variation in when filers happen to 
satisfy their “aggregate purchasing goal”). 
813
  See letters from 65 Professors; AIMA; B. Sharfman; EIM I; ICM; MFA; Profs. Bishop and Partnoy I; Prof. 
Hu; Prof. Webber; Rep. Torres, et al.; SIFMA; SIFMA AMG; STB.  
814
  We also considered investigating the effects of alternate deadlines for reporting the acquisition of 
meaningful ownership stakes in other countries, as suggested by several commenters. See, e.g., Lewis 
Study I (exhibit to letter from EIM I); and letters from Sen. Baldwin, et al.; WLRK II. However, we 
concluded that significant differences in rules and practices in other countries as compared to the United 
States limit our ability to draw direct inferences from the experience of these other countries. Further, we 
found that confounding events would limit our ability to draw conclusions about the effects of rule changes 
in these other countries. For example, revisions to Japan’s substantial shareholding reporting rules took 
effect in 2006 and 2007, coincident with the rise of poison pills and the emergence of bear market 
conditions in Japan. Thus, while activist engagements in Japan declined after 2007, it is difficult to identify 
the specific role any one of these factors played in this decline. See, e.g., Yasushi Hamao & Pedro Matos, 
U.S.-Style Investor Activism in Japan: The First Ten Years?, 48 J.
 JPN. INT. ECON. 29 (2018). 
815
  As discussed in section IV.B.3.a.iii above, we found that corporate action filings typically reflect one or 
two off-market transfers of share ownership, very few of which currently occur after the fifth day following 
the trigger date. We also anticipate that the terms of these transfers are likely agreed upon in advance. We 
therefore believe that a shortened filing deadline would not significantly impact the investment activities of 
the filers of corporate action filings. As discussed in section IV.C.1.viii below, we acknowledge that 
adjusting to an accelerated deadline could somewhat increase the compliance costs for such filers under the 
final amendments. As discussed in section IV.C.1.a, the benefits of a shortened initial Schedule 13D filing 
deadline are expected to be relatively limited for corporate action filings. 

224 
represent about 20 percent of initial Schedule 13D filings during the sample period, per the first 
row of Table 2. 
As in Figures 2, 3a, and 3b and Table 3 above, we further refine the sample of non-
corporate-action filings to exclude late filers and filers with no beneficial ownership reported as 
of the filing date and to adjust for multiple filings on the same date, resulting in a sample size of 
2,370 non-corporate-action filings.
816
 Our analysis, presented in Table 6, provides information 
about the characteristics of current campaigns delineated by filers’ degree of accumulation of 
shares as of the amended deadline.
817
 
 
816
  We exclude late filers from this analysis because it is difficult to predict how filers that are not in 
compliance with the current filing deadline will react to a change in this deadline. See supra note 718 and 
accompanying text for more detail on the sample refinements. 
817
  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis (to 
categorize filings, as discussed in section IV.B.3.a.ii above, to extract the data necessary to determine share 
accumulation patterns, as discussed supra note 719, and to extract the required dates) as well as data from 
the Audit Analytics, CRSP, and Compustat databases. Estimates of average issuer characteristics (Rows 2 
through 5) and campaign-level profit and value measures (Rows 9 through 11) are based on the campaigns 
for which the required data was available. While data availability varies by row and column of the table, 
every statistic in the table reflects data for at least 81% of the respective sample of filings. The Amihud 
illiquidity ratio (in Row 4) is computed as in the Gantchev & Jotikasthira 2018 Study. See supra note 692 
regarding how we identify the “Prominent Activists” category (for the purpose of computing Row 6). A 
filer’s unrealized gains on the reported equity stake (used to compute the percentages in Row 9) are based 
on information on their actual purchases and purchase prices for the 60 days prior to the filing as reported 
in the Schedule 13D filing, as well as the remainder of ownership acquired before those 60 days, which is 
assumed to be acquired at the average purchase price reported in the Schedule 13D filing excluding any 
purchases after the trigger date. Unrealized gains are estimated by comparing these purchase prices to the 
share price the day after the filing from the CRSP database. Abnormal returns (in Row 10) are computed as 
the difference between an issuer’s stock market return and the CRSP value-weighted market index and are 
presented for the period extending from 20 business days prior to 20 business days after the filing date. 
Basing the horizon over which the abnormal returns are computed on business days, rather than calendar 
days, is consistent with existing studies but differs from the graphs presented in Figures 7a and 7b, which 
present returns based on calendar days around the filing date (and which thus reflect slightly different 
estimates). For the aggregate estimate of the increase in shareholder value (in Row 12), the estimated 
average increase in shareholder value per campaign (in Row 11) is used as a proxy for the shareholder 
value impact of campaigns for which the data required to produce this estimate was unavailable (about 10% 
to 19% of campaigns in any given category). We may slightly overestimate the number of campaigns 
falling in Columns 3 and 4 due to the algorithm by which total reported ownership is extracted from filings. 
See supra note 722. As discussed above, we reviewed all of the filings categorized in Column 4 (i.e., in the 
light grey bars of Figure 3b) manually and determined that 6% of the filings in this column would not have 
been categorized in this group if our algorithm to extract total reported ownership from the filing was as 
precise as our manual review of the documents. However, because the average increase in shareholder 
value for these filings was relatively low, excluding these filings from Column 4 would not have a 
meaningful impact on our estimate of the aggregate increase in shareholder value for this category. 

225 
Table 6 
Campaign Characteristics by Degree of Accumulation by Amended Filing Deadline, 
Annualized (2011-2021) 
 
Percent of Stake Accumulated by Amended Deadline 
 
(1) 
100% 
(full stake) 
(2) 
<100% 
 
(3) 
<90% 
subset of (2) 
(4) 
<75% 
subset of (3) 
(1) Average number of campaigns / 
year 
173 42 7 1 
Targeted Issuer Characteristics: 
    
(2) Average issuer size (market cap.) $916M $1.5B $1.8B $1.8B 
(3) Average issuer liquidity 
(turnover)* 
1.2% 1.2% 1.5% 1.5% 
(4) Average issuer illiquidity 
(Amihud illiquidity ratio)** 
0.13 0.11 0.09 0.08 
(5) Percent issuers in S&P 1500 9.7% 14.3% 15.6% 12.5% 
Filer/Campaign Characteristics: 
    
(6) Percent by a Prominent Activist 29.8% 36.3% 43.6% 56.3% 
(7) Average beneficial ownership 
reported in filing 
9.1% 7.3% 8.7% 9.5% 
(8) Average percentage of reported 
ownership stake accumulated 
after amended deadline 
0% 5.9% 19.2% 35.3% 
(9) Average percentage of filer’s 
unrealized gains on reported 
equity stake, as of day after filing 
date, attributable to shares 
accumulated after amended 
deadline*** 
0% 4.1% 9.1% 22.6% 
  

226 
Table 6 (continued) 
Campaign Characteristics by Degree of Accumulation by Amended Filing Deadline, 
Annualized (2011-2021) 
 
Percent of Stake Accumulated by Amended Deadline 
 
(1) 
100% 
(full stake) 
(2) 
<100% 
 
(3) 
<90% 
subset of (2) 
(4) 
<75% 
subset of (3) 
Campaign Value Implications:  
    
(10) Average return around filing 
date (cumulative abnormal return, 
day -20 to 20) 
5.7% 8.1% 17.2% 14.4% 
(11) Average increase in shareholder 
value per campaign 
$36M $151M $222M $208M 
(12) Average aggregate increase in 
shareholder value across all 
campaigns combined (based on 
average number of campaigns per 
year) 
$6.3B/yr $6.3B/yr $1.6B/yr $302M/yr 
*  Turnover is the average daily trading volume as a percentage of the issuer’s shares outstanding, computed over 
the six-month period before the trigger date. 
**The Amihud illiquidity ratio is intended to capture the stock price impact of trading and is computed over the six-
month period before the trigger date. See note 817 for more details. 
***Unrealized gains estimated for this purpose reflect estimated gains only on the equity stake reported in the 
Schedule 13D filing (i.e., excludes unrealized gains from any cash-settled derivative instruments, including 
swaps, to the extent such instruments did not result in beneficial ownership) and are computed as of the day after 
the filing (i.e., excludes any impact of changes in stock price or additional stock purchases thereafter). See note 
817 for more details. 
The columns of Table 6 reflect the same subsamples of filings as the corresponding 
columns of Table 3 above. A similar analysis with respect to the potential effects of a shortened 
initial Schedule 13D filing deadline on activism was presented in the DERA Memorandum. 
Whereas the analysis in the DERA Memorandum was based on the proposed five-calendar day 
deadline, the analysis summarized in Table 6 is based on the five-business day deadline. One 
commenter stated that the analysis demonstrated that “shortening the deadline should not 
significantly impede activist campaigns” because “[t]he overwhelming majority of past filers 

227 
have acquired at least 75% of their reported stake” by the amended deadline.
818
 A nother 
commenter questioned whether the data supporting the findings with respect to the percentage of 
past filers that completed their share accumulations by the amended deadline is “representative 
of the broader market.”
819
 This commenter recommended that the analysis be expanded to focus 
on campaigns where the activist filer continued its purchases throughout the 10-day window and 
reported initial beneficial ownership of 10 percent or more.
820
 
We acknowledge that the campaigns in our non-corporate-action sample are 
heterogeneous, and that the percentage of filers that continued to accumulate shares after the 
amended deadline would vary across subsamples. For example, Row 6 of Table 6 demonstrates 
that “prominent activists” were somewhat more likely than others to continue to accumulate a 
significant fraction of their reported beneficial ownership after the amended deadline. Per the 
commenter’s suggestion to focus on filers reporting beneficial ownership of 10 percent or more, 
we note that Row 7 of Table 6 indicates that the reported initial beneficial ownership was not 
systematically higher for filers that continue to accumulate shares after the amended deadline in 
comparison to those that do not. Per the commenter’s other suggestion, we note that both Table 6 
and Table 5 above do isolate (in Column 2 of each table) the results for those filings that 
continue to accumulate shares after the amended deadline. 
Other commenters, referencing the dollar estimates in the DERA Memorandum, asserted 
that the analyses demonstrated that the costs of the proposed Schedule 13D filing deadline 
amendments related to effects on activist campaigns exceed the benefits of the proposed 
 
818
  See letter from Better Markets II. 
819
  See letter from CIRCA IV. 
820
  Id. 

228 
amendments.
821
 One commenter stated that the DERA Memorandum “fail[ed] to adequately 
quantify the benefits to long-term shareholders of the target issuer in the form of substantially 
higher share prices.”
822
 In response to these commenters, we note that the dollar campaign values 
in rows 11 and 12 of Table 6 do not represent cost estimates of the final amendments. Rather, the 
values reflect the value creation from the historical campaigns.
823
 Interpreting these figures as a 
cost would require assuming all of these campaigns would have been abandoned under a five-
business day filing deadline. Instead, we expect that a five-business day deadline would not have 
deterred the vast majority of campaigns. Accordingly, we believe that the costs of the final 
amendments would be significantly less than any of the figures in Table 6 or identified by 
commenters because we expect that activists will adapt to the amended deadline rather than 
forgo campaigns. We acknowledge that some activist investors have indicated that the proposed 
amendments would make them less likely to carry out activist campaigns.
824
 Nonetheless, we 
expect that the vast majority of the value creation reflected in the table above would continue 
unabated. Results in Row 1 show that 80 percent of campaigns (173 out of 215 campaigns per 
year) over the period from 2011 to 2021 would not have been affected by a five-business day 
filing deadline. While the remaining 20 percent ( 42 out of 215 campaigns per year) could have 
been affected to some degree, we expect most of these campaigns would still have occurred, as 
there are several ways activists can adapt to the amended deadline.
825
 In particular, as we discuss 
 
821
  See Lewis Study II, at 8 (exhibit to letter from EIM IV observing that, historically, “the average rise in 
shareholder value for a campaign that requires more than five days to develop a position is $128 million”); 
letters from CIRCA IV; EIM IV. 
822
  See letter from CIRCA IV. 
823
  The values also do not account for the costs activists incur to conduct the campaigns.  
824
  See, e.g., letters from CIRCA IV; EIM IV. 
825
  See supra note 724. 

229 
below in this section, activists can adapt to a shorter deadline using strategies such as (a) 
accumulating a smaller stake in the issuer’s shares; (b) accumulating shares more quickly; or (c) 
accumulating an economic stake using other instruments, such as cash-settled swaps or other 
derivatives. We expect that in most if not all cases, they will do so.   
A Literature Review 
In considering the implications of a potential reduction in activist campaigns, we have 
expanded our consideration of the existing literature on activist campaigns, as suggested by 
commenters.
826
 There is a large body of literature finding that activist campaigns are, on average, 
associated with an economically significant increase in shareholder value (i.e., positive abnormal 
stock returns) around the Schedule 13D filing or other announcement date.
827
 As noted in the 
 
826
  See letters from 65 Professors; MFA; Rep. Torres, et al. 
827
  Measurement windows in most studies range from five to 40 days around the announcement date, with 
many also considering longer horizons to address concerns about a potential reversal of the returns. See, 
e.g., Lucian Bebchuk et al., The Long-Term Effects of Hedge Fund Activism, 115 C
OLUM. L. REV. 1085 
(2015) (“Bebchuk et al. 2015 Study”) (estimating an announcement return of about 6% to initial Schedule 
13D filings by activist hedge funds from 1994 through 2007, with, on average, no reversal in returns over 
the following five years); Kedia et al. 2021 Study (demonstrating, in Table IA2 of the Internet Appendix, 
no reversal over five years of the positive one-year buy-and-hold returns for different subsamples of initial 
Schedule 13D filings by activist hedge funds from 2004 through 2012, based on a variety of models of 
benchmark returns); Boyson & Pichler 2019 Study (estimating a buy-and-hold return of about 12% over a 
holding period averaging 2.7 years to campaigns by hedge fund activists from 2001 through 2012); Martijn 
Cremers et al., Hedge Fund Activism and Long-Term Firm Value (Working Paper, Dec. 13, 2018), 
available at https://ssrn.com/abstract=2693231 (“Cremers et al. 2018 Study”) (estimating a return of about 
6% around the start of activist hedge fund campaigns from 1995 through 2011, with, on average, no 
reversal in returns over the following five years); Edward Swanson et al., Are All Activists Created Equal? 
The Effect of Interventions by Hedge Funds and Other Private Activists on Long-Term Shareholder Value, 
72 J.
 CORP. FIN. 102144 (2022) (“Swanson et al. 2022 Study”) (estimating returns of 5% to initial Schedule 
13D filings in 1994 through 2014, with, on average, no reversal in returns over the following three years); 
Ed deHaan et al., Long-Term Economic Consequences of Hedge Fund Activist Interventions, 24 R
EV. ACC. 
STUD. 536 (2019) (“deHaan et al. 2019 Study”) (estimating, on an equally weighted basis, returns of 5% to 
initial Schedule 13D filings by activist hedge funds from 1994 through 2011, with, on average, no reversal 
in returns over the following two years); Brav et al. 2022 Study (estimating an announcement return of 
about 5% to blockholdings by hedge fund activists from 1994 to 2018, with, on average, no reversal in 
returns over the following three years). While much of the academic research has focused on blockholdings 
by activist hedge funds, other studies have found similar stock returns related to Schedule 13D filings by 
other types of investors. See, e.g., Ulf von Lilienfeld-Toal & Jan Schnitzler, The Anatomy of Block 
Accumulations by Activist Shareholders, 62 J.
 CORP. FIN. 101620 (2020) (“Lilienfeld-Toal & Schnitzler 
 
 

230 
Proposing Release, the literature does not find that these returns reverse in the long term, though 
the determination of long-term returns is inherently more complicated than measuring short-term 
returns.
828
 Researchers have also found that the degree of impact that these activities have on 
shareholder value varies significantly with an issuer’s market capitalization, with smaller-cap 
issuers experiencing significantly larger returns (expressed as a percentage) around the 
disclosure of an activist campaign than larger-cap issuers.
829
 Researchers have debated whether 
 
2020 Study”) (estimating returns of 7% to 8% around initial Schedule 13D filings by external shareholders 
in 2001 through 2016, irrespective of filer type); Swanson et al. 2022 Study (estimating returns of 5% 
around initial Schedule 13D filings in 1994 through 2014, with no statistically significant difference in the 
returns around filings by hedge funds versus those by other private activists).  
828
  See Proposing Release at 13885 and supra note 827. Several commenters cited a different study than those 
cited above, with one stating that it “shows the stock price increase is temporary and in fact the company is 
often in a weaker economic position post-activist intervention.” See letter from Sen. Baldwin, et al; see also 
letter from Labor Unions. The cited study presents results showing that a measure of firm valuation 
increases for firms targeted by hedge fund activists relative to a matched sample of similar, non-targeted 
firms in the year after activists report their ownership, but that there is no statistically significant difference 
in this metric across the targeted and matched firms over a longer horizon. However, this study does not 
investigate stock price or stock returns, but instead measures firm valuation as Tobin’s Q, which the 
authors define as ratio of a firm's market value of assets to the replacement value of assets. This metric may 
therefore reflect changes in a number of factors beyond stock returns, such as changes in debt values and 
changes in book assets, and cannot be interpreted equivalently to the studies cited above. Further, the 
results of the matched sample analysis demonstrate that the differential in Tobin’s Q diminishes over longer 
horizons, but not that the improvement among targeted firms is necessarily temporary; it is possible that the 
gap narrows due to a similar but delayed improvement in the matched control firms. It is also unclear how 
the study treats targets that are later acquired, which is a common outcome for targeted firms and could bias 
the long horizon results. Finally, the longer-horizon tests use a different baseline than the shorter-horizon 
tests (Tobin’s Q one year after activists report their ownership is compared to the same metric one year 
before activists report their ownership, while Tobin’s Q five years after activists report their ownership is 
compared to the same metric five years before activists report their ownership), which may affect the 
interpretation of the results. See Mark DesJardine & Rodolphe Durand, Disentangling the Effects of Hedge 
Fund Activism on Firm Financial and Social Performance, 41 S
TRATEG. MGMT. J. 1054 (2020) 
(“DesJardine and Durand 2020 Study”) (with matched sample results presented in Table 7). One 
commenter noted additional concerns with this study. See letter from Profs. Bishop and Partnoy II. A 
different study using a larger sample of hedge fund activist campaigns finds differing results under multiple 
matched-sample approaches, with a statistically significant increase in Tobin’s Q for targeted firms, 
including over a five-year horizon. See Brav et al. 2022 Study (at Table 9, Panel A). 
829
  See, e.g., deHaan et al. 2019 Study (finding that the average long-term returns around hedge fund activism 
on an equally weighted basis are driven by the smallest 20% of targets by market capitalization); Brav et al. 
2022 Study (documenting a roughly 2-3% announcement return for the largest two terciles of targets of 
activist hedge funds, compared to a roughly 9% announcement return for the smallest tercile of targets, 
based on market capitalization). We note that a smaller percentage return for an issuer with a larger market 
capitalization may imply a larger total dollar impact on shareholder value than that associated with a larger 
percentage return for a smaller issuer. 

231 
the activists’ actions are responsible for any of this increase in value. Some researchers argue 
that any stock price reaction may instead reflect activists’ ability to select issuers that are likely 
to be taken over or to recover from underperformance for other reasons.
830
 However, broader 
evidence supports the hypothesis that activists’ actions are responsible for the vast majority of 
the increase in value.
831
  
There is also academic research on the effect of activist campaigns on investors other 
than shareholders of the targeted issuers. Studies have associated activist campaigns with a 
positive effect on the operational and financial performance, as well as shareholder value, of 
issuers other than the targeted issuers, based on the perceived likelihood of a potential activist 
 
830
  See, e.g., Cremers et al. 2018 Study; deHaan et al. 2019 Study; Yvan Allaire & François Dauphin, The 
Game of ‘Activist’ Hedge Funds: Cui Bono?, 31 I
NT. J. DISCL. GOV. 279 (2016). 
831
  See, e.g., Brav et al. 2022 Study (finding that the outperformance of issuers targeted by activists persists 
even when benchmarked against a variety of matched control samples, including a control sample of non-
targeted issuers that are closely matched to the targeted issuers based on their condition at the time of 
targeting as well as changes in performance prior to that time); Rui Albuquerque et al., Value Creation in 
Shareholder Activism, 145 J.
 FIN. ECON. 153 (2022) (“Albuquerque et al. 2022 Study”) (estimating that 
only 13% of the total returns associated with activist campaigns could be attributed to stock-picking ability 
as opposed to the campaigns themselves); Robin Greenwood & Michael Schor, Investor Activism and 
Takeovers, 92 J.
 FIN. ECON. 362 (2009) (finding that returns associated with Schedule 13D filings are 
driven by activists’ success at getting target firms acquired, and not just selecting targets that are likely to 
get acquired); Nicole Boyson et al., Activism Mergers, 126 J.
 FIN. ECON. 54 (2017) (finding that even 
Schedule 13D targets with failed acquisition bids experience improvements in operating performance, 
financial policy, and positive long-term abnormal returns); Swanson et al. 2022 Study (finding significant 
abnormal returns associated with the subsets of Schedule 13D filings presenting a variety of non-sale 
demands, such as demands associated with corporate strategy, and not just for those presenting demands for 
a sale of all, or part, of the company). Various studies have also associated activist campaigns with 
operational improvements. See, e.g., Nicole M. Boyson & Robert Mooradian, Corporate Governance and 
Hedge Fund Activism, 14 R
EV. DERIVATIVES RES. (2011) (finding an increase in return on assets for issuers 
that are the subject of hedge fund activist campaigns, relative to similar non-targeted issuers); Alon Brav et 
al., The Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Labor Outcomes, 28
 REV. 
FIN. STUD. 2723 (2015) (“Brav et al. 2015 Study”) (finding an increase in productivity at the plant level for 
issuers that are the subject of hedge fund activist campaigns, but not for similar plants at non-targeted 
issuers); Nickolay Gantchev et al., Activism and Empire Building, 138 J.
 FIN. ECON. 526 (2020) (finding 
that issuers that are the subject of hedge fund activist campaigns reduce value-destructive acquisition 
activity relative to similar, non-targeted issuers). 

232 
campaign targeting these other issuers.
832
 Other research has found that issuers that are the 
suppliers or close competitors of the targeted issuers, in certain circumstances, experience 
decreases in shareholder value around an activist campaign, which researchers have associated 
with cost-cutting and increased efficiency at the target issuer.
833
 These effects on suppliers and 
competitors of targeted issuers are consistent with activism having beneficial competitive effects 
related to improvements in operational efficiency, as noted by a commenter.
834
 Other academic 
studies have found that activist campaigns have a mixed impact on debtholders of the targeted 
 
832
  See, e.g., Nikolay Gantchev et al., Governance Under the Gun: Spillover Effects of Hedge Fund Activism, 
23 R
EV. FIN. 1031 (2019) (“Gantchev et al. 2019 Study”) (finding that an interquartile increase in the 
“threat” of an activist campaign is associated with operational and financial improvements and a 2.4% 
positive stock return at the issuers with a high perceived “threat” of being targeted); Caroline Heqing Zhu, 
The Preventative Effect of Hedge Fund Activism: Investment, CEO Compensation, and Payout Policies, 17 
I
NT. J. MAN. FIN. 401 (2021) (finding that an increase in the likelihood of an activist campaign is associated 
with proactive corporate policy changes and improved operating performance in the form of an increase in 
return on assets). 
833
  See, e.g., Hadiye Aslan, Shareholders Versus Stakeholders in Investor Activism: Value for Whom?, 60 J. 
CORP. FIN. 101548 (2020) (finding reduced profit margins and stock prices reflecting a negative 
announcement return of about -1.5% for the suppliers of an issuer targeted by an activist hedge fund 
relative to suppliers of other issuers and finding that the economic effects on suppliers are stronger for the 
suppliers of target firms with high cost efficiency or operating margin improvements after the activist 
campaign); Hadiye Aslan & Praveen Kumar, The Product Market Effects of Hedge Fund Activism, 119 J.
 
FIN. ECON. 226 (2016) (finding a negative announcement return for those close competitors of an issuer 
targeted by an activist hedge fund that do not themselves face the “threat” of activist hedge fund campaign, 
while those close competitors that do face such a “threat” experience positive announcement returns; and 
finding that the impact on competing firm performance is stronger for targets with, among other things, a 
greater improvement in productivity). 
834
  See Lewis Study II (exhibit to letter from EIM IV). Several other commenters also questioned the DERA 
Memorandum’s inclusion of a discussion of shareholders of a target’s suppliers and competitors. See letters 
from EIM IV; CIRCA IV. We acknowledge that effects on these shareholders represent transfers rather 
than market-level economic benefits or costs of activism (e.g., costs to these shareholders may result even 
when the market benefits as a whole from enhanced operational efficiency and competition). As noted, we 
refer to the impact on entities other than the target issuer here as evidence that activism can have beneficial 
competitive effects, rather than to place a primary emphasis on consideration of shareholders of issuers 
other than the target issuers in determining appropriate disclosure deadlines and related amendments. 

233 
issuer, depending on the nature of the campaign’s goals and how pursuing those goals would 
impact both performance and also the level of financial risk of the issuer.
835
 
Considerations 
Commenters noted that if there are fewer activist campaigns under the amended deadline, 
there will be reduced shareholder value creation.
836
 Commenters also noted that a reduction in 
activist campaigns would result in decreased corporate accountability and, on average, a 
reduction in operational efficiency, both because of the reduced direct beneficial effect of 
activists (on average) on the operations of targeted issuers
837
 and because of the reduced indirect 
beneficial effect of the possibility of becoming a future activist target (or of competition with 
targeted issuers) on the operational performance of non-targeted issuers.
838
 Some commenters 
 
835
  See, e.g., April Klein & Emanuel Zur, The Impact of Hedge Fund Activism on the Target Firm’s Existing 
Bondholders, 24 R
EV. FIN. STUD. 1735 (2011) (estimating that bonds of targeted issuers experience, on 
average, a negative announcement return of about -4% to activist hedge fund campaigns); Hadiye Aslan & 
Hilda Maraachlian, Wealth Effects of Hedge Fund Activism (Working Paper, 2018), available at 
https://ssrn.com/abstract=993170 (estimating that bonds of targeted issuers experience, on average, a 
positive announcement return of about 2% to activist hedge fund campaigns, but with variation based on 
the type of campaign: bondholders benefit the most for those with governance-related goals, while those 
calling for restructuring the issuer lead to bondholder losses); Jayanthi Sunder et al., Debtholder Responses 
to Shareholder Activism: Evidence from Hedge Fund Interventions, 27 R
EV. FIN. STUD. 3318 (2014) 
(examining changes in bank loan spreads upon activist hedge fund campaigns and finding that spreads 
increase in response to merger-related or restructuring campaigns but decrease in response to those that 
seek to address governance-related issues). 
836
  See letters from 65 Professors; AIMA; C. Penner and Prof. Eccles; CIRCA I; EIM I; M. Frampton; MFA; 
Profs. Swanson, Young, and Yust; PSCM; Profs. Eccles and Rajgopal; Rice Management; S. Lorne. One 
comment letter provided an analysis in which the commenters concluded that “net investors benefit 
significantly during the relevant time period,” estimating a $12 million benefit to net investors per 
campaign based on their computation of the net order imbalance and stock returns from each day through 
30 days after the Schedule 13D filing dates. See letter from Profs. Bishop and Partnoy III. 
837
  See supra note 831 for detail on studies that have associated activist campaigns with operational 
improvements. 
838
  See supra note 832. Reductions in operational efficiency and the associated weakening of competition 
could result in greater shareholder value at some supplier and competitor firms of potential targets, per the 
academic research cited above, but this would not represent a market-level benefit. See supra note 834. See 
also letters from 65 Professors; AIMA; C. Penner and Prof. Eccles; CIRCA I; CIRCA IV; Dodge & Cox; 
EIM I; ICM; M. Frampton; MFA; Prof. Gordon; Profs. Schwartz and Shavell I; Prof. Webber; PSCM; 
Profs. Eccles and Rajgopal; Rep. Torres, et al. 

234 
indicated that activist investors would continue their activities despite reduced profitability.
839
 
Others indicated that such reduced profitability and the acceleration of potential defensive 
responses by the target issuer would impede activism.
840
 Some commenters indicated that a 
reduction in the pursuit of activist campaigns and in the disciplining effect on corporate 
accountability of the possibility of such campaigns would result in reduced market efficiency,
841
 
a less optimal allocation of resources,
842
 reduced liquidity,
843
 and reduced trust in markets 
because managers are not held accountable.
844
  
We acknowledge that a reduction in investment research and in significant shareholdings 
by investors who undertake such campaigns could reduce market efficiency (and thereby the 
efficient allocation of resources) because of the role that investments based on such research and 
analysis play in moving stock prices closer to their fundamental values. A reduction in such 
activities could also reduce liquidity, as noted by commenters,
845
 by lessening liquidity provision 
in the securities market by these investors (through, e.g., limit orders) as they build their stakes. 
We acknowledge the beneficial effects of activism to the market. However, our analysis of 
historical data indicates that 80 percent of campaigns were completed by the amended deadline, 
with 97 percent of campaigns having completed 90 percent of their stakes by the amended 
 
839
  See letters from AFREF; Better Markets I; HMA II; SCG; WLRK I. 
840
  See letters from AIMA; CIRCA I; Dodge & Cox; EIM I; ICM; M. Frampton; MFA; Prof. Gordon; Profs. 
Schwartz and Shavell I; Profs. Swanson, Young, and Yust; Profs. Eccles and Rajgopal; Rep. Torres, et al.; 
S. Lorne; STB; TRP. 
841
  See letters from AIMA; Dodge & Cox; EIM I; MFA; Profs. Swanson, Young, and Yust; Profs. Eccles and 
Rajgopal; Rice Management; STB. 
842
  See letters from 65 Professors; EIM I; Rep. Torres, et al.; TRP. 
843
  See letters from AIMA; EIM I. 
844
  See letters from C. Penner and Prof. Eccles; Dodge & Cox; EIM I. 
845
  See supra note 843. 

235 
deadline.
846
 We therefore expect the majority of campaigns will be largely unaffected by the 
deadline.  In addition, for those campaigns that would be affected by the deadline, we expect the 
activists will adapt to the shortened deadline and continue to pursue the campaigns, thereby 
preserving the beneficial effects of their activism.
847
  
Some commenters indicated that activist campaigns are not uniformly beneficial, and that 
the short-term price reaction to such campaigns may not translate into positive shareholder value 
impacts in the long-term.
848
 Some commenters stated that a reduction in such campaigns and the 
threat of such campaigns could be beneficial because it would reduce the pressure on issuers to 
make changes in governance, payouts, or investments that are not in the interest of long-term 
shareholders.
849
 One commenter stated that activist campaigns are a deterrent to going public,
850
 
implying that a reduction in such activities could encourage more companies to enter the public 
markets. We acknowledge that activist campaigns are heterogeneous. While the average impact 
of activist campaigns on shareholder value is likely to be positive in the long-term as well as the 
short-term,
851
 some campaigns may have a negative impact on shareholder value either in the 
short- or long-term. It is possible that some of the activist campaigns that are less likely to occur 
 
846
  See supra section IV.B.3.a.iii, Table 3.  
847
  Although we believe that activists whose campaigns are impacted by the shortened deadline are likely to 
adapt and continue with their campaigns, we note that there are costs likely associated with those 
adaptations, as discussed below. Thus, although the market is likely to benefit from an activist campaign 
that continues as a result of such adaptations, the costs associated with those adaptations may reduce the 
extent of such benefits. Nevertheless, because those campaigns would still proceed, the potential reduction 
in benefits resulting from the costs associated with an adaptation likely would be significantly less than the 
elimination of all the potential benefits if the campaign were abandoned outright. 
848
  See letters from AFREF; Better Markets I; Labor Unions; NIRI; R. Steel and Prof. Goshen; SCG; Sen. 
Baldwin, et al.; WLRK I. 
849
  See letters from AFREF; NIRI; SCG; Sen. Baldwin, et al. 
850
  See letter from SCG. 
851
  See, e.g., Bebchuk et al. 2015 Study; Kedia et al. 2021 Study; Boyson & Pichler 2019 Study; Cremers et al. 
2018 Study; Swanson et al. 2022 Study; deHaan et al. 2019 Study; Brav et al. 2022 Study; Lilienfeld-Toal 
& Schnitzler 2020 Study; Swanson et al. 2022 Study.  

236 
after the adoption of the final rules would have decreased shareholder value, such that activists 
forgoing those campaigns could benefit shareholders. A lower risk of facing an activist campaign 
could, per the commenter cited above, also be a positive factor in the decision of additional 
companies to enter the public markets. That said, the final amendments are not intended to 
discourage activism. Instead, they reflect our attempt to ensure investors receive material 
information in a timely manner while, at the same time, maintaining the balance between issuers 
of securities and the shareholders who seek to exert influence or control over issuers that 
Congress sought when enacting section 13(d).  
Some commenters stated that certain types of activist campaigns were more likely to be 
forgone as a result of a shortened deadline. For example, some commenters stated that a 
reduction in campaigns was more likely among those campaigns targeting smaller issuers with 
lower trading volumes
852
 or for certain types of activist campaigns (e.g., those pursuing changes 
at an issuer rather than a potential sale of the issuer).
853
 Some commenters noted that the final 
amendments may reduce competition among investors who pursue activist campaigns,
854
 as 
more sophisticated and experienced investors may be better able to adapt to the final 
amendments. We acknowledge that the final amendments may have differential impacts on 
different types of activist campaigns. For instance, it may be more costly for a filer to accelerate 
the completion of its stake under a shortened filing window for smaller, less liquid issuers. 
However, in Table 6 above, we find that the targets of filers who currently continue to 
accumulate a significant fraction of their stake after the five-business day deadline are, on 
 
852
  See letters from CIRCA I; ICM; Prof. Gordon. 
853
  See letter from Profs. Swanson, Young, and Yust. 
854
  See Lewis Study I (Exhibit to letter from EIM I); letter from MFA. 

237 
average, slightly larger and more liquid than other targets. Further, studies cited earlier in this 
section find that the abnormal stock returns around the announcement of activist campaigns are 
lower for larger issuers. These lower expected gains from campaigns at larger issuers could make 
investors less likely to bear additional costs to conduct such a campaign by one of the adaptation 
strategies discussed (rather than forgoing the campaign) relative to potential campaigns at 
smaller issuers even if these costs of doing so are lower than they would be at smaller, less liquid 
issuers, as noted above.  
To summarize, while the amended filing deadline may make a minority of campaigns less 
profitable and,  as a result, could potentially reduce shareholder value creation, we do not expect 
a substantial reduction in the extent of activism as most historical campaigns would not have 
been impacted by the amended filing deadline and since activists may adapt to accommodate the 
amended deadline and we expect that in most if not all cases, they will do so.   
Implications of Changes to Activist Campaigns 
As referenced above, filers have various ways to adapt to the amended filing deadlines 
and we expect that many filers will likely use these methods of adaption to the amended filing 
deadline where they remain incentivized to pursue their campaigns. For example, some filers 
may proceed with smaller stakes, other filers may accumulate shares more quickly during the 
amended filing window (or add to their stake after the filing date), while others may acquire an 
economic interest in the issuer, such as by using cash-settled swaps or other derivatives. We 
expect that such adaptations are most likely to arise in the context of non-corporate-action filings 
in which filers would otherwise have continued to accumulate shares on the open market after 
the amended filing deadline (i.e., campaigns like those represented in Columns 2, 3, and 4 of 

238 
Table 6).
855
 Some commenters stated that investors have a target share accumulation that would 
be required to make a campaign worthwhile and that in some cases this target would not be 
achievable under the amended deadline.
856
 One of these commenters noted that investors may 
file early if they reach their target ownership before the filing deadline, but implied that one 
should not assume from observing these filings that they can reach their target ownership with 
the same speed in all instances.
857
 We note also that some commenters stated that the proposed 
five-calendar day filing window would provide activist investors ample time to accrue a 
significant stake,
858
 implying that filers would be able to adapt to the revised deadline. While a 
filer’s adaptation strategy will ultimately be based on its assessment of the benefits and costs of 
various available strategies, which will likely vary across filers and specific situations, we expect 
that most of the profitable campaigns will continue to be profitable notwithstanding the five-
business day filing deadline. In these cases, we expect activists to use adaptation strategies rather 
than forgo the campaigns. And, we expect that most campaigns will not be constrained by the 
amended filing deadline as, historically, 97 percent of campaigns achieved 90 percent of their 
position by the amended deadline.
859
  
The degree to which the benefits associated with earlier disclosure under a shortened 
filing deadline would be achieved also depends on how the filers respond to the shortened 
deadline. As an adaptation strategy, some filers may simply proceed with acquiring a smaller 
stake in an issuer, notwithstanding the reduced potential profits.  
 
855
  As discussed in section IV.C.1.b.i above, we believe that the process of acquiring shares is unlikely to be 
significantly impacted in most other cases. 
856
  See letters from AIMA; CIRCA I; ICM; Prof. Gordon. 
857
  See letter from AIMA. 
858
  See letters from ABA; Better Markets I; NASDAQ; SCG; WLRK I. 
859
  See Table 3 and supra note 724. 

239 
Alternatively, filers could adapt to the amended filing deadline by accumulating shares 
more quickly during the modified filing window or adding to their stake after the filing date. 
Such approaches are likely to preserve more fully both the current shareholder value impact of 
the campaigns and the benefits of earlier disclosure. We acknowledge that these adaptations 
would entail greater costs to filers because the additional shares would likely be purchased at 
higher prices than under the current accumulation pattern.
860
 Further, in some cases post-filing 
purchases may be precluded because issuers could react to the disclosure by adopting low-
threshold poison pills or other defensive measures. While some commenters suggest that 
adaptations that rely on accumulating shares more quickly could further reduce market efficiency 
should volatility increase as a result of aggressive purchasing,
861
 we do not believe that a 
temporary increase in volatility would be disruptive enough to override the benefits to price 
informativeness mentioned above.  
Filers could also adapt by instead acquiring an economic interest in the issuer, such as by 
using cash-settled swaps or other derivatives.
862
 Although these instruments would not replace 
the ownership of shares in the issuer, and generally do not provide voting rights, they may have 
the effect of providing economic exposure to the issuer without triggering the section 13(d) 
 
860
  In the case of stock purchases after an earlier filing date, these shares would be purchased at the higher 
stock price that prevails after the filing date (i.e., the price reflecting the market’s knowledge of the filer’s 
intentions). Accumulating shares more quickly would generally entail purchases at higher prices because, 
all else equal, larger order sizes or more aggressive trading has greater price impact. See, e.g., Albert S. 
Kyle, Continuous Auctions and Insider Trading, 53 E
CONOMETRICA 1315 (1985). 
861
  See letters from AIMA; EIM I; Rice Management; STB. 
862
  Staff have noted that some Schedule 13D filers already make use of cash-settled derivatives referencing the 
issuer in which they report beneficial ownership. See, e.g., Memorandum of the Staff of the Division of 
Economic and Risk Analysis, Supplemental Data and Analysis Regarding the Proposed Reporting 
Thresholds in the Equity Security-Based Swap Market (June 20, 2023), available at 
https://www.sec.gov/comments/s7-32-10/s73210-207819-419422.pdf. Thus, it is plausible that at least 
some filers could adapt to the amendments by making greater use of these instruments. See Security-Based 
Swaps Release for a discussion of the circumstances in which a holder of a SBS currently may be deemed 
the beneficial owner of the class of equity securities referenced by the swap. 

240 
beneficial ownership reporting obligation. Such economic exposure would allow filers to remain 
financially incentivized to pursue campaigns that create shareholder value, as opposed to 
forgoing such campaigns solely due to the shortened filing deadline.  
Some commenters indicated that such a heavier reliance by activist investors on 
derivatives may be an unintended consequence of a shortened Schedule 13D filing window.
863
 
Adaptations involving the use of derivatives would generally entail some incremental costs to 
these investors because of the premiums charged by counterparties for these products, and, as 
noted, would not provide the investors with voting rights beyond those associated with any 
shares they otherwise beneficially own. That said, such approaches may often be the most cost-
effective alternative for activist investors and may preserve the shareholder benefits associated 
with the campaigns.  
An increased reliance on these products may, in certain situations, reduce the overall 
benefits associated with a shortened filing deadline by reducing the likelihood that disclosure of 
economic interests would occur any earlier than under the status quo. In particular, cash-settled 
swaps and related derivatives do not generally give rise to beneficial ownership as they do not 
generally provide voting or disposition rights over the reference securities.
864
 They therefore 
generally fall outside the scope of the primary purpose of the Schedule 13D filings and the 
section 13(d) beneficial ownership reporting system, which are focused on disclosure of a filer’s 
accumulation of equity securities that provide rights that could allow the filer to control or 
influence control over an issuer. Nevertheless, it is possible that some market participants may 
look to Schedule 13D filings (in particular, Item 6 of Schedule 13D) for information about a 
 
863
  See letter from Profs. Swanson, Young, and Yust. 
864
  See supra section II.B.3. 

241 
filer’s accumulation of economic interests, such as cash-settled swaps and derivatives without 
voting or disposition rights. Acquisition of these instruments could allow a filer to obtain more 
than five percent of economic interest in an issuer’s covered class and then, at a later point, cross 
the five percent beneficial ownership threshold through holding or acquiring equity securities of 
the covered class—triggering the requirement for a Schedule 13D filing in five business days—
at a later date. In this scenario, there is no delay in the disclosure of the information that 
Schedule 13D filings and section 13(d) are intended to provide—the beneficial ownership of the 
equity securities that provide voting and disposition rights. However, the filer does delay 
disclosure relative to obtaining the purely economic exposure of more than five percent of the 
issuer represented by the cash-settled swaps or derivatives. As such, an investor’s pattern of 
accumulation of economic interest, relative to when their campaign is revealed to the market, 
may not differ from that under the status quo. In fact, depending on the degree of reliance on 
cash-settled derivative securities, complete disclosure of an investor’s total economic interest in 
an issuer may, under the final rules, be reduced or further delayed than under the baseline, such 
as in cases where, notwithstanding acquisition of these instruments, the investor beneficially 
owns five percent or less of a covered class and no Schedule 13D filing obligation is triggered. 
Still, we cannot predict the extent to which investors will adapt by accumulating cash-settled 
swaps or derivatives in lieu of equity securities, including because cash-settled swaps and 
derivatives generally represent only an economic interest in the issuer, with no voting rights or 
disposition rights with respect to the reference securities, and therefore cannot be presumed to be 
equivalents to equity securities that do provide such rights.  
Initial Schedule 13D filings signal to the market that an investor may intend to influence 
an issuer, often through activism. For market participants that value such signals, regardless of 

242 
beneficial ownership, an increased reliance by activist investors on financial instruments that 
generally do not trigger the section 13(d) beneficial ownership reporting obligations, such as 
cash-settled swaps or derivatives, may reduce the overall benefits associated with a shortened 
filing deadline by reducing the likelihood that disclosure of such information would occur any 
earlier than under the status quo.   
We note that one commenter stated that potential adaptations presented in the DERA 
Memorandum are “neither cost-free nor viable,”
865
 and we recognize that the amended filing 
deadline may make a minority of campaigns more costly, including as a result of the adaptations. 
Similarly, we acknowledge that there would be costs, and reduced benefits, to the extent activism 
is reduced as a result of the final rules. However, we do not expect a substantial reduction in the 
extent of activism as historical evidence suggests most campaigns would not be impacted by the 
amended filing deadline.   
ii. Compliance Costs 
A shortened initial Schedule 13D filing deadline may increase compliance costs for 
beneficial owners who have an obligation to file an initial Schedule 13D under the final rules. 
For example, beneficial owners who regularly make significant stock investments could incur a 
one-time cost to update their information technology systems to monitor securities transactions 
and generate alerts and reports in time to accommodate the rule change. They may also need to 
allocate more resources on an ongoing basis to monitor their holdings in accordance with the 
amended deadline so that they can meet their obligation to file an initial Schedule 13D. In 
addition, external service providers and advisers may charge higher fees for expedited processing 
 
865
  See letter from EIM IV (also stating that potential adaptations “would fundamentally alter how an activist 
assembles its exposure to a given company in ways that would impair the ability of an activist to pursue a 
particular campaign”). 

243 
and/or for weekend services, which may be more frequently required under the final 
amendments. Compliance costs may increase both in the context of non-corporate-action filings 
and corporate action filings. The compliance costs could be more significant for some filers (e.g., 
those with more complex affiliate structures or investment strategies) than others. 
Commenters identified additional compliance challenges that may arise as a result of the 
shortened initial Schedule 13D deadline. For example, some commenters noted aspects of the 
initial Schedule 13D filing process that have not become simplified as a result of technological 
advancements, including nuanced legal analysis, drafting of narratives, and certain data 
collection, determinations, and computations that are accomplished manually or with reliance on 
external resources.
866
 Others noted issues for first-time filers that may be hard to resolve within 
five business days, such as the processing time (including delays) for receiving EDGAR filing 
codes,
867
 or stated that compliance burdens would be greater for non-institutional filers or 
smaller institutional filers lacking certain infrastructure or personnel,
868
 and that the accelerated 
filing deadline may require an increased reliance on third parties.
869
 
We acknowledge that not all aspects of preparing and submitting an initial Schedule 13D 
have been simplified by technology, and that the amended filing deadline may increase certain 
compliance costs given the need to complete these tasks in a shorter timeframe. We also 
acknowledge that the incremental compliance burdens may be greater for smaller, less 
experienced filers than for other filers due to their more limited internal resources and expertise 
in preparing filings. In particular, these filers are less likely to have operational systems and 
 
866
  See letters from ABA; Dodge & Cox; IAA; MSBA; STB. 
867
  See letters from MSBA; STB. 
868
  See letters from A. Day; E. Fraser; Perkins Coie. 
869
  See letter from E. Fraser. 

244 
processes in place to facilitate compliance with the revised filing deadline. They are also likely to 
be more reliant on external advisers and service providers, who may charge higher fees for 
expedited processing and/or for weekend services.  
2. Shortened Schedule 13G Filing Deadlines 
The final amendments to Rules 13d-1(b), (c), and (d) and 13d-2(b), (c), and (d) shorten 
the filing deadlines for both initial and amended Schedule 13G filings as well as, in certain cases, 
increasing their frequency.
870
 As discussed in more detail in section II.A.2 above, under the final 
amendments, QIIs and Exempt Investors will be required to file an initial Schedule 13G within 
45 days after calendar quarter-end if, as of the end of that quarter, their beneficial ownership 
exceeds five percent (rather than the current deadline of 45 days after the calendar year-end at 
which beneficial ownership exceeds five percent). The filing obligation for QIIs will be 
accelerated from 10 days to five business days after month-end if, as of such month-end, their 
beneficial ownership exceeds 10 percent. Passive Investors will be required to file an initial 
Schedule 13G within five business days (rather than the current deadline of 10 days) after 
crossing the five percent beneficial ownership threshold. All three filer types will be required to 
file a Schedule 13G amendment within 45 calendar days after any calendar quarter-end at which 
there is a material change in the information previously reported in a Schedule 13G (rather than 
the current deadline of 45 days after any calendar year-end at which there are “any changes” in 
the information previously reported). For QIIs and Passive Investors, the requirement to file a 
Schedule 13G amendment upon exceeding 10 percent beneficial ownership or an increase or 
 
870
  For the purpose of this economic analysis, we refer to an “increased frequency” of Schedule 13G filings 
under the final amendments because the frequency of Schedule 13G filings is generally expected to 
increase overall. However, the frequency of filings will not necessarily increase in all cases. If there is only 
one material change (or no such change) in the information reported in a Schedule 13G filing over the 
course of a year, then the reporting frequency generally will be the same as under the current regime. 

245 
decrease in beneficial ownership thereafter of more than five percent will be accelerated. 
Specifically, QIIs will be required to file an amendment five business days (rather than the 
current deadline of 10 days) after any month-end at which beneficial ownership meets one of 
these thresholds, while Passive Investors will be required to file an amendment within two 
business days (rather than the current deadline of “promptly”) after beneficial ownership meets 
one of these thresholds. 
A.   Benefits 
Academic research has provided evidence that at least some Schedule 13G filings contain 
value-relevant information that is not already incorporated in market prices, as discussed in more 
detail below.
871
 The acceleration of such Schedule 13G filings under the final rules may thus 
benefit market participants. Specifically, investors and issuers, with earlier access to the 
information and an updated stock price, may be able to make better-informed investment and 
resource allocation decisions. At an economy level, this better-informed decision-making may 
improve the efficiency of resource allocation overall. 
Some commenters agreed that the proposed acceleration of beneficial ownership 
reporting as a whole, including the proposed revisions to Schedule 13G filing deadlines, would 
make material information available to all investors in a more timely manner.
872
 Some 
commenters also specified reasons that the information in Schedule 13G filings in particular is 
important to investors and issuers.
873
 For example, one commenter stated that there are 
“significant risks and impacts of large holdings on investors irrespective of the stated intentions 
 
871
  See infra notes 883-885 and accompanying text. 
872
  See letters from ABA; AFREF; EEI; FedEx; Freeport-McMoRan; Nasdaq. 
873
  See letters from AFREF; HMA I; Nasdaq; SCG. 

246 
of a large position holder,” such as the risk of stock price volatility if a large shareholding were 
to be sold.
874
 Another commenter stated that the disclosure of beneficial owners in Schedule 13G 
filings, together with Schedule 13D filings, “help inform the education and advocacy efforts of 
those with a stake in . . . important votes.”
875
 Other commenters indicated that information about 
all large shareholders facilitates issuer efforts to identify and engage with these shareholders in 
order to elicit their views and ideas.
876
 
On the other hand, some commenters stated that they do not believe there is a “harmful” 
information asymmetry or other problem that justifies an acceleration of the Schedule 13G 
deadlines,
877
 or indicated that the earlier disclosure of the information in Schedule 13G filings 
would be of limited, if any, benefit.
878
 For example, some indicated that the concerns that could 
justify accelerating Schedule 13D filings would not equally apply to Schedule 13G filings.
879
 
Some commenters stated that the information in Schedule 13G filings is unlikely to be material 
because of the passive intent of the filers
880
 or because of existing disclosures (such as Schedule 
13F or Form N-PORT
881
 for some QIIs, or registration statements for some Exempt Investors) 
that provide similar information.
882
 
 
874
  See letter from HMA I. 
875
  See letter from AFREF. 
876
  See letters from Nasdaq; SCG. 
877
  See letters from ICI I; MFA; MSBA; SIFMA; SIFMA AMG; SSC; TIAA; TRP. 
878
  See letters from ABA; MFA; TRP. 
879
  See letters from ICI I; MSBA; SIFMA; TIAA. 
880
  See letters from ABA; MFA; MSBA; STB. 
881
  Though a commenter referenced Form N-Q, we note that this form has been rescinded and similar 
information is now disclosed in Form N-PORT. 
882
  See letters from ABA; MFA; SIFMA AMG. 

247 
Given commenters’ statements regarding a lack of material information in Schedule 13G 
filings and limited benefits from the acceleration of these filings, we reconsidered the evidence 
on the market impact of these filings. Initial Schedule 13G filings by hedge funds in particular 
have consistently been associated by multiple academic studies with, on average, a statistically 
significant positive stock price reaction around the filing date.
883
 Similarly, one study found that 
all initial Schedule 13G filings that are not submitted 45 days after the end of the calendar year 
(i.e., generally Schedule 13G filings by Passive Investors, including some hedge funds, which 
are required to be made within 10 days of the trigger date) are associated, on average, with a 
statistically significant stock market reaction.
884
 T his study also finds that initial Schedule 13G 
filings submitted 45 days after the end of the calendar year (i.e., generally Schedule 13G filings 
by QIIs and Exempt Investors, which include some hedge funds) are not associated with a 
 
883
  See, e.g., Albuquerque et al. 2022 Study (finding that Schedule 13G filings by hedge funds are associated 
with an average cumulative abnormal return of about 1.2% over the period from 30 days before to 10 days 
after the filing date); Alex Edmans et al., The Effect of Liquidity on Governance, 26 R
EV. FIN. STUD. 1443 
(2013) (“Edmans et al. 2013 Study”) (finding that Schedule 13G filings by hedge funds are associated with 
an average cumulative abnormal return of 0.8% over the period from one day before to one day after the 
filing date); and Christopher Clifford, Value Creation or Destruction? Hedge Funds as Shareholder 
Activists, 14 J.
 CORP. FIN. 323 (2008) (“Clifford 2008 Study”) (finding that Schedule 13G filings by hedge 
funds are associated with an average cumulative abnormal return of 1.6% over the period from two days 
before to two days after the filing date, and that there are similar positive cumulative abnormal returns 
around the filing date for filings submitted within 10 days of the trigger date and for all Schedule 13G 
filings by hedge funds regardless of the timing of the filing). These researchers vary in their interpretation 
of these results, with some attributing the positive returns to a governance role of the filers (i.e., a 
contribution to the promotion of corporate accountability) and others asserting that the positive return may 
be a reflection of the market’s view of the filers’ stock-picking ability. There may be further potential 
explanations for the market reaction. For example, the presence of certain significant shareholders (e.g., an 
investor known to pursue activist strategies at some of the issuers in which they invest, or an institutional 
investor known to have voted in the past in favor of changes proposed by activists) could provide 
information about the likelihood of a future activist campaign or the likelihood of success of such a 
campaign. See, e.g., Kedia et al. 2021 Study (finding that the composition of institutional ownership of an 
issuer is associated with both the likelihood of being targeted by an activist campaign and the outcomes of 
such campaigns). 
884
  See Albuquerque et al. 2022 Study (finding, in a sample of all Schedule 13G filings from 1996 to 2016, that 
Schedule 13G filings that are not made 45 days after calendar year-end, but are instead made on any other 
day, experience a statistically significant cumulative abnormal return of 0.59% around the filing date). 

248 
meaningful stock market reaction on average.
885
 It  is unclear whether this finding with respect to 
post-year-end filings, in contrast to the findings with respect to other Schedule 13G filings, is 
attributable to the different types of persons filing on a calendar-year-end filing schedule or by 
an effect of the year-end filing schedule itself on the significance of the information to the 
market by the time it is reported on Schedule 13G. Overall, this and other studies provide support 
for commenters’ assertions that at least some Schedule 13G filings contain market-moving 
information.   
Some commenters stated that any benefits of the proposed filing deadlines would be 
limited due to an increase in inaccurate filings as a result of the accelerated preparation of filings 
or due to a risk of information overload from the increased number of filings.
886
 The filing 
deadlines we are adopting in the final amendments for Schedule 13G require, in many cases, less 
frequent filing, and provide longer windows prior to filing, than the proposed filing deadlines. 
Accordingly, the adopted filing deadlines, as compared to the proposed filing deadlines, may 
mitigate the risk of inaccurate filings or information overload suggested by commenters. 
One commenter stated that the Commission did not address “which investors stand to 
benefit” from the proposed accelerated filing deadlines, and indicated that, while retail and long-
term investors would not benefit, “sophisticated short-term professional investors” would profit 
at the expense of the investors filing Schedule 13G.
887
 While we are unable to predict with a 
reasonable degree of confidence which specific investors or categories of investors are likely to 
benefit most from the acceleration of disclosures, we note that the revisions to the final deadlines 
 
885
  See Albuquerque et al. 2022 Study (finding, in sample of all Schedule 13G filings from 1996 to 2016, that 
the cumulative abnormal return around the filing date for all such filings made 45 days after calendar year-
end is not distinguishable from zero). 
886
  See letters from MFA; NVCA; STB. 
887
  See letter from TRP. 

249 
relative to the proposed amendments in many cases should mitigate the commenter’s concern 
that the benefits would accrue primarily to short-term traders at the expense of Schedule 13G 
filers.
888
 In particular, as discussed below, the lower frequency of disclosure and increased filing 
windows being adopted, relative to the proposed amendments, should reduce the risk that parties 
(including short-term professional investors) profit by anticipating and “front-running” the trades 
of the filer.
889
 We also acknowledge that the benefits are likely to vary across filings, across filer 
types, and across issuers. For example, there may be lower benefits in cases where alternate, 
existing disclosures provide similar information on a similar timeframe, such as with respect to 
QIIs that also file Form 13F. 
The economic analysis in the Proposing Release also indicated that the proposed 
frequency of Schedule 13G filings could have particular informational benefits resolving a 
concern whereby, currently, QIIs and Exempt Investors may avoid beneficial ownership 
reporting by selling down their positions by the end of the calendar year.
890
 Some commenters 
indicated that statements in the Proposing Release that investors may currently avoid beneficial 
ownership reporting in this way were unsubstantiated or inconsistent with their experience.
891
 
We acknowledge that it is unclear whether and to what extent investors sell down securities 
holdings before calendar year-end to avoid beneficial ownership reporting, as well as what 
motives would be likely to drive such behavior, particularly given that many filers would likely 
be required to disclose such holdings before year-end on other forms and schedules in any event. 
We are unable to undertake a systematic quantitative analysis of such behavior because we can 
 
888
  See letter from TRP. 
889
  See section IV.C.2.b below for further discussion of “front-running” risks. 
890
  See Proposing Release at 13882. 
891
  See letters from ICI I; SIFMA; TIAA. 

250 
only observe holdings that are sold before year-end when they are reported on Form 13F or 
through other disclosures, which are precisely the situations that present less of a concern with 
respect to the lack of a Schedule 13G filing during that period. We also acknowledge that it is 
unclear how material any information about the filers’ beneficial ownership may be in these 
cases in light of the short-term or transient nature of this ownership and the academic research 
discussed above.
892
 That said, by requiring disclosure at the end of a quarter, the final 
amendments may reduce the opportunities to avoid a Schedule 13G filing, which could elicit 
incremental value-relevant information to the benefit of market participants as more filings are 
disclosed. 
b. Costs 
All Schedule 13G filers may incur one-time compliance costs to update their systems and 
processes to comply with the revised filing deadlines, such as updating any information 
technology systems used to monitor beneficial ownership and generate associated alerts and 
reports. All such filers are also likely to incur incremental ongoing compliance costs to review 
beneficial ownership on a more frequent basis and potentially (to the extent that there are 
material changes in the information previously reported) prepare more frequent Schedule 13G 
filings. These ongoing costs may include costs associated with gathering information from 
multiple sources, determining whether changes are material, and, if changes are deemed to be 
material, drafting a filing, validating its content, obtaining signatures, processing the filing into 
the required format (via internal personnel or an external EDGAR filing agent), and submitting 
 
892
  See supra note 885 regarding research finding no significant stock market return, on average, around year-
end filings of Schedule 13G. See also supra note 883 regarding potential reasons for a significant stock 
market reaction around some Schedule 13G filings, all of which would be weakened in the case of a short-
term or transient holding. 

251 
it. In addition, filing agents (and potentially other external advisers) may charge higher fees for 
expedited processing and/or for weekend services, which may be more frequently required 
(particularly for Passive Investors) under the accelerated deadlines. 
Some commenters, although not expressly distinguishing between the Schedule 13D and 
Schedule 13G requirements, stated that they did not expect the proposed accelerated deadlines to 
be overly burdensome on filers,
893
 with one stating that filers are “highly likely to be 
sophisticated and experienced investors with the proper resources to file promptly.”
894
 
Other commenters stated that they expected significant increases in compliance burdens 
from the proposed Schedule 13G filing deadlines which were not sufficiently accounted for in 
the Proposing Release, citing, for example, the significant increase in the required frequency of 
reporting and of monitoring holdings;
895
 that many investors must file Schedule 13G for many 
different issuers;
896
 and that filers may not already have the required systems in place or have 
access to the required infrastructure and personnel to comply.
897
  
Some commenters also noted various practical challenges that would make it difficult to 
complete all of the required steps to submit an accurate Schedule 13G within the proposed filing 
windows (i.e., five business days, five calendar days, or one business day), such as steps that 
require manual work or cannot be expedited through the use of technology;
898
 constraints with 
respect to the availability and system capacity of any outside staff or services that are used;
899
 
 
893
  See letters from Anonymous 10; Freeport-McMoRan; J. Soucie. 
894
  See letter from Freeport-McMoRan. 
895
  See letters from ABA; ICI I; MFA; SIFMA AMG. 
896
  See letters from IAA; ICI I; MFA. 
897
  See letters from ICI I; SIFMA; SIFMA AMG. 
898
  See letters from E. Fraser; IAA; MSBA; STB; TIAA. 
899
  See letters from MSBA; STB. 

252 
issues related to the necessary involvement of multiple parties, entities, or signatories;
900
 and a 
lack of sufficient time to validate the content of the filing.
901
 Some commenters noted that first-
time, non-institutional, or smaller filers may face particular challenges in complying with the 
proposed filing deadlines.
902
  
In response to the concerns about compliance costs and challenges related to the 
proposed amendments, we note that, for QIIs and Exempt Investors, the final amendments 
require a lower frequency of initial and amended filings (generally quarterly as opposed to 
monthly) and allow more time to prepare filings (45 calendar days as opposed to five business 
days) as compared to the proposed amendments. Many of these filers (about 84 percent of QIIs 
and 10 percent of Exempt Investors in 2022, per Table 4 above) already file Form 13F on a 
similar schedule. As indicated by some commenters,
903
 filers may thus be better equipped to 
assess their holdings and (potentially) prepare Schedule 13G filings on a quarterly schedule. 
Further, under the final amendments, QIIs should be able to monitor beneficial ownership that 
could exceed 10 percent of a covered class (or, thereafter, change by more than five percent) on a 
monthly basis, as they do now, rather than daily, as may have been required under the proposed 
amendments. Passive Investors will also be permitted to submit most Schedule 13G amendments 
on a quarterly cadence (rather than monthly, as proposed), with 45 calendar days (rather than 
five business days, as proposed) after the end of the period to submit the filings, though their 
initial filings will be required within five business days after the trigger date (rather than five 
calendar days, as proposed). They will also be permitted to file a Schedule 13G amendment 
 
900
  See letters from MSBA; SSC; STB. 
901
  See letters from ABA; MFA; SSC; STB. 
902
  See letters from E. Fraser; ICI I; MFA; MSBA; STB. 
903
  See letters from IAA; ICI I; SIFMA; SIFMA AMG; SSC; TRP. 

253 
within two business days of their holdings exceeding 10 percent of a covered class (or, 
thereafter, for changes of five percent or more), rather than one business day, as proposed. 
Finally, to provide time to implement the new Schedule 13G filing deadlines, compliance is not 
required until September 30, 2024.  
We acknowledge that the incremental compliance burdens of the revised deadlines may 
be greater for smaller, less experienced filers than for other filers due to their more limited 
internal resources and expertise in preparing filings. In particular, these filers are less likely to 
have operational systems and processes in place that would facilitate compliance with the revised 
filing deadlines. The compliance burdens may be greatest for smaller, less experienced Passive 
Investors when filing an initial Schedule 13G, as these investors may, for example, be most 
likely to incur fees for expedited processing and/or for weekend services given the revised 
deadline for their filings (five business days after the trigger date) and their likely reliance on 
external advisors and service providers. That said, all of the changes relative to the proposed 
amendments should at least partially mitigate commenters’ concerns about compliance costs and 
challenges discussed above, including for first-time, non-institutional, or smaller filers. For 
example, under the Proposed Amendments, Schedule 13G filers could have been required to file 
as many as 12 amendments per year under the month-end filing deadline in Rule 13d-2(b). Under 
the final amendments, however, Schedule 13G filers’ burdens may be significantly lower, as the 
quarter-end filing deadline in amended Rule 13d-2(b) results in a maximum of four amendments 
per year pursuant to that rule.  
We also acknowledge that the accelerated Schedule 13G filing deadlines may give rise to 
incremental free-riding and front-running risks. That is, there is a risk that more frequent filings 
with a shorter filing window may reveal a filer’s proprietary information or trading strategies to 

254 
other market participants, thus allowing those participants to “free ride” by copying the filer’s 
strategies without incurring the same cost as the fund to research, identify and devise profitable 
strategies.
904
 Further, more frequent filings with a shorter filing window could also allow other 
investors to better anticipate trades of the filers. These other investors may attempt to “front run” 
or trade ahead of filers to capture any impact on the prices of traded securities.
905
 Any increase in 
free-riding and front-running may ultimately diminish a filer’s investment returns and thus harm 
the filer and any clients or investors of the filer. Such risks may also reduce incentives to engage 
in research and analysis about potential shareholdings or to pursue some investment 
opportunities, which may reduce market efficiency and the efficient allocation of capital to its 
most productive uses. Any related reduction in the number of significant shareholders of issuers 
may also reduce the operational efficiency of affected issuers, due to the role large shareholders 
may play in the promoting of corporate accountability either through direct monitoring of 
management or the threat of exiting an investment.
906
  
Some commenters disagreed with t he Commission’s statement in the Proposing Release 
that the risks of front-running and free-riding associated with the proposed Schedule 13G filing 
 
904
  See, e.g., Marno Verbeek & Yu Wang, Better than the Original? The Relative Success of Copycat Funds, 
37 J.
 BANK. FIN. 3454 (2013) (studying potential free-riding behavior and finding that some funds duplicate 
the disclosed asset holdings of actively managed mutual funds, and that free-riding on the portfolios 
disclosed by “past winning funds” generates significantly better performance net of trading costs and 
expenses than the vast majority of mutual funds). 
905
  See, e.g., Sophie Shive & Hayong Yun, Are Mutual Funds Sitting Ducks? 107 J. FIN. ECON. 220 (2013) 
(studying potential front-running behavior and finding that hedge funds trade on expected mutual fund 
flows, and that this type of anticipatory trading is stronger after 2004 when quarterly portfolio disclosure 
was required of mutual funds). 
906
  See, e.g., Edmans et al. 2013 Study (finding that initial Schedule 13G filings are followed by improvements 
in operating performance and associating this relation with the role of significant shareholders); see also 
Alex Edmans & Clifford Holderness, Blockholders: A Survey of Theory and Evidence, 1 H
ANDB. ECON. 
CORP. Gov. 541 (2017); Andrei Shleifer & Robert Vishny, Large Shareholders and Corporate Control, 94 
J.
 POL. ECON. 461 (1986). 

255 
deadlines were likely to be low,
907
 raising concerns that both the proposed frequency of reporting 
and the proposed filing windows (i.e., five business days, five calendar days, or one business 
day) would lead to significant risks of revealing proprietary trading strategies and, because 
disclosure may be required while trades or trading strategies are still in progress, of facilitating 
predatory trading.
908
 We believe that the revised deadlines in the final amendments relative to 
the proposed amendments should reduce these risks, particularly for filers that are already 
reporting holdings on a similar timeframe on Form 13F. That said, confidential treatment 
requests for Form 13F filings that may allow some filers to defer disclosing some or all of their 
holdings on that form
909
 are not available for Schedule 13G filings, so even Form 13F filers and 
their clients may bear some additional risk of free-riding and front-running when filing Schedule 
13G. 
There could also be negative effects on competition in the market for investment 
management services from accelerated Schedule 13G filing deadlines, as noted by some 
commenters.
910
 In particular, the free-riding and front-running risks discussed above could 
reduce incentives for investment managers to construct proprietary investment strategies, and 
 
907
  See Proposing Release at 13886. 
908
  For comments regarding the proposed frequency of reporting, see letters from Dodge & Cox; IAA; ICI I; 
SSC; TIAA; TRP. For comments regarding the proposed filing windows, see letters from Dodge & Cox; 
IAA; TRP. 
909
  For example, information about holdings in reportable securities that would reveal a filer’s ongoing 
program of acquisition or disposition of a reportable security, open risk arbitrage positions, and investment 
strategies that utilize block positioning may be eligible for confidential treatment with respect to Form 13F 
for the period of time necessary to effectuate the filer’s strategy. See Section 13(f) Confidential Treatment 
Requests, letter from staff of Division of Investment Management (June 17, 1998), available at 
https://www.sec.gov/investment/divisionsinvestmentguidance13fpt2htm. 
910
  See letters from MFA (stating that the proposed Schedule 13G filing requirements would “create more 
substantial barriers to entry, thereby discouraging new potential entrants to the investment management 
market”); TIAA (stating that the proposed Schedule 13G filing requirements would put “investment 
advisers – particularly active advisers – at a real competitive disadvantage” due to “competitors attempting 
to copy or trade ahead of QIIs’ investment strategies and engage in other manipulative trading practices”). 

256 
any increased compliance burdens may increase barriers to entry. However, for the reasons 
discussed above, we expect such risks and burdens, and therefore any resulting effect on 
competition, to be mitigated under the revised filing deadlines as compared to the proposed filing 
deadlines. 
3. Other Amendments 
a. Revised Filing Deadline for Schedule 13D Amendments 
The final amendment to Rule 13d-2(a) revises the filing deadline for amendments to 
Schedule 13D to two business days after the date on which a material change occurs, as 
compared to the baseline requirement that amendments be filed “promptly” after such date. 
We believe that replacing the “promptly” requirement with a bright-line, two-business 
day requirement will provide greater clarity as to when material changes are to be disclosed, 
which could reduce any current filer confusion. In addition, to the extent that the revised 
deadline results in earlier disclosure of some Schedule 13D amendments than under the baseline, 
this deadline may allow the information to be incorporated into market prices earlier, allow 
market participants to make better-informed investment decisions, and enhance the efficiency of 
resource allocation at the economy level. For those filers that would not otherwise have filed 
their amendments within two business days after a material change, the revised deadline for 
Schedule 13D amendments may somewhat increase compliance costs. 
In particular, these filers may bear greater costs due to the need to complete the necessary 
tasks (including gathering information from multiple sources, determining whether changes are 
material, drafting and validating the content of the filing, obtaining signatures, processing the 
filing into the required format via internal personnel or an external EDGAR filing agent, and 
submitting the filing) more quickly. In addition, filing agents (and potentially other external 

257 
advisers) may charge higher fees for expedited processing and/or for weekend services, which 
may be more frequently required under the revised deadline. There may also be compliance 
challenges involved in accessing external advisers or coordinating among multiple signatories or 
parties in a short timeframe. Any such costs and challenges are likely to be more burdensome for 
small, non-institutional, and less experienced filers with fewer in-house resources. In particular, 
these filers are less likely to have operational systems and processes in place that would facilitate 
compliance with the revised filing deadline and are likely to be more reliant on external advisers 
and service providers. The compliance costs and challenges are also likely to be greater for 
institutional filers with more complex business organizations, including those with sub-advisory 
relationships common in the investment management industry. 
One commenter asserted that the “promptly” standard under Rule 13d-2(a) has “generally 
been understood” to mean within two business days.
911
 Accordingly both the benefits and costs 
of the revised deadline for Schedule 13D amendments will likely be limited in the case of 
Schedule 13D amendments that would have been made within two business days even in the 
absence of the final amendments. Some commenters questioned whether a revised deadline for 
Schedule 13D amendments would materially improve the information available to investors and 
other market participants,
912
 with two commenters questioning the benefits with respect to 
specific subsets of filers
913
 and one stating that “there have been very few, if any, abuses 
 
911
  See letter from EIM I. 
912
  See letters from AIMA; NVCA; STB. One of these commenters specified that, in the context of venture 
capital funds making distributions of shares to their limited partners, a one-business day filing deadline 
would risk “erroneously signaling a sell-off to the market,” harming liquidity and market efficiency, 
particularly for thinly traded companies that are more likely to be dominated by retail investors. See letter 
from NVCA. 
913
  See letters from NVCA; STB. 

258 
associated with the current ‘promptly’ regime and . . . it has worked well and effectively.”
914
 We 
acknowledge that the extent of any benefits of the revised deadline are likely to vary across 
filers, types of filings, and issuers, with greater benefits associated with those Schedule 13D 
amendments that have more of a market impact (e.g., because they report a more significant 
change in holdings or plans) and that also would otherwise have been filed a greater number of 
days after the material change. 
The proposed amendments would have required amendments to Schedule 13D to be filed 
one business day after the date on which a material change occurs. Many commenters raised 
concerns about compliance challenges and costs associated with the limited time that would be 
available to consider the need for, prepare, and submit a filing under this proposed deadline.
915
 
While some of the commenters raising such concerns indicated that more than two days may be 
required to complete the required tasks,
916
 some identified a two business day deadline as a more 
practicable period for compliance.
917
 We agree with these commenters and therefore expect that 
the revision of this filing deadline to two business days, rather than one business day, after the 
date on which a material change occurs will mitigate some concerns about difficulties in 
complying with the amended deadline.  
b.   Amendments to Item 6 of Schedule 13D 
The final amendment to Item 6 of Schedule 13D makes explicit that cash-settled 
derivative securities (including cash-settled SBS) that use the issuer’s securities as a reference 
security are included among the types of contracts, arrangements, understandings, and 
 
914
  See letter from AIMA. 
915
  See letters from ABA; AIMA; IAA; ICI I; EEI; EIM I; Hoak; MFA; MSBA; NVCA; Perkins Coie; STB. 
916
  See letters from AIMA; ICI I; STB. 
917
  See letters from IAA; EIM I; Hoak; NVCA; Perkins Coie. 

259 
relationships that must be disclosed under that Item. This final amendment will not change the 
treatment of derivative securities for the purpose of determining beneficial ownership. To the 
extent that this final amendment elicits additional disclosure that may not otherwise have been 
provided, investors and the market may benefit from a more complete understanding of all of a 
filer’s interests in an issuer. In particular, this final amendment may provide more information 
about the overall economic exposure of the filer to the issuer, which may be associated with the 
actions the filer may be expected to take and thus the shareholder value impact associated with 
the filing.
918
 However, filers could incur additional compliance costs to the extent that they have 
not already been providing such disclosure. In particular, filers may need to expend additional 
internal resources and/or consult external advisors to draft the required disclosures and to 
monitor interests in cash-settled derivative securities in order to report any material changes. In 
section V.C below we estimate for purposes of the Paperwork Reduction Act of 1995 (“PRA”) 
that this final amendment will impose, on average, an additional 0.1 burden hour per filing. 
One commenter indicated that the inclusion of SBS in Item 6 would not provide 
incremental benefits beyond other disclosures, including disclosures that are under consideration 
in a different proposed rulemaking.
919
 We continue to believe that, given current disclosure 
requirements, the final amendment to Item 6 may elicit additional disclosure that may not 
otherwise have been provided. Further, to the extent some of this information may be made 
public in other documents, investors may benefit from being able to review all of a filer’s 
interests in an issuer in a single location.  
 
918
  See, e.g., Lilienfeld-Toal & Schnitzler 2020 Study (suggesting that the percentage of beneficial ownership 
reported in Schedule 13D is an indicator of the types of actions the filer may be expected to take and 
finding that this percentage is a statistically significant predictor of the announcement returns around the 
filing date).  
919
  See letter from IAA; see also Schedule 10B Proposal. 

260 
c.   Structured Data Requirement for Schedules 13D and 13G 
The final rules require all disclosures reported on Schedules 13D and 13G other than the 
exhibits to be submitted using 13D/G-specific XML. We continue to believe, as discussed in the 
Proposing Release, that requiring the disclosures in a structured, machine-readable data language 
will improve the public dissemination and accessibility of the information in these disclosures by 
facilitating its extraction and analysis. Some commenters agreed that a structured data 
requirement would enhance the benefits of the disclosures by making the information easier to 
access and analyze.
920
  
We expect that the structured data requirement will impose some incremental compliance 
costs on filers. In section V.C below we estimate for purposes of the PRA that these 
requirements will impose, on average, an additional 0.5 burden hour per filing. One commenter 
expressed concern that structured data requirement would be unduly burdensome for small 
beneficial owners.
921
 Filers will have the option of using a fillable web form that converts 
inputted disclosures into 13D/G-specific XML, which should limit the incremental burden on 
filers that elect to use this approach. In particular, we expect that the availability of a fillable web 
form should, due to its ease of use, mitigate the concern raised by a commenter that the 
structured data requirement would be unduly burdensome for small beneficial owners. Filers 
who instead choose to submit filings directly in 13D/G-specific XML may bear implementation 
costs of establishing related compliance processes and expertise and/or, as one commenter 
indicated, ongoing costs of working with third-party vendors.
922
 Making submissions directly in 
 
920
  See, e.g., letters from ICI I; M. Slavens. 
921
  See letter from A. Day. 
922
  See letter from ICI I. 

261 
13D/G-specific XML is an approach that may be more likely to be taken by filers expecting to 
submit larger numbers of Schedule 13D and Schedule 13G filings, such as QIIs. We expect the 
costs of submitting Schedule 13D/G directly in 13D/G-specific XML will vary based on prior 
experience with encoding and transmitting structured disclosures. Per Table 4 in section IV.B.3.b 
above, 84 percent of the QIIs filing initial Schedule 13Gs in 2022 were also Schedule 13F filers, 
and thus have such experience.  
One commenter, while supporting the proposed structured data requirement, raised 
concerns about the additional time necessary to comply with the structured data requirement 
within the shortened filing windows that were proposed.
923
 We acknowledge that the structured 
data requirement will increase the amount of time needed to submit filings. We believe the 
extended time permitted to file Schedule 13D and Schedule 13G amendments, and, for QIIs and 
Exempt Investors, to file initial Schedule 13G filings under the final rules as compared to the 
proposed deadlines should mitigate some of the concerns raised by this commenter about the 
time required to comply with the structured data requirement. 
d.   Amendments to Regulation S-T 
The final amendments to Regulation S-T revise the time by which Schedule 13D and 13G 
filings must be submitted in order to be deemed to have been filed on a given business day from 
5:30 p.m. to 10 p.m. Eastern Standard Time or Eastern Daylight Saving Time, whichever is 
currently in effect, on that day. This change may, on the margin, mitigate the incremental 
compliance challenges and costs associated with the revised filing deadlines, particularly for 
filers located in a different time zone than the Commission’s principal office or those operating 
 
923
  Id. 

262 
in multiple time zones. Some commenters agreed that these extended filing hours would benefit 
filers in light of the shortened filing deadlines.
924
 
The final amendments to Regulation S-T also make temporary hardship exemptions 
under Rule 201 of Regulation S-T unavailable with respect to Schedule 13D and 13G filings. We 
expect this change to have no meaningful economic effects as filers will be able to request a 
filing date adjustment under existing Rule 13(b) of Regulation S-T under similar circumstances 
as a temporary hardship exemption.
925
 
D.  Reasonable Alternatives to the Final Rules 
We considered many alternatives to the final rules. Some of these are discussed earlier in 
this release. In this section, we present certain significant alternatives and a discussion of their 
benefits and costs relative to the final rules.  
1. Alternative Filing Deadlines 
We considered both earlier and later (and more and less frequent) filing deadlines relative 
to those that we are adopting. In general, earlier (or more frequent) filing deadlines may have 
increased the benefits, but also the costs, of the amendments, while later (or less frequent) 
deadlines would have decreased the costs but also the benefits of the amendments. The economic 
implications of some alternative filing deadlines (namely, those that were proposed but not 
adopted) are discussed in more detail above. 
With respect to the initial Schedule 13D filing deadline, which will be five business days 
after the trigger date, we also considered a deadline of greater or fewer days after the trigger 
date. Additionally, we considered deadlines stated in calendar days as opposed to business days, 
 
924
  See letters from IAA; ICI I. 
925
  Commission staff may grant the request if it appears that the adjustment is appropriate and consistent with 
the public interest and the protection of investors. See Rule 13(b) of Regulation S-T.   

263 
which, when applied to the same number of days (i.e., five calendar days), would have the effect 
of decreasing the number of days a person would have to file an initial Schedule 13D in cases 
where weekends or holidays fall in the middle of the filing window. In general, a shorter 
deadline and the resulting earlier disclosures may have increased the benefits discussed above for 
those non-corporate-action filings that would not already be considered timely with respect to 
such shorter deadline. A shorter deadline may also have further reduced the risk discussed above 
of shareholders selling to informed bystanders prior to a Schedule 13D filing (as demonstrated in 
Figure 6 above), which may have further enhanced trust in markets and capital formation. 
However, a shorter deadline may also have increased the number of activist campaigns 
forgone compared to the amended filing deadlines, due to two effects. First, a shorter deadline 
would mean that, given current share accumulation patterns, there would be a greater number of 
potential campaigns for which filers would have to consider whether or not to proceed and if so, 
how.
926
 Second, the likelihood of adapting may decrease if it is more difficult for filers to adapt 
to an even shorter deadline than that which we are adopting. An increase in forgone activist 
campaigns may have further reduced shareholder value creation. A reduction in the pursuit of 
activism may also have related negative effects on operational efficiency, market efficiency, 
liquidity, and capital formation, as discussed in the context of the adopted deadline above. 
In the case of a longer deadline, the implications for the incremental benefits and costs 
would have been the reverse of those for a shorter deadline. We note that there is no clear 
breakpoint in either the accumulation pattern of filers or in the abnormal trading volume prior to 
 
926
  See supra Figures 2, 3a, and 3b for the percentage of filers that have completed accumulating all, 90%, or 
75% respectively of their reported stake by each calendar day after the trigger date. 

264 
Schedule 13D filings that could help to support a particular filing deadline, including five-
business day deadline we are adopting. 
A deadline expressed in calendar days would also have incremental effects beyond a 
direct effect on the length of the filing window. In particular, such a deadline would decrease the 
consistency in the total number of business hours that persons would have to continue 
accumulating shares and to draft and submit a filing after their trigger date.
927
 For example, a 
five-calendar day deadline may represent anywhere from two to five business days depending on 
the occurrence of weekends and holidays after the trigger date. This inconsistency may distort 
the campaigns that are pursued by activists or the timing of these campaigns. For example, an 
activist who crosses the five percent threshold on a Monday would generally have five trading 
days from the trigger date to accumulate further shares and potentially increase their profits prior 
to filing and informing the market of their activity. In contrast, an activist who reaches the same 
threshold on a Friday prior to a Federal holiday on the following Monday would only have two 
trading days after the trigger date to accumulate shares before making a Schedule 13D filing. 
Because investors who reach the threshold near a weekend or holiday would thus be at a relative 
disadvantage, activists may be relatively more incentivized to pursue campaigns at issuers where 
liquidity conditions (i.e., availability and ease of share purchase transactions) facilitate crossing 
the five percent threshold early in a week at a lower cost.
928
 Any effect of this kind, in turn, 
would have a detrimental effect on operational efficiency at the market level by influencing 
which campaigns are more likely to be pursued. 
 
927
  See, e.g., letter from Profs. Bishop and Partnoy III (recommending a five-business day deadline because it 
would be “consistent with other regulatory and trading practices,” and noting that “the unit of analysis in 
examining trading should be trading days”). 
928
  See Gantchev & Jotikasthira 2018 Study regarding the role of institutional selling demand on the timing of 
Schedule 13D trigger dates. 

265 
A deadline expressed in calendar days could also increase compliance costs, given that 
external service providers and advisers may charge higher fees for weekend or holiday services, 
which may be more frequently required under a deadline expressed in calendar days. However, a 
deadline expressed in calendar days would increase the consistency in the total number of 
calendar days that persons would have to submit a filing. For example, five business days may 
represent anywhere from seven to 10 calendar days. If a significant amount of investment, 
advisory, drafting, or other activities in preparation of a Schedule 13D filing takes place on 
weekends and holidays, it is possible that this inconsistency in calendar days would advantage 
some filers over others (i.e., those who are better positioned to work over weekends and holidays 
versus those who are not). 
With respect to the initial Schedule 13G filing deadline for Passive Investors, which will 
be five business days after the trigger date, we also considered longer and shorter deadlines (and 
the use of deadlines expressed in business as opposed to calendar days, which would have had 
the effect of lengthening the deadline for the same number of stated days). A longer deadline 
would have eased commenters’ concerns about the compliance costs and complications for 
Passive Investors.
929
 However, researchers have found that those Schedule 13G filings that are 
not made 45 days after year-end (i.e., generally Schedule 13G filings by Passive Investors) are 
associated, on average, with a statistically significant positive abnormal stock return,
930
 albeit 
smaller than that generally found for Schedule 13D filings.
931
 This result may imply that at least 
some of these disclosures contain material information whose earlier disclosure could benefit 
 
929
  See, e.g., letters from IAA; MSBA. 
930
  See supra note 884. 
931
  See supra note 827. 

266 
investors (and which may have enhanced the efficiency of resource allocation at the economy 
level). A longer deadline would have reduced any such benefits. In the case of a shorter deadline, 
the implications for the incremental benefits and costs would have been the reverse of those for a 
longer deadline. 
2. Tiered Approaches 
We considered “tiered” approaches to the initial Schedule 13D filing deadline, in contrast 
to the uniform approach to the filing deadline being adopted. We considered, for example, 
maintaining the current 10-day deadline for acquisitions of more than five percent but no more 
than 10 percent of a covered class while instituting an amended, shorter deadline in cases where 
beneficial ownership exceeds 10 percent. We also considered whether the deadline for the initial 
Schedule 13D filing should vary based on a specified characteristic of the issuer of the covered 
class, such as its market capitalization or trading volume. Finally, we considered maintaining the 
10-day deadline for those filers that elect to “stand still” by not acquiring additional beneficial 
ownership of the covered class once the five percent threshold has been crossed until the 
corresponding Schedule 13D is filed. 
One commenter stated that a tiered approach that would maintain a 10-day deadline for 
filing a Schedule 13D pertaining to beneficial ownership in micro-, small-, and mid-
capitalization issuers “may serve to limit the impact that reforms to Rule 13d-1(a) have on 
shareholder engagement and monitoring,” particularly at micro-, small-, and mid-capitalization 
issuers where, in the commenter’s view, “such effective engagement and monitoring is most 
necessary.”
932
 Another commenter suggested requiring persons who cross certain higher 
thresholds (e.g., a 10 percent beneficial ownership threshold) or who accumulate certain amounts 
 
932
  See letter from ICM. 

267 
after crossing the five percent threshold (e.g., an additional three percent) file their initial 
Schedule 13D on the proposed accelerated timeline, but “allowing investors who trigger 
Schedule 13D filings for more technical reasons and who are not accumulating stock in 
connection with a potential activist engagement (e.g., proxy contests or intended take-private 
activity) to continue filing under the current regime.”
  933
 This commenter also supported 
maintaining the 10-day deadline for “an investor who crosses the 5% threshold but acquires no 
additional stock after the initial crossing transaction,” stating that “there is no informational 
disadvantage for existing investors in such circumstances” and that in some cases there is “earlier 
disclosure by the issuer relating to the [crossing] transaction” and therefore “little purpose [is] 
served by accelerating the timeline for the investor to prepare its disclosure.”
934
 
We acknowledge that there is significant heterogeneity in the benefits and costs of the 
amended filing deadline across different types of filers and issuers. For example, as discussed 
above, these benefits and costs are likely to vary across “corporate action” as compared to “non-
corporate-action” filings,
935
 across issuers of different sizes,
936
 and by the identity of the filer.
937
 
 
933
  See letter from STB. 
934
  Id. 
935
  See section IV.B.3.a.ii above for definitions of these terms and section IV.C.1 above for discussions in 
which we conclude that both the benefits and costs of the shortened initial Schedule 13D filing deadline are 
likely to be limited for corporate action filings. 
936
  Academic research has associated smaller issuer market capitalization with a higher positive abnormal 
stock return around the filing of an initial Schedule 13D. See supra note 829. A higher positive abnormal 
stock return may imply higher costs if there is less such activism under an accelerated filing timeline but 
also higher benefits to investors from accelerating disclosure due to the greater importance of the 
information to the market. 
937
  Academic research has associated Schedule 13D filers’ reputations (based on their financial clout, 
expertise, or aggressive style of engagement) with the size of the positive abnormal stock return around the 
filing. See, e.g., C. N. V. Krishnan et al., The Second Wave of Hedge Fund Activism: The Importance of 
Reputation, Clout, and Expertise, 40 J.
 CORP. FIN. 296 (2016); and Travis Johnson & Nathan Swem, 
Reputation and Investor Activism: A Structural Approach, 139 J.
 FIN. ECON. 29 (2021). As discussed supra 
note 936, a higher positive abnormal stock return may imply both higher costs and higher benefits of 
accelerating the filing deadline. 

268 
Ideally, a tiered approach would be used to accelerate disclosure specifically in circumstances 
where the benefits of accelerated disclosure are greater and the costs of accelerated disclosure are 
lower. However, there are many important dimensions across which the benefits and costs are 
likely to vary, complicating the task of designing a tiered approach. Further, the subgroups of 
filings that are associated with the greatest costs under an accelerated filing deadline (and where 
there thus could be significant advantages of maintaining the 10-day deadline) are also the same 
subgroups associated with the greatest benefits under an accelerated deadline, while those 
associated with lower costs are associated with lower benefits.
938
 This pattern mitigates our 
ability to improve the costs of the amendments by implementing a tiered approach. 
3. Modify Structured Data Requirement 
We considered modifying the proposed structured data requirement for Schedules 13D 
and 13G. We considered, for example, requiring only the quantitative disclosures reported on 
Schedules 13D and 13G to be provided in a structured data language. Narrowing the scope of the 
structuring requirement in this way could simplify the resulting dataset to include only the 
information that might be used most widely by market participants, analysts, and Commission 
staff for aggregation, comparison, and analysis, which may better suit those users who wish to 
focus their analysis on such information and forgo the additional step of filtering out other data. 
However, the non-quantitative disclosures on Schedules 13D and 13G, such as textual narratives 
and identification checkboxes, are also likely to be valuable for many data users, including 
market participants, analysts, and Commission staff, to access and analyze in an efficient and 
automated manner. In addition, we expect that the incremental cost savings to filers of requiring 
only the quantitative disclosures to be structured would be low, because filers would only be 
 
938
  See supra notes 936-937 for examples of some such subgroups. 

269 
forgoing the costs of inputting their textual and checkbox disclosures into fillable web forms (or 
of tagging those disclosures directly or by means of a filing agent) rather than broader costs 
associated with structured data implementation more generally. For these reasons, we have 
determined not to modify the scope of the structured data requirement. 
One commenter recommended that the Commission opt for the XBRL data language, 
rather than creating an XML schema designed specifically for beneficial ownership reporting.
939
 
This commenter stated that using the XBRL standard, rather than the proposed 13D/G-specific 
XML requirements, would result in significantly lower costs and greater efficiencies for filers, 
users of filings, and the Commission, while also enhancing the benefits of a structured data 
requirement by facilitating improved data quality and the ability to commingle the data with 
other datasets. We acknowledge that different structured data languages entail different costs and 
benefits for filers and data users.
940
 We believe that 13D/G-specific XML is more suitable than 
XBRL for Schedules 13D and 13G because it facilitates the use of a fillable form that should 
result in a lower cost of complying with the structured data requirement compared to XBRL, 
particularly for smaller and infrequent filers. Under an XBRL requirement, filers (including 
smaller and infrequent filers) would incur costs and burdens associated with tagging the 
disclosures (e.g., software licensing costs, time spent applying tags) or with paying a third party 
to do so. Thus, although some Schedule 13D and Schedule 13G filers, such as those currently 
subject to Inline XBRL reporting requirements (e.g., filers that are Commission registrants) or 
that otherwise have experience with XBRL may realize some efficiencies under an XBRL 
alternative, we believe the cost savings expected to arise from having a fillable form option 
 
939
  See letter from XBRL US. 
940
  See supra section IV.C.3.c for a discussion of costs associated with the 13D/G-specific XML requirements. 

270 
under the 13D/G-specific XML requirements would have a more substantial positive impact with 
respect to filers as a whole.  
In addition, while some Schedule 13D and Schedule 13G filers and data users may have 
familiarity with XBRL data and software, such filers and data users likely also have familiarity 
with data structured in form-specific XML languages on EDGAR. For instance, the Commission 
has found the use of form-specific XML on section 16 ownership reporting forms to have had 
positive impacts on filers (with respect to compliance costs) and users (in terms of data usability) 
of those disclosures without imposing significantly higher implementation costs on the 
Commission than other structured data requirements impose.
941
 For these reasons, we are 
requiring 13D/G-specific XML rather than Inline XBRL for Schedules 13D and 13G. 
V. Paperwork Reduction Act 
A.  Summary of the Collections of Information  
Certain provisions of our rules, schedules and forms that will be affected by the final 
amendments contain “collection of information” requirements within the meaning of the PRA.
942
 
The Commission published a notice requesting comment on changes to these collection of 
information requirements in the Proposing Release and submitted these requirements to the 
Office of Management and Budget (“OMB”) for review in accordance with the PRA.
943
 The 
hours and costs associated with maintaining, disclosing, or providing the information required by 
the final amendments constitute paperwork burdens imposed by such collection of information. 
 
941
  See Securities and Exchange Commission, Office of Structured Disclosure, Insider Transactions Data Sets, 
available at https://www.sec.gov/dera/data/form-345. 
942
  44 U.S.C. 3501 et seq. 
943
  44 U.S.C. 3507(d); 5 CFR 1320.11. 

271 
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of 
information requirement unless it displays a currently valid OMB control number.  
The title for the affected collections of information is “Regulation 13D and Regulation 
13G; Schedule 13D and Schedule 13G” (OMB Control No. 3235-0145). These schedules contain 
item and other requirements that outline the information a reporting person must disclose.
944
 The 
schedules were adopted under the Exchange Act. A description of the final amendments can be 
found in section II above, and a discussion of the economic effects of the final amendments can 
be found in section IV above. Compliance with the information collections is mandatory. 
Responses to the information collections are not kept confidential and there is no mandatory 
retention period for the information disclosed. 
B.  Summary of Comment Letters on PRA Estimates  
In the Proposing Release, the Commission requested comment on the PRA burden hour 
and cost estimates and the analysis used to derive the estimates. We did not receive any comment 
letters in response to the request for comment on the PRA estimates and analysis included in the 
Proposing Release. 
C.  Burden and Cost Estimates for the Final Amendments  
Below we estimate the incremental and aggregate effect on the paperwork burden as a 
result of the final amendments. As discussed in section II above, we have made a number of 
changes from the Proposed Amendments, and we have adjusted our estimates accordingly. For 
example, in the Proposing Release, the Commission estimated paperwork burden increases for 
Forms 3, 4, and 5 as well as Schedules 13D and 13G associated with proposed Rules 13d-3(e) 
and 13d-5(b)(1)(i) and (ii) and (b)(2)(i). Because we are not adopting those proposed rules, we 
 
944
  See 17 CFR 240.13d-101 and 240.13d-102. 

272 
have adjusted the paperwork burden estimates from the Proposing Release accordingly. In 
addition, rather than basing our PRA estimates on the actual number of Schedule 13D and 13G 
filings in calendar year 2020, as the Commission did in the Proposing Release, we base our PRA 
estimates with respect to the final amendment to Rule 13d-2(b), in part, on the actual number of 
Schedule 13G filings in calendar year 2022.
945
 
At the outset, we note that the current OMB inventory for Regulation 13D-G reflects 
8,587 annual responses. This number is based on the number of initial Schedule 13D and 13G 
filings made. We think that the better approach is for the PRA to reflect the burdens arising from 
both the initial Schedule 13D and 13G filings and amended Schedule 13D and 13G filings. 
Accordingly, we first update the existing PRA burden estimates to reflect this new approach. 
Specifically, we are updating the current OMB inventory from 8,587 annual responses to 29,793 
annual responses to reflect the average number of initial and amended Schedule 13D and 13G 
filings per year that were made in calendar years 2020, 2021, and 2022.
946
 We then estimate the 
PRA impact of the final amendments using the updated inventory numbers as the baseline. Table 
1 below illustrates the resulting incremental change to the total annual compliance burden in 
hours and in costs. Additionally, we note that the current OMB inventory for the above-
referenced collections of information reflect an average of hourly rate of $400 per burden hour 
 
945
  Compare Proposing Release at 13892, n.273, with infra note 952. 
946
  In calendar year 2020, there were 5,288 Schedule 13D filings (comprised of 1,148 initial filings and 4,140 
amendments) and 22,080 Schedule 13G filings (comprised of 6,436 initial filings and 15,644 amendments) 
for a total of 27,368 filings. See DERA Memorandum at nn.3 & 24. In addition, during calendar year 2021, 
there were 5,434 Schedule 13D filings (comprised of 1,555 initial filings and 3,879 amendments) and 
24,874 Schedule 13G filings (comprised of 8,676 initial filings and 16,198 amendments) for a total of 
30,308 filings. See id. at 1, 8. Finally, in calendar year 2022, there were 5,179 Schedule 13D filings 
(comprised of 1,161 initial filings and 4,018 amendments) and 26,523 Schedule 13G filings (comprised of 
8,433 initial filings and 18,090 amendments) for a total of 31,702 filings. See supra section IV.B.3. Taking 
the three-year average of these amounts results in an average of 29,792 Schedule 13D and 13G filings per 
year, comprised of 1,288 initial Schedule 13D filings, 4,012 Schedule 13D amendments, 7,849 initial 
Schedule 13D filings, and 16,644 Schedule 13G amendments, when rounded to the nearest whole number. 

273 
borne by outside professionals. Similarly, in the Proposing Release, the Commission used an 
estimated cost of $400 per hour, recognizing that the costs of retaining outside professionals may 
vary depending on the nature of the professional services.
947
 The Commission recently 
determined to increase the estimated costs of such hourly rate to $600 per hour
948
 to adjust the 
estimate for inflation from Aug. 2006.
949
 Accordingly, we first update the existing PRA burden 
estimates to reflect this new cost estimate, as set out in the following Table 1. 
PRA Table 1: Change in PRA Burden Due to Updating Inventory Numbers 
 
± 
See supra note 946.
 
±± 
The current OMB inventory reflects an   average of 14.5 burden hours for each Schedule 13D filing and an average 
of 12.4 burden hours for each Schedule 13G filing. As noted above, however, the current OMB inventory only 
included initial Schedule 13D and 13G filings, and so these average burden hours were estimates with respect only 
to initial filings. Because Schedule 13D and 13G amendments generally contain a fraction of the information 
contained in an initial filing and because of the likely efficiencies associated with preparing an amendment based on 
the information disclosed in an initial filing, we estimate average burden hours per filing of 3 hours per Schedule 
13D amendment and 2 hours per Schedule 13G amendment. When applied to the updated average annual number of 
initial Schedule 13D filings (1,288), Schedule 13D amendments (4,012), initial Schedule 13G filings (7,849), and 
Schedule 13G amendments (16,644), see supra note 946,  this reflects a total of 161,315 burden hours (when 
rounded to the nearest whole number). In addition, the current OMB inventory assumes that 25% of the burden 
associated with a Schedule 13D or 13G filing is borne by the reporting persons and 75% is borne by outside 
professionals. Thus, assuming that 25% of the total burden hours associated with Schedule 13D and 13G filings 
(161,315) is borne by the reporting persons yields a total of 40,329 internal burden hours (when rounded to the 
nearest whole number). 
±±± 
The current OMB inventory reflects a total cost burden of $32,894,000 for Regulation 13D-G, reflecting an 
 
947
  See Proposing Release at 13894, n.280. 
948
  We recognize that the costs of retaining outside professionals may vary depending on the nature of the 
professional services, but for purposes of this PRA analysis, we estimate that such costs would be an 
average of $600 per hour.  
949
  See Listing Standards for Recovery of Erroneously Awarded Compensation, Release No. 33-11126 (Oct. 
26, 2022) [87 FR 73076 (Nov. 28, 2022)].   
 
Current OMB Inventory 
 
 
Updated Inventory 
 
Increased Burden Due to Update 
Current 
Annual 
Responses 
(A) 
Current 
Burden 
Hours 
(B) 
Current Cost 
Burden 
(C) 
Updated 
Annual 
Responses 
(D) 
±
 
 
Updated 
Burden 
Hours  
(E) 
±±
 
Updated Cost 
Burden 
(F)
 ±±±
 
Increase in 
Number of 
Responses 
(G) = (D) 
- (A) 
Increase in 
Burden 
Hours 
(H) = (E)     
- (B) 
Increase in 
Cost Burden 
(I) = (F) - (C) 
 
8,587 
 
27,412 
 
$32,894,000 
 
29,792 
 
40,329 
 
$72,591,600 
 
21,205 
 
12,917 
 
$39,697,000 

274 
average of hourly rate of $400 per burden hour borne by outside professionals. As noted above, we are increasing 
this cost estimate to $600 per hour. Further, as noted above, assuming that 75% of the total burden hours associated 
with Schedule 13D and 13G filings (161,315) is borne by the reporting persons yields a total of 120,986 burden 
hours borne by outside professionals (when rounded to the nearest whole number). As such, we calculate the 
updated cost burden by multiplying (x) $600 by (y) 120,986.
 
We believe that the final amendments potentially could increase the number of responses 
to this updated collection of information for Schedules 13D and 13G. Specifically, although we 
do not anticipate an increase in this collection due to our final amendment to Rule 13d-1, our 
final amendment to Rule 13d-2(b) with respect to the standard that requires an amendment to 
Schedule 13G could potentially increase the number of Schedule 13G amendments filed 
annually.
950
 For purposes of this PRA, therefore, we estimate that there could be an additional 
41,679 annual responses to the collection of information under Regulation 13D-G
951
 as a result 
of the final amendment to Rule 13d-2.
952
  
 
950
  For example, Rule 13d-2(b) currently requires that a Schedule 13G be amended 45 days after the calendar 
year-end in which any change occurred to the information previously reported. Under our amendment to 
Rule 13d-2(b), a Schedule 13G will have to be amended within 45 days after the end of the calendar quarter 
in which a material change occurred to the information previously reported. Although an amendment under 
Rule 13d-2(b) currently is required for “any” change in the information previously reported, that rule only 
requires that one amendment be filed annually, if at all. Under the revisions we are adopting to that rule, 
although the standard for determining an amendment obligation would only arise upon a “material” change 
to the information previously reported, the rule changes could theoretically result in numerous amendments 
being filed on an annual basis, with as many as four Schedule 13G amendments being filed annually 
pursuant to revised Rule 13d-2(b). 
951
  To the extent that a person or entity incurs a burden imposed by Regulation 13D-G, it is encompassed 
within the collection of information estimates for Regulation 13D-G. This burden includes the preparation, 
filing, processing and circulation of initial and amended Schedules 13D and 13G.  
952
  As discussed in section IV.B.3 supra, a total of 18,090 Schedule 13G amendments were filed in calendar 
year 2022. Upon further review of that data set, we note that 15,100, or 83.47% of those Schedule 13G 
amendments were made within the first 45 days of calendar year 2022. In addition, we note for calendar 
years 2020, 2021, and 2022, there were an average of 16,644 Schedule 13G amendments filed each year. 
See supra note 946. Because Rule 13d-2(b) currently has a Schedule 13G amendment deadline of within 45 
days after calendar year-end, we assume that 83.47% of the 16,644 Schedule 13G amendments filed each 
year, or 13,893 filings (when rounded to the nearest whole number), were made pursuant to Rule 13d-2(b). 
As noted above, our amendment to Rule 13d-2(b) could result in a beneficial owner filing four Schedule 
13G amendments annually pursuant to Rule 13d-2(b), as compared to the one annual amendment that 
currently may be required by Rule 13d-2(b). See supra note 950. As such, for purposes of this PRA, we 
estimate that there will be 55,572 Schedule 13G amendments filed annually pursuant to Rule 13d-2(b) as a 
result of our amendment (calculated by multiplying (x) the 13,893 annual responses currently attributable 
 
 

275 
In addition to a potential increase in the number of annual responses, we expect that the 
final amendments will change the estimated burden per response for Regulation 13D-G. For both 
Schedule 13D and Schedule 13G filers, we expect that the structured data requirement will 
increase the estimated burden per response by requiring that the disclosures in those schedules be 
made using the 13D/G-specific XML. In addition, for Schedule 13D filers, we expect that the 
final amendment to Item 6 of Schedule 13D potentially could increase the estimated burden per 
response by specifying that disclosure is required under Item 6 for the use of cash-settled 
derivative securities with respect to an issuer’s securities.
953
 
The burden estimates were calculated by estimating the number of parties we anticipate 
would expend time, effort, and/or financial resources to generate, maintain, retain, disclose or 
provide information in connection with the final amendments and then multiplying by the 
estimated amount of time, on average, such parties would devote in response to the final 
amendments. The following table summarizes the calculations and assumptions used to derive 
our estimates of the aggregate increase in burden corresponding to the final amendments. 
 
 
to Rule 13d-2(b) by (y) four), resulting in 41,679 additional responses to the collection of information 
under Regulation 13D-G (calculated as the difference between (x) the 55,572 annual responses estimated to 
be attributable to Rule 13d-2(b) as a result of the amendments and (y) the 13,893 annual responses 
currently attributable to Rule 13d-2(b)). We note, however, that this estimate likely reflects the upper limit 
of the potential increases in the number of annual Regulation 13D-G responses as a result of our 
amendment to Rule 13d-2(b) because (1) the amendment revises Rule 13d-2(b) to require a Schedule 13G 
be amended only for a “material” change to the information previously reported, as compared to the current 
requirement that an amendment be filed for “any” change to the information previously reported, (2) the 
information previously reported by many Schedule 13G filers may not change materially on a quarterly 
basis, and (3) some of the Schedule 13G amendments filed in the first 45 days of a given calendar year may 
not have been made pursuant to Rule 13d-2(b). 
953
  We further expect, however, that this potential increase may be offset in part by the amendment to Item 6 
that deletes the “including but not limited to” proviso. 

276 
PRA Table 2. Calculation of Increase in Burden Hours Resulting from the Final 
Amendments 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a  
As noted in PRA Table 1 and supra note 946, the updated OMB inventory will reflect 29,793 total Schedule 13D 
and 13G filings, comprised of 5,300 Schedule 13D filings and 24,493 Schedule 13G filings (in each case comprised 
of both initial filings and amendments). When taking into account the potential effects of the amendment to Rule 
13d-2(b) we estimate that the number of Schedule 13G filings could increase by 41,679, for a total of 66,172 annual 
Schedule 13G filings. See supra note 952. 
 
b 
As noted in PRA Table 1, the current OMB inventory reflects an average of 14.5 burden hours for each Schedule 
13D filing and an average of 12.4 burden hours for each Schedule 13G filing. We use these per filing burden hours 
as a baseline for estimating the burden impact of the final amendments. We estimate that the new structured data 
requirement will increase the burden per response for Schedule 13D and 13G filings (both initial and amended 
filings) by 0.5 burden hours. Our assumption is that the burden will be greatest in the first year after adoption, as 
filers adjust to the new requirements and update their Schedule 13D and 13G preparation and filing processes 
accordingly. We estimate that the burden of the structured data requirement will be 1 hour in the first year and 0.25 
hours in each of the following two years for a three-year average of 0.5 burden hours. Further, for the amendments 
to Item 6 of Schedule 13D, we estimate they will increase the burden by 0.1 hours for each initial Schedule 13D 
filing. Although these amendments could, in some cases, substantially increase the amount of disclosure made 
pursuant to Item 6, we believe that this estimate accurately reflects that only a relatively small percentage of all 
Schedule 13D filers hold cash-settled derivative securities and, therefore, will be required to make additional 
disclosures. In addition, we also expect that any increased burden may be offset in part by the amendment to Item 6 
that deletes the “but not limited to” proviso. Finally, because not every Schedule 13D amendment will respond to 
Item 6, we apply this increase only to initial filings. Taken together, we estimate that the amendments could increase 
the annual burden hours per initial Schedule 13D filing by 0.6 hours and increase the annual burden hours for each 
Schedule 13D amendment, and each initial Schedule 13G filing and Schedule 13G amendment by 0.5 hours. When 
added to the current averages, we estimate that, as a result of the final amendments, the new average per filing 
burden hours will be 15.1 hours for initial Schedule 13D filings, 3.5 hours for Schedule 13D amendments, 12.9 
hours for initial Schedule 13G filings, and 2.5 hours for Schedule 13G amendments.
 
c
 Derived by multiplying the number of responses in each column by the burden hours per response, and rounded to 
the nearest whole number.  
d
 Derived by adding together the hours from “Column Totals” (280,538 hours) and subtracting from that total 
burden hours associated with Schedule 13D and 13G filings for Regulation 13D-G, as noted under PRA Table 1 
(161,315).  
 
Schedule 
13D Initial 
Filings 
(A) 
Schedule 13D 
Amendments 
(B) 
Schedule 13G 
Initial Filings 
(C) 
Schedule 13G 
Amendments 
(D) 
Number of 
Responses 
a
 
     1,288 4,012 7,848 58,323 
 
Burden 
Hours Per 
Response 
b
 
 
15.1 3.5 12.9 2.5 
Column Total
 c
 19,449 14,042 101,239 145,808 
Aggregate  
Increase   
in Burden Hours
 d
 
119,223 

277 
 
The table below illustrates the incremental change to the total annual compliance burden 
in hours and in costs as a result of the final amendments. The table sets forth the percentage 
estimates we typically use for the burden allocation for each response. 
PRA Table 3. Calculation of Aggregate Increase in Burden Hours Resulting from the Final 
Amendments 
 
 
 
 
 
 
 
 
 
† This number reflects an estimated increase of 41,679 annual responses to the updated Regulation 13D-G collection 
of information set forth in PRA Table 1. See supra note 952 and accompanying text. PRA Table 1 reflects an 
updated baseline total of 29,792 responses filed annually for Regulation 13D-G. 
†† Calculated as the sum of annual burden hour increases estimated for Schedule 13D and 13G filings. See supra 
PRA Table 2, “Aggregate Increase in Burden Hours.” 
††† The estimated increases in Columns (C) and (D) are rounded to the nearest whole number. 
Below we summarize the requested paperwork burden for Regulation 13D-G that will be 
submitted to OMB for review in accordance with the PRA, including the estimated total 
reporting burdens and costs, under the final amendments. This table includes both the 
adjustments to the PRA inventory reflected in PRA Table 1 and the aggregate burden increase 
resulting from the final rules reflected in PRA Table 3. 
PRA Table 4. Requested Paperwork Burden for Regulation 13D-G under the Final 
Amendments 
Total Number 
of Estimated 
Responses  
(A)† 
Total 
Increase in 
Burden Hours 
 
(B)†† 
 
 Increase in 
Internal Hours  
(C)††† 
 
= (B) x 25% 
 
 Increase in Outside 
Professional Hours  
(D)††† 
 
= (B) x 75% 
 
 Increase in Outside 
Professional Costs  
(E) 
 
= (D) x $600 
      
71,471 
    
119,223 
 
29,806 
 
89,417 
 
$53,650,200 
 
Current Burden 
 
 
Program Change 
 
Revised Burden 
Current 
Annual 
Responses 
(A) 
Current 
Burden 
Hours 
(B) 
Current Cost 
Burden 
(C) 
Increase in 
Number of 
Responses 
(D)
±
 
 
Increase 
in Burden 
Hours 
(E)
±±
 
Increase in 
Cost Burden 
(F)
 ±±±
 
Annual 
Responses 
(G) = (A) 
+ (D) 
Burden 
Hours 
(H) = (B)     
+ (E) 
Cost Burden 
(I) = (C) + (F) 
 
8,587 
 
27,412 
 
$32,894,000 
 
62,884 
 
42,723 
 
$93,347,200 
 
71,471 
 
70,135 
 
$126,241,200 

278 
 
±
 Calculated as the sum of (x) the 21,205 increase in the number of annual responses as a result of the update of the 
current OMB inventory (from Column (G) in PRA Table 1) and (y) the 41,679 increase in the number of annual 
responses as a result of the final amendments (see supra note 952 and accompanying text). 
±± 
Calculated as the sum of (x) the 12,917 increase in the number of burden hours as a result of the update of the 
current OMB inventory (from Column (H) in PRA Table 1) and (y) the 29,806 increase in the number of burden 
hours as a result of the final amendments (from Column (C) in PRA Table 3). 
±±± 
Calculated as the sum of (x) the $39,697,000 increase in the cost burden as a result of the update of the current 
OMB inventory (from Column (G) in PRA Table 1) and (y) the $53,650,200 increase in the cost burden as a result 
of the final amendments (from Column (E) in PRA Table 3).
 
VI.    Regulatory Flexibility Act Certification 
The Regulatory Flexibility Act (“RFA”)
954
 requires Federal agencies, in promulgating 
rules, to consider the impact of those rules on small entities. Section 603(a) of the RFA generally 
requires the Commission to undertake an initial regulatory flexibility analysis of all proposed 
rules, or rule amendments, to determine the impact of the proposed rulemaking on “small 
entities,”
955
 while section 604(a) requires that the Commission generally provide a final 
regulatory flexibility analysis of rules it is adopting.
956
 Section 605(b) of the RFA states that 
these requirements shall not apply to any proposed or final rule or rule amendment if the head of 
the agency certifies that the rule will not, if promulgated, have a significant economic impact on 
a substantial number of small entities.
957
 The Commission certified in the Proposing Release that 
the Proposed Amendments would not have a significant economic impact on a substantial 
number of small entities for purposes of the RFA.
958
 
For purposes of Commission rulemaking in connection with the RFA, a small entity 
 
954
  5 U.S.C. 601 et seq. 
955  
Section 601(b) of the RFA permits agencies to formulate their own definitions of “small entities.” See 5 
U.S.C. 601(b). The Commission has adopted definitions for the term “small entity” for the purposes of 
Commission rulemaking in accordance with the RFA. Those definitions, as relevant to this rulemaking, are 
set forth in 17 CFR 240.0-10 and, with respect to investment companies, 17 CFR 270.0-10. 
 
956  
See 5 U.S.C. 603(a), 604(a). 
957  
See 5 U.S.C. 605(b). 
958
  Proposing Release at 13895-96. 

279 
includes: (1) when used with reference to an “issuer” or a “person,” other than an investment 
company, an “issuer” or “person” that, on the last day of its most recent fiscal year, had total 
assets of $5 million or less;
959
 or (2) a broker-dealer with total capital (net worth plus 
subordinated liabilities) of less than $500,000 on the date in the prior fiscal year as of which its 
audited financial statements were prepared pursuant to 17 CFR 240.17a-5(d), or, if not required 
to file such statements, a broker-dealer with total capital (net worth plus subordinated liabilities) 
of less than $500,000 on the last business day of the preceding fiscal year (or in the time that it 
has been in business, if shorter); and is not affiliated with any person (other than a natural 
person) that is not a small business or small organization.
960
 An investment company, including a 
business development company,
961
 is considered to be a “small business” if it, together with 
other investment companies in the same group of related investment companies, has net assets of 
$50 million or less as of the end of its most recent fiscal year.
962
 
A description of the final amendments can be found in section II above, and a discussion 
of the economic effects of the final amendments can be found in section IV above. Although the 
final amendments will apply to beneficial owners regardless of their size, we believe that the vast 
majority of the beneficial owners that will be subject to the amendments will not be “small 
entities” for purposes of the RFA. For example, the amendments to the filing deadlines in Rules 
13d-1 and 13d-2, as well as the amendments to Rules 13 and 201 of Regulation S-T and the 
structured data requirement, only apply to persons who beneficially own more than five percent 
 
959  
See 17 CFR 240.0-10(a). 
960  
See 17 CFR 240.0-10(c). 
961
  Business development companies are a category of closed-end investment company that are not registered 
under the Investment Company Act [15 U.S.C. 80a-2(a)(48) and 80a-53-64].  
962
  17 CFR 270.0-10(a). 

280 
of a covered class of securities, thus providing a basis to conclude that such a person is unlikely 
to fall within the definition of “small entity.”  In addition, to the extent that the final amendments 
to the filing deadlines apply to members of a group, in addition to individual entities, we believe 
that members of a group generally would be larger investors and similarly are unlikely to fall 
within the definition of “small entity.” 
We did not receive any comment letters in response to the request for comment on the 
RFA certification in the Proposing Release.
963
 Although some commenters asserted that certain 
of the Proposed Amendments would be unduly burdensome for smaller and non-institutional 
beneficial owners,
964
 those commenters did not indicate (or provide data that would suggest) that 
those beneficial owners would be small entities for purposes of the RFA. Thus, those comments 
do not alter our belief that the vast majority of the beneficial owners that will be subject to the 
amendments will not be small entities for purposes of the RFA. In addition, the final 
amendments include some modifications to the Proposed Amendments. As discussed in more 
detail in section II above, we are not adopting proposed Rule 13d-3(e), nor are we adopting many 
of the proposed amendments to Rules 13d-5 and 13d-6. We also have adopted longer deadlines 
than proposed for initial and amended Schedule 13G filings. We believe these modifications 
generally would reduce any burdens of the final amendments in the event any small entity 
becomes subject to them. Moreover, we do not believe that these modifications alter the basis 
upon which the Commission made the certification in the Proposing Release. 
For the foregoing reasons, the Commission certifies, pursuant to 5 U.S.C. 605(b), that the 
final amendments will not have a significant economic impact on a substantial number of small 
 
963
  Proposing Release at 13896. 
964
  See, e.g., letters from A. Day; E. Fraser; MFA; see also letters from B. Mason; S. Thornburg. 

281 
entities for purposes of the RFA.  
Statutory Authority 
We are adopting the rule amendments contained in this release under the authority set 
forth in sections 3(b), 13, and 23(a) of the Exchange Act.  
List of Subjects  
17 CFR Part 232 
 Administrative practice and procedure, Reporting and recordkeeping requirements, 
Securities. 
17 CFR Part 240 
 Reporting and recordkeeping requirements, Securities. 
Text of Amendments 
 For the reasons set out in the preamble, the Commission is amending title 17, chapter II, 
of the Code of Federal Regulations as follows: 
PART 232—REGULATION S-T—GENERAL RULES AND REGULATIONS FOR 
ELECTRONIC FILINGS 
1. The general authority citation for part 232 continues to read as follows: 
 Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 77sss(a), 78c(b), 78l, 78m, 
78n, 78o(d), 78w(a), 78ll, 80a-6(c), 80a-8, 80a-29, 80a-30, 80a-37, 80b-4, 80b-6a, 80b-10, 80b-
11, 7201 et seq.; and 18 U.S.C. 1350, unless otherwise noted. 
* * * * * 
2. Amend § 232.13 by: 
a. Revising paragraph (a)(4); and 
b. Designating the note following paragraph (a)(4) as note 1 to paragraph (a). 

282 
The revision reads as follows: 
§ 232.13   Date of filing; adjustment of filing date. 
(a) *    *    * 
(4) Notwithstanding paragraph (a)(2) of this section, a Form 3, 4, or 5 (referenced in §§ 
249.103, 249.104, and 249.105 of this chapter, respectively), a Schedule 14N (referenced in § 
240.14n-101 of this chapter), a Form 144 (referenced in § 239.144 of this chapter), or a Schedule 
13D or Schedule 13G, inclusive of any amendments thereto (§§ 240.13d-101 and 240.13d-102 of 
this chapter), submitted by direct transmission commencing on or before 10 p.m. Eastern 
Standard Time or Eastern Daylight Time, whichever is currently in effect, shall be deemed filed 
on the same business day. 
* * * * * 
§ 232.201   [Amended] 
3. Amend § 232.201(a) introductory text by:  
a. Removing the word “or” that immediately precedes “an Asset Data File”; and  
b. Adding after the phrase “Asset Data File (as defined in § 232.11),” the phrase “or a 
Schedule 13D or Schedule 13G (§§ 240.13d-101 and 240.13d-102 of this chapter),”. 
PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE 
ACT OF 1934 
4. The authority citation for part 240 continues to read, in part, as follows:  
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 
77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78l, 78m, 78n, 
78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll, 78mm, 80a-20, 
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 

283 
U.S.C. 5221(e)(3); 18 U.S.C. 1350; and Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. 
L. 112-106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted. 
* * * * * 
 Section 240.13d-3 is also issued under Public Law 111-203 § 766, 124 Stat. 1799 (2010). 
* * * * * 
5. Amend § 240.13d-1 by revising paragraphs (a), (b)(1)(i) and (iii),  (b)(2), (c) 
introductory text, (d), (e)(1) introductory text, (e)(1)(ii), (f)(1), (g), (i), and (j) to read as follows: 
§ 240.13d-1   Filing of Schedules 13D and 13G. 
(a) Any person who, after acquiring directly or indirectly the beneficial ownership of any 
equity security of a class which is specified in paragraph (i)(1) of this section, is directly or 
indirectly the beneficial owner of more than five percent of the class shall, within five business 
days after the date of the acquisition, file with the Commission, a statement containing the 
information required by Schedule 13D (§ 240.13d-101). 
(b) *    *    * 
(1) *    *    * 
(i) Such person has acquired such securities in the ordinary course of the person’s 
business and not with the purpose nor with the effect of changing or influencing the control of 
the issuer, nor in connection with or as a participant in any transaction having such purpose or 
effect, including any transaction subject to § 240.13d-3(b), other than activities solely in 
connection with a nomination under § 240.14a-11; and 
*    *    *    *    * 
(iii) Such person has promptly notified any other person (or group within the meaning of 
section 13(d)(3) of the Act) on whose behalf it holds, on a discretionary basis, securities 

284 
exceeding five percent of the class, of any acquisition or transaction on behalf of such other 
person which might be reportable by that person under section 13(d) of the Act. This paragraph 
(b)(1)(iii) only requires notice to the account owner of information which the filing person 
reasonably should be expected to know and which would advise the account owner of an 
obligation such account owner may have to file a statement, or an amendment thereto, pursuant 
to section 13(d) of the Act. 
*    *    *    *    * 
(2) The Schedule 13G filed pursuant to paragraph (b)(1) of this section shall be filed 
within 45 days after the end of the calendar quarter in which the person became obligated under 
paragraph (b)(1) of this section to report the person’s beneficial ownership as of the last day of 
the calendar quarter, provided, that it shall not be necessary to file a Schedule 13G unless the 
percentage of the class of equity security specified in paragraph (i)(1) of this section beneficially 
owned as of the end of the calendar quarter is more than five percent; however, if the person’s 
direct or indirect beneficial ownership exceeds 10 percent of the class of equity securities prior to 
the end of the calendar quarter, the initial Schedule 13G shall be filed within five business days 
after the end of the first month in which the person’s direct or indirect beneficial ownership 
exceeds 10 percent of the class of equity securities, computed as of the last day of the month. 
(c) A person who would otherwise be obligated under paragraph (a) of this section to file 
a statement on Schedule 13D (§ 240.13d-101) may, in lieu thereof, file with the Commission, 
within five business days after the date of an acquisition described in paragraph (a) of this 
section, a short-form statement on Schedule 13G (§ 240.13d-102). Provided, that the person: 
*    *    *    *    * 

285 
(d) Any person who, as of the end of any calendar quarter, is or becomes directly or 
indirectly the beneficial owner of more than five percent of any equity security of a class 
specified in paragraph (i)(1) of this section and who is not required to file a statement under 
paragraph (a) of this section by virtue of the exemption provided by section 13(d)(6)(A) or (B) of 
the Act (15 U.S.C. 78m(d)(6)(A) or 78m(d)(6)(B)), or because the beneficial ownership was 
acquired prior to December 22, 1970, or because the person otherwise (except for the exemption 
provided by section 13(d)(6)(C) of the Act (15 U.S.C. 78m(d)(6)(C))) is not required to file a 
statement, shall file with the Commission, within 45 days after the end of the calendar quarter in 
which the person became obligated to report under this paragraph (d), a statement containing the 
information required by Schedule 13G (§ 240.13d-102). 
(e)(1) Notwithstanding paragraphs (b) and (c) of this section and § 240.13d-2(b), a person 
that has reported that it is the beneficial owner of more than five percent of a class of equity 
securities in a statement on Schedule 13G (§ 240.13d-102) pursuant to paragraph (b) or (c) of 
this section, or is required to report the acquisition but has not yet filed the schedule, shall 
immediately become subject to paragraph (a) of this section and § 240.13d-2(a) and shall file a 
statement on Schedule 13D (§ 240.13d-101) within five business days if, and shall remain 
subject to those requirements for so long as, the person: 
*    *    *    *    * 
(ii) Is at that time the beneficial owner of more than five percent of a class of equity 
securities described in paragraph (i)(1) of this section. 
*    *    *    *    * 
(f)(1) Notwithstanding paragraph (c) of this section and § 240.13d-2(b), persons reporting 
on Schedule 13G (§ 240.13d-102) pursuant to paragraph (c) of this section shall immediately 

286 
become subject to paragraph (a) of this section and § 240.13d-2(a) and shall remain subject to 
those requirements for so long as, and shall file a statement on Schedule 13D (§ 240.13d-101) 
within five business days after the date on which the person’s beneficial ownership equals or 
exceeds 20 percent of the class of equity securities. 
*    *    *    *    * 
(g) Any person who has reported an acquisition of securities in a statement on Schedule 
13G (§ 240.13d-102) pursuant to paragraph (b) of this section, or has become obligated to report 
on Schedule 13G (§ 240.13d-102) but has not yet filed the Schedule, and thereafter ceases to be a 
person specified in paragraph (b)(1)(ii) of this section or determines that it no longer has 
acquired or holds the securities in the ordinary course of business shall immediately become 
subject to paragraph (a) or (c) of this section (if the person satisfies the requirements specified in 
paragraph (c)) and § 240.13d-2(a), (b), or (d), and shall file, within five business days thereafter, 
a statement on Schedule 13D (§ 240.13d-101) or amendment to Schedule 13G, as applicable, if 
the person is a beneficial owner at that time of more than five percent of the class of equity 
securities. 
*    *    *    *    * 
(i)(1) For the purpose of this section, the term equity security means any equity security 
of a class which is registered pursuant to section 12 of the Act, or any equity security of any 
insurance company which would have been required to be so registered except for the exemption 
contained in section 12(g)(2)(G) of the Act, or any equity security issued by a closed-end 
investment company registered under the Investment Company Act of 1940; provided, s  uch term 
shall not include securities of a class of non-voting securities. 

287 
(2) For the purpose of this section, the term business day means any day, other than 
Saturday, Sunday, or a Federal holiday, from 12 a.m. to 11:59 p.m., Eastern Time. 
(j) For the purpose of sections 13(d) and 13(g) of the Act, any person, in determining the 
amount of outstanding securities of a class of equity securities, may rely upon information set 
forth in the issuer’s most recent quarterly or annual report, and any current report subsequent 
thereto, filed with the Commission pursuant to the Act, unless such person knows or has reason 
to believe that the information contained therein is inaccurate. 
*    *    *    *    * 
6. Amend § 240.13d-2 by:  
a. Revising paragraphs (a) through (d); and 
b. Removing the sectional authority citation from the end of the section. 
The revisions read as follows: 
§ 240.13d-2   Filing of amendments to Schedules 13D or 13G. 
(a) If any material change occurs in the facts set forth in the Schedule 13D (§ 240.13d-
101) required by § 240.13d-1(a), including, but not limited to, any material increase or decrease 
in the percentage of the class beneficially owned, the person or persons who were required to file 
the statement shall file or cause to be filed with the Commission an amendment disclosing that 
change within two business days after the date of such change. An acquisition or disposition of 
beneficial ownership of securities in an amount equal to one percent or more of the class of 
securities shall be deemed “material” for purposes of this section; acquisitions or dispositions of 
less than those amounts may be material, depending upon the facts and circumstances. 
(b) Notwithstanding paragraph (a) of this section, and provided that the person filing a 
Schedule 13G (§ 240.13d-102) pursuant to § 240.13d-1(b) or (c) continues to meet the 

288 
requirements set forth therein, any person who has filed a Schedule 13G (§ 240.13d-102) 
pursuant to § 240.13d-1(b), (c), or (d) shall amend the statement within 45 days after the end of 
each calendar quarter if, as of the end of the calendar quarter, there are any material changes in 
the information reported in the previous filing on that Schedule; provided, however, that an 
amendment need not be filed with respect to a change in the percent of the class outstanding 
previously reported if the change results solely from a change in the aggregate number of 
securities outstanding. Once an amendment has been filed reflecting beneficial ownership of five 
percent or less of the class of securities, no additional filings are required unless the person 
thereafter becomes the beneficial owner of more than five percent of the class and is required to 
file pursuant to § 240.13d-1. 
(c) Any person relying on § 240.13d-1(b) that has filed its initial Schedule 13G (§ 
240.13d-102) pursuant to § 240.13d-1(b) shall, in addition to filing any amendments pursuant to 
paragraph (b) of this section, file an amendment on Schedule 13G (§ 240.13d-102) within five 
business days after the end of the first month in which the person’s direct or indirect beneficial 
ownership, computed as of the last day of the month, exceeds 10 percent of the class of equity 
securities. Thereafter, that person shall, in addition to filing any amendments pursuant to 
paragraph (b) of this section, file an amendment on Schedule 13G (§ 240.13d-102) within five 
business days after the end of the first month in which the person's direct or indirect beneficial 
ownership, computed as of the last day of the month, increases or decreases by more than five 
percent of the class of equity securities. Once an amendment has been filed reflecting beneficial 
ownership of five percent or less of the class of securities, no additional filings are required by 
this paragraph (c). 

289 
(d) Any person relying on § 240.13d-1(c) that has filed its initial Schedule 13G (§ 
240.13d-102) pursuant to § 240.13d-1(c) shall, in addition to filing any amendments pursuant to 
paragraph (b) of this section, file an amendment on Schedule 13G (§ 240.13d-102) within two 
business days after acquiring, directly or indirectly, greater than 10 percent of a class of equity 
securities specified in § 240.13d-1(d), and thereafter within two business days after increasing or 
decreasing its beneficial ownership by more than five percent of the class of equity securities. 
Once an amendment has been filed reflecting beneficial ownership of five percent or less of the 
class of securities, no additional filings are required by this paragraph (d). 
*    *    *    *    * 
7. Amend § 240.13d-3 by: 
a. R evising paragraphs (d)(3) introductory text and (d)(4); and 
b. Removing the sectional authority citation from the end of the section. 
The revisions read as follows: 
§ 240.13d-3   Determination of beneficial owner. 
*    *    *    *    * 
(d) *    *    * 
(3) A person who in the ordinary course of such person’s business is a pledgee of 
securities under a written pledge agreement shall not be deemed to be the 
beneficial owner of such pledged securities until the pledgee has taken all formal 
steps necessary which are required to declare a default and determines that the 
power to vote or to direct the vote or to dispose or to direct the disposition of such 
pledged securities will be exercised, provided, that: 
*    *    *    *    * 

290 
(4) A person engaged in business as an underwriter of securities who acquires securities 
through such person’s participation in good faith in a firm commitment underwriting registered 
under the Securities Act of 1933 shall not be deemed to be the beneficial owner of such 
securities until the expiration of 40 days after the date of such acquisition. 
8. Revise § 240.13d-5 to read as follows: 
§ 240.13d-5   Acquisition of beneficial ownership. 
(a) A person who becomes a beneficial owner of securities shall be deemed to have 
acquired such beneficial ownership for purposes of section 13(d)(1) of the Act, whether such 
acquisition was through purchase or otherwise. However, executors or administrators of a 
decedent’s estate generally will be presumed not to have acquired the beneficial ownership held 
by the decedent’s estate until such time as such executors or administrators are qualified under 
local law to perform their duties. 
(b)(1)(i) When two or more persons agree to act together for the purpose of acquiring, 
holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be 
deemed to have acquired beneficial ownership, for purposes of sections 13(d) and (g) of the Act, 
as of the date of such agreement, of all equity securities of that issuer beneficially owned by any 
such persons.  
(ii) A group regulated as a person pursuant to section 13(d)(3) of the Act shall be deemed 
to have acquired beneficial ownership, as determined under paragraph (a) of this section and for 
purposes of sections 13(d)(1) and (2) of the Act, if any member of the group becomes the 
beneficial owner of additional equity securities in the same class beneficially owned by the group 
after the group’s formation. The beneficial ownership so acquired shall be reported as being held 

291 
by the group through the earlier of {x} the date of the group’s dissolution or {y} the date of that 
member’s withdrawal from the group. 
(iii) Notwithstanding paragraph (b)(1)(ii) of this section, a group regulated under section 
13(d)(3) of the Act shall not be deemed to have acquired beneficial ownership, as determined 
under paragraph (a) of this section, if, after the group’s formation, a member of the group 
becomes the beneficial owner of additional equity securities in the same class beneficially owned 
by the group through a sale by or transfer from another member of the group. 
(2)(i) A group regulated as a person pursuant to section 13(g)(3) of the Act shall be 
deemed to have become the beneficial owner, for purposes of sections 13(g)(1) and (2) of the 
Act, if any member of the group becomes a beneficial owner of additional equity securities in the 
same class held by the group after the group’s formation and through the earlier of {x} the date 
of the group’s dissolution or {y} the date of that member’s withdrawal from the group.   
(ii) Notwithstanding paragraph (b)(2)(i) of this section, a group regulated under section 
13(g)(3) of the Act shall not be deemed to have become the beneficial owner of additional equity 
securities in the same class beneficially owned by the group if, after the group’s formation, a 
member of the group becomes the beneficial owner of additional equity securities in the same 
class beneficially owned by the group through a sale by or transfer from another member of the 
group. 
9. Revise § 240.13d-6 to read as follows: 
§ 240.13d-6   Exemption of certain acquisitions. 
(a) The acquisition of securities of an issuer by a person who, prior to such acquisition, 
was a beneficial owner of more than five percent of the outstanding securities of the same class 
as those acquired shall be exempt from section 13(d) of the Act; provided, that: 

292 
(1) The acquisition is made pursuant to preemptive subscription rights in an offering 
made to all holders of securities of the class to which the preemptive subscription rights pertain; 
(2) Such person does not acquire additional securities except through the exercise of such 
person’s pro rata share of the preemptive subscription rights; and 
(3) The acquisition is duly reported, if required, pursuant to section 16(a) of the Act and 
the rules and regulations thereunder in this part. 
(b) A group shall be deemed not to have acquired any equity securities beneficially 
owned by the other members of the group solely by virtue of their concerted actions relating to 
the purchase of equity securities directly from an issuer in a transaction not involving a public 
offering; provided, that: 
(1) All the members of the group are persons specified in § 240.13d-1(b)(1)(ii); 
(2) The purchase is in the ordinary course of each member’s business and not with the 
purpose nor with the effect of changing or influencing control of the issuer, nor in connection 
with or as a participant in any transaction having such purpose or effect, including any 
transaction subject to § 240.13d-3(b); 
(3) There is no agreement among or between any members of the group to act together 
with respect to the issuer or its securities except for the purpose of facilitating the specific 
purchase involved; and 
(4) The only actions among or between any members of the group with respect to the 
issuer or its securities subsequent to the closing date of the non-public offering are those which 
are necessary to conclude ministerial matters directly related to the completion of the offer or 
sale of the securities. 
§ 240.13d-7   [Removed and Reserved] 

293 
10. Remove and reserve § 240.13d-7. 
11. Amend § 240.13d-101 by:  
a. Removing the note that reads “Note: Schedules filed in paper format shall include a 
signed original and five copies of the schedule, including all exhibits. See Rule 13d–7 for other 
parties to whom copies are to be sent.”; and 
b. Revising Item 6 and the paragraph following the “Name/Title” block.   
The revisions read as follows: 
§ 240.13d-101   Schedule 13D—Information to be included in statements filed pursuant to § 
240.13d-1(a) and amendments thereto filed pursuant to § 240.13d-2(a). 
*    *    *    *    * 
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to 
Securities of the Issuer. Describe any contracts, arrangements, understandings, or relationships 
(legal or otherwise) among the persons named in Item 2 and between such persons and any 
person with respect to any securities of the issuer, including any class of such issuer’s securities 
used as a reference security, in connection with any of the following: call options, put options, 
security-based swaps or any other derivative securities, transfer or voting of any of the securities, 
finder’s fees, joint ventures, loan or option arrangements, guarantees of profits, division of 
profits or loss, or the giving or withholding of proxies, naming the persons with whom such 
contracts, arrangements, understandings, or relationships have been entered into. Include such 
information for any of the securities that are pledged or otherwise subject to a contingency the 
occurrence of which would give another person voting power or investment power over such 
securities except that disclosure of standard default and similar provisions contained in loan 
agreements need not be included. 

294 
*    *    *    *    * 
The original statement shall be signed by each person on whose behalf the statement is filed or 
such person’s authorized representative. If the statement is signed on behalf of a person by such 
person’s authorized representative (other than an executive officer or general partner of the filing 
person), evidence of the representative's authority to sign on behalf of such person shall be filed 
with the statement; provided, however, that a power of attorney for this purpose which is already 
on file with the Commission may be incorporated by reference. The name and any title of each 
person who signs the statement shall be typed or printed beneath such person’s signature. 
*    *    *    *    * 
12. Amend § 240.13d-102 by:  
a. Revising Item 8 and the paragraph following the “Name/Title” block; and 
b. Removing the note at the end of the section.  
The revisions read as follows: 
§ 240.13d-102   Schedule 13G—Information to be included in statements filed pursuant to § 
240.13d-1(b), (c), and (d) and amendments thereto filed pursuant to § 240.13d-2. 
*    *    *    *    * 
Item 8. Identification and Classification of Members of the Group 
If a group has filed this schedule pursuant to § 240.13d-1(b)(1)(ii)(K), so indicate under Item 
3(k) and attach an exhibit stating the identity and Item 3 classification of each member of the 
group. If a group has filed this schedule pursuant to Rule 13d-1(c) or Rule 13d-1(d), attach an 
exhibit stating the identity of each member of the group. 
*    *    *    *    * 

295 
The original statement shall be signed by each person on whose behalf the statement is filed or 
such person’s authorized representative. If the statement is signed on behalf of a person by such 
person’s authorized representative other than an executive officer or general partner of the filing 
person, evidence of the representative’s authority to sign on behalf of such person shall be filed 
with the statement; provided, however, that a power of attorney for this purpose which is already 
on file with the Commission may be incorporated by reference. The name and any title of each 
person who signs the statement shall be typed or printed beneath such person’s signature. 
*    *    *    *    * 
By the Commission. 
Dated: October 10, 2023.  
 
 
Vanessa A. Countryman, 
Secretary. 

Conformed to Federal Register version 

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. 



2 

FOR FURTHER INFORMATION CONTACT: Nicholas Panos, Senior Special Counsel, and 

Valian Afshar, Senior Special Counsel, Division of Corporation Finance, at (202) 551-3440, U.S. 

Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.  

SUPPLEMENTARY INFORMATION: We are adopting amendments to 17 CFR 240.13d-1 

(“Rule 13d-1”), 17 CFR 240.13d-2 (“Rule 13d-2”), 17 CFR 240.13d-3 (“Rule 13d-3”), 17 CFR 

240.13d-5 (“Rule 13d-5”), 17 CFR 240.13d-6 (“Rule 13d-6”), 17 CFR 240.13d-101 (“Rule 13d-

101”), and 17 CFR 240.13d-102 (“Rule 13d-102”) under the Securities Exchange Act of 1934 

[15 U.S.C. 78a et seq.] (“Exchange Act”).1 We also are adopting amendments to 17 CFR 232.13 

(“Rule 13 of Regulation S-T”) and 17 CFR 232.201 (“Rule 201 of Regulation S-T”) under 17 

CFR part 232 (“Regulation S-T”).2 In addition, we are rescinding 17 CFR 240.13d-7 (“Rule 13d-

7”). 

 

  

 
1  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. 

2  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.  



3 

Table of Contents 

I. INTRODUCTION 

II. DISCUSSION OF THE FINAL AMENDMENTS 

A. AMENDMENTS TO RULES 13D-1 AND 13D-2 AND RULES 13 AND 201 OF 
REGULATION S-T TO REVISE FILING DEADLINES AND FILING DATE 
ASSIGNMENT 

1. Rule 13d-1(a), (e), (f), and (g) 
2. Rule 13d-1(b), (c), and (d) 
3.  Rule 13d-2(a) and (b) 
4. Rule 13d-2(c) and (d) 
5.  Rules 13(a)(4) and 201(a) of Regulation S-T 

B. PROPOSED AMENDMENT TO RULE 13D-3 REGARDING THE USE OF CASH-
SETTLED DERIVATIVE SECURITIES 

1. Proposed Amendment 
2. Comments Received 
3. Commission Guidance 

C. PROPOSED AMENDMENTS TO RULE 13D-5 
1. Proposed Rule 13d-5(b)(1)(i), (b)(2)(i), and (b)(1)(ii) 
2. Proposed Rule 13d-5(b)(1)(iii) and (b)(2)(ii) 
3. Proposed Rule 13d-5(b)(1)(iv) and (b)(2)(iii) 

D. PROPOSED AMENDMENTS TO RULE 13D-6 TO CREATE CERTAIN 
EXEMPTIONS 

1. Proposed Amendments 
2. Comments Received 
3. Final Amendments 

E.  AMENDMENT TO SCHEDULE 13D TO CLARIFY DISCLOSURE 
REQUIREMENTS REGARDING DERIVATIVE SECURITIES 

1. Proposed Amendment 
2. Comments Received 
3. Final Amendment 

F. STRUCTURED DATA REQUIREMENT FOR SCHEDULES 13D AND 13G 
1. Proposed Amendment 
2. Comments Received 
3. Final Amendment 

G. COMPLIANCE DATES 

III. OTHER MATTERS 



4 

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 
 

 
  



5 

I. Introduction 

We are amending certain rules within 17 CFR 240.13d-1 through 240.13f-1 (“Regulation 

13D-G”)3 and Regulation S-T to modernize the beneficial ownership reporting requirements and 

improve their operation and efficacy. Some4 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 

 
3  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. 

4  See infra note 22 for a discussion of certain technical amendments we are adopting that the Commission 
did not previously propose. 

5  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. 33-
11180; 34-97405 (Apr. 28, 2023) [88 FR 28440 (May 4, 2023)] (“Reopening Release”). That memorandum 
provided supplemental data and analysis related to certain economic effects of the Proposed Amendments. 
See Memorandum of the Staff of the Division of Economic and Risk Analysis, Supplemental data and 
analysis on certain economic effects of proposed amendments regarding the reporting of beneficial 
ownership (Apr. 28, 2023), available at https://www.sec.gov/comments/s7-06-22/s70622-20165251-
334474.pdf (“DERA Memorandum”).  

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

 
 



6 

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 

securities7 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-59 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/iac092122-
agenda.htm. 

7  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. 

8  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. 

9  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. 



7 

Schedule 13D to within five business days10 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 

 
10  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.” 

11  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.” 

12  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 240.13d-
1(b)(1)(i). 



8 

Investors13 to within 45 days14 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 Investors16 

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;  

 
13  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. 

14  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.” 

15  In addition, we are retaining the requirement in Rule 13d-1(b)(2) that a QII file its initial Schedule 13G on 
a more expedited basis if its beneficial ownership exceeds 10% of a covered class. 17 CFR 240.13d-
1(b)(2). We are amending that rule, however, to require that such an initial Schedule 13G be filed within 
five business days after the end of the first month in which the QII’s beneficial ownership exceeds 10% of a 
covered class, computed as of the last day of the month, rather than the current requirement of 10 calendar 
days after month-end. 

16  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. 34-
39538 (Jan. 12, 1998) [63 FR 2854, n.9 (Jan. 16, 1998)]. These investors are ineligible to report beneficial 
ownership pursuant to Rule 13d-1(b) or (d) but are eligible to report beneficial ownership on Schedule 13G 
in reliance upon Rule 13d-1(c).  



9 

• 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 Time17 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 

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

Saving Time, whichever is currently in effect. 
18  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. 

19  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.  



10 

in section II.A:  

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

Initial 
Filing 

Deadline 

Within 10 days 
after acquiring 
beneficial 
ownership of 
more than 5% or 
losing eligibility 
to file on 
Schedule 13G. 
Rule 13d-1(a), (e), 
(f), and (g). 

Within five business 
days after acquiring 
beneficial ownership 
of more than 5% or 
losing eligibility to file 
on Schedule 13G. 
Rule 13d-1(a), (e), (f), 
and (g). 

QIIs & Exempt 
Investors: 45 days after 
calendar year-end in 
which beneficial 
ownership exceeds 5%. 
Rule 13d-1(b) and (d). 
 
QIIs: 10 days after 
month-end in which 
beneficial ownership 
exceeds 10%. Rule 13d-
1(b). 
 
Passive Investors:  
Within 10 days after 
acquiring beneficial 
ownership of more than 
5%. Rule 13d-1(c). 

QIIs & Exempt 
Investors: 45 days 
after calendar quarter-
end in which 
beneficial ownership 
exceeds 5%. Rule 13d-
1(b) and (d). 
 
QIIs: Five business 
days after month-end 
in which beneficial 
ownership exceeds 
10%. Rule 13d-1(b). 
 
Passive Investors: 
Within five business 
days after acquiring 
beneficial ownership 
of more than 5%. Rule 
13d-1(c). 

Amendment 
Triggering 

Event 

Material change in 
the facts set forth 
in the previous 
Schedule 13D. 
Rule 13d-2(a). 

Same as current 
Schedule 13D: 
Material change in the 
facts set forth in the 
previous Schedule 
13D. Rule 13d-2(a). 

All Schedule 13G Filers: 
Any change in the 
information previously 
reported on Schedule 
13G. Rule 13d-2(b). 
 
QIIs & Passive 
Investors: Upon 
exceeding 10% 
beneficial ownership or 
a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(c) and (d). 
 
 

All Schedule 13G 
Filers: Material 
change in the 
information previously 
reported on Schedule 
13G. Rule 13d-2(b). 
 
QIIs & Passive 
Investors: Same as 
current Schedule 13G: 
Upon exceeding 10% 
beneficial ownership 
or a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(c) and (d). 



11 

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

Amendment 
Filing 

Deadline 

Promptly after the 
triggering event. 
Rule 13d-2(a). 

Within two business 
days after the 
triggering event. Rule 
13d-2(a). 

All Schedule 13G Filers: 
45 days after calendar 
year-end in which any 
change occurred. Rule 
13d-2(b). 
 
QIIs: 10 days after 
month-end in which 
beneficial ownership 
exceeded 10% or there 
was, as of the month-
end, a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(c). 
 
Passive Investors: 
Promptly after 
exceeding 10% 
beneficial ownership or 
a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(d). 

All Schedule 13G 
Filers: 45 days after 
calendar quarter-end 
in which a material 
change occurred. Rule 
13d-2(b).  
 
QIIs: Five business 
days after month-end 
in which beneficial 
ownership exceeds 
10% or a 5% increase 
or decrease in 
beneficial ownership. 
Rule 13d-2(c). 
 
Passive Investors: 
Two business days 
after exceeding 10% 
beneficial ownership 
or a 5% increase or 
decrease in beneficial 
ownership. Rule 13d-
2(d). 

Filing “Cut-
Off” Time 

5:30 p.m. Eastern 
Time. Rule 
13(a)(2) of 
Regulation S-T. 

10 p.m. Eastern Time. 
Rule 13(a)(4) of 
Regulation S-T. 

All Schedule 13G Filers: 
5:30 p.m. Eastern Time. 
Rule 13(a)(2) of 
Regulation S-T. 

All Schedule 13G 
Filers: 10 p.m. Eastern 
Time. Rule 13(a)(4) of 
Regulation S-T. 

As noted above, we are not adopting proposed Rule 13d-3(e). Instead, we discuss the 

circumstances in which a holder of a cash-settled derivative security, excluding SBS, may be 

deemed the beneficial owner of the reference covered class under Rule 13d-3. We also are not 

adopting the proposed exemption in 17 CFR 240.13d-6(d) (“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 



12 

amending Item 6 of Schedule 13D, codified at Rule 13d-101, to remove any implication that a 

person is not required to disclose interests in all derivative securities that use a covered class as a 

reference security. This amendment is intended to eliminate any ambiguity regarding the scope 

of the disclosure obligations of Item 6 of Schedule 13D as to derivative securities, including with 

respect to any derivative not originating with, or offered or sold by, the issuer, such as a cash-

settled option or SBS. 

As noted above, we are not adopting most of the proposed substantive amendments to 

Rule 13d-5.20 We also are not adopting proposed 17 CFR 240.13d-6(c) (“Rule 13d-6(c)”), which 

would have specified certain circumstances under which two or more persons may coordinate 

and consult with one another and engage with an issuer without being subject to regulation as a 

group. Instead, we are issuing guidance regarding the appropriate legal standard for determining 

whether a group is formed. This guidance is intended to provide clarity on the circumstances 

under which a person may be deemed to have formed a group with another person or persons 

within the meaning of sections 13(d)(3) and 13(g)(3). 

We are adopting the proposed requirement that Schedules 13D and 13G be filed using a 

structured, machine-readable data language. We are, therefore, now requiring that all disclosures, 

including quantitative disclosures, textual narratives, and identification checkboxes, on 

Schedules 13D and 13G be filed using an 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.  

 
20  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. 
21  Under this structured data requirement, only the exhibits to Schedules 13D and 13G will remain 

unstructured. 



13 

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 

 
22  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). 

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



14 

provision, Rule 13d-1(a) sets forth the 10-day filing deadline for the initial Schedule 13D.24 

Although the Dodd-Frank Act amended section 13(d)(1) to grant the Commission the authority 

to shorten the deadline for filing the initial Schedule 13D, the 10-day deadline has not been 

updated since it was enacted more than 50 years ago.25   

Rule 13d-1(e), (f), and (g) set forth the initial Schedule 13D filing obligations for 

investors who are no longer eligible to rely upon Rule 13d-1(b)26 or (c)27 (which permit investors 

to file the more abbreviated Schedule 13G in lieu of the longer-form Schedule 13D). Rule 13d-

1(e), (f), and (g) ensure that initial Schedule 13D filings uniformly are subject to a 10-day 

deadline, regardless of whether the beneficial owners were previously eligible to file a Schedule 

13G in lieu of the Schedule 13D. 

Rule 13d-1(e) applies to persons who have been filing a Schedule 13G in lieu of 

Schedule 13D in reliance upon either Rule 13d-1(b) or (c). Rule 13d-1(b) and (c) both provide 

that a person may not rely on those provisions if he or she beneficially owns the relevant equity 

securities with the purpose or effect of changing or influencing the control of the issuer.28 

Institutional and 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 

 
24  17 CFR 240.13d-1(a) (requiring that a Schedule 13D be filed “within 10 days after the acquisition” of 

beneficial ownership of more than 5% of a covered class). 
25  Section 13(d)(1) of the Exchange Act was enacted by the Ninetieth Congress in 1968 through the approval 

of Senate Bill 510.  
26  17 CFR 240.13d-1(b).  
27  17 CFR 240.13d-1(c).  
28  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.” 



15 

effect, as described more fully under Item 10 of Schedule 13G, or certain institutional investors 

that also acquire or hold beneficial ownership outside of the ordinary course of business, are 

considered to have, for purposes of this release, a “disqualifying purpose or effect.”29 Rule 13d-

1(e)(1) requires 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 

 
29  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)].  



16 

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 

 
30  Proposing Release at 13851. 
31  Id. 
32  Id. at 13852. 



17 

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 

Commenters36 expressed a range of views on the proposed amendments to Rule 13d-1(a), 

 
33  Proposing Release at 13850, 13852. 
34  Id. at 13854. 
35  Id. 
36  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 

 
 



18 

(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. 

37  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, AFL-
CIO (Apr. 11, 2022) (“AFL-CIO”) (expressly supporting only the proposed amendment to Rule 13d-1(a)); 
Americans for Financial Reform Education Fund (“Apr. 11, 2022) (“AFREF”) (same); Americans for 
Financial Reform Education Fund, American Federation of Labor and Congress of Industrial Organizations 
(AFL-CIO), Communications Workers of America (CWA), Interfaith Center on Corporate Responsibility 
(ICCR), Public Citizen (June 27, 2023) (“AFREF, et al.”) (same); Anonymous (Feb. 19, 2022) 
(“Anonymous 1”); Anonymous (Feb. 19, 2022) (“Anonymous 3”); Anonymous (Feb. 20, 2022) 
(“Anonymous 5”); Anonymous (Mar. 14, 2022) (“Anonymous 11”); Anonymous (Mar. 14, 2022) 
(“Anonymous 12”); Anthony R., Individual Investors (Feb. 18, 2022) (“Anthony R.”); Better Markets (Apr. 
11, 2022) (“Better Markets I”) (same); Better Markets (June 27, 2023) (“Better Markets II”) (same); Maria 
Ghazal, Senior Vice President and Counsel, Business Roundtable (Apr. 11, 2022) (“BRT”) (same); Curtis 
Robinson (Feb. 18, 2022 (“C. Robinson”); Richard F. McMahon, Jr., Senior Vice President, Energy Supply 
& Finance Edison Electric Institute (Mar. 22, 2022) (“EEI”); An Investor, Engineer (Apr. 4, 2022) 
(“Engineer”); Mark R. Allen, Executive Vice 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 

 
 



19 

amendments would increase the timeliness and quality of information for market participants.38 

A number of commenters asserted that the proposed amendments would increase transparency 

and fairness in the financial markets.39  

 Several commenters identified potential specific benefits of the proposed amendments. 

For example, some commenters asserted that the proposed amendments would be particularly 

beneficial for retail investors by providing them with additional information and transparency.40 

Another commenter stated that the proposed amendments would enable investors and the market 

to “better track when beneficial owners take significant positions in covered securities for 

purposes of controlling or exerting influence over issuers, resulting in more informed decision-

making by investors and more accurate valuation of securities by the market.”41 

Other commenters highlighted potential downsides of the current 10-day deadline. For 

example, one commenter described the 10-day deadline as costly to public companies and 

investors generally and based its support for the proposed amendments “on the fundamental 

concept that a public company must have timely information about its owners in order to engage 

 
(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.  

38  See, e.g., letters from ABA; Anthony R.; FedEx; Freeport-McMoRan; Jonah; P. Worts; T. Mirvis, et al. 
39  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. 
40  See, e.g., letters from C. Robinson (“I welcome all rules that require more disclosure and faster times to 

report[].”); J. Soucie; P. Worts.  
41  See letter from TIAA; see also letter from P. Worts. 



20 

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 

 
42  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”). 

43  See letter from HMA I. 
44  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. 

45  See letter from Labor Unions. 
46  See letter from NIRI. 
47  See letter from Better Markets I; see also letter from Better Markets II.21 

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 

 
48  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. 

49  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. 

50  See, e.g., letters from Sen. Baldwin, et al.; T. Mirvis, et al. 
51  See letter from BRT. 
52  See letter from NIRI. 
53  See, e.g., letters from AFREF; Better Markets I; SCG; Sen. Baldwin, et al.; WLRK II. 



22 

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 

 
54  See letter from WLRK II. 
55  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. 

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



23 

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 

 
58  See letter from WLRK I. 
59  See letter from FedEx. 
60  See, e.g., letters from ABA; AFREF; Better Markets I; Better Markets II; HMA II; Labor Unions; Sen. 

Baldwin, et al.; WLRK I. 
61  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). 

62  See letter from HMA II. 
63  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.   



24 

investor.”64 And, one commenter asserted that the proposed amendments are “more likely to 

adversely affect short-term behaviors than long-term oriented activism.”65 

 In addition, a number of commenters stated that shareholder activism is not uniformly 

beneficial for issuers and their shareholders.66 For example, one commenter asserted that hedge 

fund activism could be contributing to an emphasis on short-term gains over sustainable, long-

term growth that benefits longer-term investors.67 One commenter noted that while a Schedule 

13D filing by an activist may often lead to an immediate bump in the issuer’s stock price, there is 

no compelling evidence that activist interventions deliver long-term value to shareholders.68 One 

commenter asserted that the current 10-day deadline may discourage companies from going 

public, inhibiting capital formation, based on the threat of activism and “the burden of being 

subject to attacks by activist investors, a number of whom have short-term agendas.”69 One 

commenter stated that activist investors often pressure companies and their management to agree 

to their short-term demands that may or may not be in the long-term interests of shareholders, 

employees, and other stakeholders.70 Further, one commenter cited a study indicating that 

activist hedge fund campaigns targeting public companies are associated with a reduction in jobs, 

 
64  See letter from AFL-CIO. 
65  See letter from WLRK I. 
66  See, e.g., letters from AFREF; Better Markets I; HMA II; Labor Unions; NIRI; SCG; Sen. Baldwin, et al.; 

WLRK I. 
67  See letter from AFREF. The commenter also noted that while hedge fund activism is associated with short-

term increases in shareholder value, the evidence is much more mixed on the question of whether hedge 
fund activism results in long-term gains. Id.; see also letter from Better Markets I (stating that the benefits 
of shareholders seeking to acquire or influence corporate control and policy are mixed because some act 
out of short-term profit motives, not a desire to promote long-term value). 

68  See letter from WLRK I. 
69  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. 

70  See letter from NIRI. 



25 

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 Act72 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 

 
71  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”). 

72  Public Law 90-439, 82 Stat. 454 (July 29, 1968). 
73  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. 

74  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 short-
term shareholder payouts and forgoing investments necessary for long-term financial health and growth) to 
avoid becoming targets of activism. Id. The commenter also asserted that the proposed amendments would 
benefit shareholders and other market participants by facilitating sound corporate governance. Id. For 
example, the commenter stated that a shortened filing deadline would help investors ensure their asset 
managers are fulfilling their fiduciary duties and help inform the education and advocacy efforts of those 
with a stake in proxy contests, shareholder resolutions, and other important votes. Id. 



26 

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 

 
75  See letter from Better Markets I. 
76  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). 

77  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. 



27 

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 

 
78  See letter from ICM. 
79  See letter from AIMA. 
80  See letter from Profs. Schwartz and Shavell II (emphasis in original); see also letter from Profs. Schwartz 

and Shavell I. 
81  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. 

82  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. 



28 

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 

 
83  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”). 

84  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). 

85  See letter from Profs. Swanson, Young, and Yust. 
86  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. 



29 

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 

 
87  See, e.g., letters from CIRCA I; ICM; Prof. Gordon. 
88  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. 

89  See letters from AIMA; TRP. 
90  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). 

91  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). 



30 

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, 

 
92  See, e.g., letters from AIMA; ICI I; ICM; STB. 
93  See letter from ICI I. 
94  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. 

95  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. 



31 

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 

challenges100 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 

 
96  See letter from B. Sharfman. 
97  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. 

98  See letters from CIRCA IV; ICM. 
99  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. 



32 

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. 



33 

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. 



34 

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 two-
business 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. 



35 

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. 



36 

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. 



37 

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 day134 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. 



38 

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 date136 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). 



39 

a person loses eligibility to file on Schedule 13G under Rule 13d-1(e), (f), and (g)—in order for 

the filing to be considered timely. Pursuant to our amendment to Rule 13(a)(4) of Regulation S-

T, discussed in section II.A.5 below, the filing will have to be submitted by direct transmission 

commencing on or before 10 p.m. Eastern Time on the due date.137 

We believe the current 10-day filing deadline for an initial Schedule 13D filing should be 

revised to ensure investors receive material information in a manner that is considered timely in 

light of advancements in technology and developments in the financial markets that have 

occurred since that deadline was enacted in 1968. Those technological advancements include, for 

example, market professionals’ use of information technologies to compile the necessary data 

and prepare a filing,138 as well as their ability to submit filings electronically through the 

Commission’s Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system.139 In 

 
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 

 
 



40 

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.41 

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 

 
 



42 

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. 



43 

most productive uses) across the economy.151 

We recognize that several commenters opposed the proposed amendments to Rule 13d-

1(a), (e), (f), and (g). Some commenters asserted that neither Congress nor the Commission 

previously suggested that technological ability to file should be the primary basis to determine 

the appropriate initial Schedule 13D filing deadline.152 There is some indication, however, that 

when enacting the 10-day deadline, Congress considered the amount of time a beneficial owner 

would need to prepare and submit a filing.153 As noted above, there have been significant 

technological advancements since 1968 that have made it easier to prepare and file a Schedule 

13D more quickly.154 There also is some indication that Congress enacted section 13(d), in part, 

to provide shareholders with material information regarding potential changes in control in a 

timely manner to facilitate their investment decisions.155 Because changes in technology and 

developments in the financial markets since 1968 have facilitated investors’ abilities to rapidly 

accumulate beneficial ownership,156 we believe it is appropriate to shorten the initial Schedule 

 
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. 



44 

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 166-
168 and accompanying text, we believe that our analyses of the current timing of Schedule 13D filings and 
accumulations of significant equity stakes demonstrate that Schedule 13D filers are capable, utilizing 
modern technology and in light of the characteristics of today’s financial markets, of complying with the 
amended five-business day deadline. This is especially so given the sophistication and size of many 
Schedule 13D filers. See supra note 58 and accompanying text. Finally, some commenters expressed 
concerns about filers’ ability to meet the proposed deadline (as well as the other Schedule 13D and 13G 
filing deadlines) given the amount of time it may take to obtain EDGAR filer codes. See, e.g., letters from 
MSBA; STB. To ensure they obtain their EDGAR filer codes in a timely manner, we generally expect filers 
to begin the process of applying for their EDGAR filer codes before they have incurred a filing obligation 
(e.g., as they begin to acquire shares with a control intent but before crossing the 5% threshold). Filers 
should note that the Commission’s staff reviews all Form ID applications, and filers should allow sufficient 
time for that review. Further, the Commission’s staff works diligently to process Form IDs promptly upon 
receipt of an application. 

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



45 

transactions.160 In the Proposing Release, the Commission “recognize[d] the chilling effect that a 

shortening of the initial Schedule 13D filing deadline could have on a shareholder’s ability . . . to 

effect changes at companies” if the shortened deadline increases the costs and reduces the 

incentives for shareholders attempting to effect a change of control.161 Yet, the Commission 

further stated that it did not believe “that a shortening of the deadline would unduly disrupt that 

balance,” noting that “many Schedule 13D filers currently do not avail themselves of the full 10-

day filing period.”162 A number of commenters similarly asserted that the proposed five-day 

deadline would not significantly impede shareholder activism or impose significant costs or 

burdens on beneficial owners of more than five percent of a covered class.163  

Notwithstanding this support for the proposed five-calendar day deadline, we have 

decided to instead adopt a 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. 



46 

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. 



47 

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 five-

business 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”). 



48 

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 five-

business 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 one-
business 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 

 
 



49 

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 below176 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. 



50 

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. 



51 

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)). 



52 

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 proposed187 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”). 



53 

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 asymmetry191 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 1977192 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.  



54 

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). 



55 

10 percent of a covered class as of the last day of any month, then the initial Schedule 13G must 

be filed within 10 days after the end of that month. A QII relying on Rule 13d-1(b), therefore, 

may have beneficial ownership in excess of five percent throughout the calendar year without 

incurring a filing obligation unless the QII beneficially owns more than 10 percent of a covered 

class at the end of any month during that year. 

Rule 13d-1(d),198 as with Rule 13d-1(b), imposes an initial Schedule 13G filing deadline 

of 45 days after the end of the calendar year, but only for investors who have become beneficial 

owners without having made an acquisition recognized under section 13(d)(1). Given that these 

investors did not make the requisite acquisition that would have subjected them to section 13(d), 

the Commission has previously referred to this type of beneficial owner as an “Exempt 

Investor.” Unlike the QIIs and Passive Investors—discussed below, in the context of Rule 13d-

1(c)—who file a Schedule 13G in lieu of Schedule 13D and at all times remain subject to section 

13(d), Exempt Investors are subject to section 13(g) at the time their initial filing obligation 

arises. Exempt Investors reporting pursuant to Rule 13d-1(d) today may include persons such as 

founders of companies and early investors in an issuer’s class of equity securities who made their 

acquisition before the class was registered under section 12 of the Exchange Act.199 These 

beneficial owners may continue to influence or control the issuer. Accordingly, the Commission 

 
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. 



56 

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. 



57 

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. 



58 

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. 



59 

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 

 
 



60 

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.61 

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. 



62 

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 expressed 

the view that the Commission’s existing rules provide sufficient transparency into matters of 

corporate control with respect to QIIs and Passive Investors,228 as well as Exempt Investors.229 

  In addition, one commenter asserted that the Commission has not persuasively explained 

why it is appropriate to accelerate the beneficial ownership reporting deadlines as proposed.230 

Some commenters stated that the information filed on Schedule 13G by Passive and Exempt 

Investors is unlikely to be material information that is market-moving.231 Other commenters 

asserted that the proposed amendments would provide little benefit to the market given that 

institutional investment managers’ trading activity is already subject to significant scrutiny by 

the Commission and the public through the filing of Form 13F.232 

 
227  See letters from ABA; SIFMA; STB. 
228  See letters from ABA; STB. For example, those commenters noted that QIIs and Passive Investors already 

are obligated to amend their Schedule 13G promptly upon crossing a 10% beneficial ownership threshold 
and are obligated to file an initial Schedule 13D if their control intent changes. Id. 

229  See letters from SIFMA; STB. For example, those commenters noted that Exempt Investors are largely 
investors who have held the shares since prior to the issuer’s IPO and, as such, their original ownership is 
already materially disclosed in the IPO prospectus. Id. In addition, those commenters noted that to the 
extent an Exempt Investor’s beneficial ownership either exceeds 10% or exceeds their pre-IPO beneficial 
ownership level, it will be required to make section 16 filings or make an initial Schedule 13D filing. Id. 

230  See letter from ICI I. 
231  See letters from ABA; MSBA. For example, those commenters noted that a Schedule 13G filed by a 

Passive Investor does not include information about potential changes in control and that Passive Investors 
must certify that they do not have a control intent. Id. Those commenters also noted that the proposed 
amendments to Rule 13d-5 include a “tipper-tippee” provision with respect to the filing of a Schedule 13D 
but not with respect to the filing of a Schedule 13G, see letter from MSBA, and stated that accelerating the 
filing deadline for Exempt Investors will provide no additional information to the market given that the vast 
majority of Exempt Investors become Exempt Investors following the effectiveness of a registration 
statement which contains all of the information, if not more, that would be included in a Schedule 13G. See 
letter from ABA. 

232  See letters from ABA; MFA. 



63 

Several commenters also expressed concern regarding administrative burdens associated 

with the proposed amendments to Rule 13d-1(b) and (d).233 Some commenters noted that 

beneficial owners often file a Schedule 13G for multiple different issuers, which “strains” their 

filing resources at the end of the reporting period.234 One commenter stated that a month-end-

based reporting deadline applicable would burden the external resources (including outside 

counsel, filing agents, and the EDGAR system) needed to prepare and make these filings given 

that all QIIs and Exempt Investors would be performing the Schedule 13G filing analysis during 

the same five-business day period.235 One commenter expressed concern that the proposed 

amendment to Rule 13d-1(b) could create practical difficulties for QIIs, including insufficient 

time to validate the data to be included in a consolidated filing for a large institutional investor 

with multiple entities.236 And, one commenter expressed concern that institutional investors and 

other unregistered entities may lack the infrastructure and personnel to comply with the revised 

filing deadlines and described year-round monitoring of beneficial ownership reporting 

obligations and the filing deadlines that would be required under the proposed amendments as 

burdensome.237 

Other commenters expressed similar concerns that the proposed amendment to Rule 13d-

1(b) would increase QIIs’ filing burdens significantly, without material benefit to investors.238 

 
233  See, e.g., letters from ABA; IAA; ICI I; Perkins Coie; SSC; STB; see also letter from MFA & NAPFM. 
234  See letters from IAA; ICI I. 
235  See letter from STB. The commenter also asserted that the proposed five-business day period after month-

end is not enough time for outside counsel to gather the requisite information from their clients and prepare 
a Schedule 13G filing and expressed concern that investors may not be able to obtain EDGAR filing codes 
in time to meet the proposed deadlines, noting that the Commission recently has been taking three to five 
business days (and even longer during busy periods) to generally provide such codes. Id. 

236  See letter from SSC; see also letter from IAA. 
237  See letter from Perkins Coie. 
238  See, e.g., letters from ABA; ICI I; SIFMA. 



64 

Some of those commenters disagreed with the Commission’s statement that QIIs already have 

systems in place to monitor their beneficial ownership levels and asserted that the proposed 

amendment would require significant changes to their operational systems and processes.239 One 

commenter disagreed with the Commission’s statement that the proposed amendments only 

would require QIIs to monitor the beneficial ownership levels on a monthly basis, suggesting 

instead that the proposed amendments would require daily monitoring.240 Another commenter 

expressed concern that, as a practical matter, the proposed five-day deadline under Rule 13d-1(c) 

would be impossible to comply with in most cases.241 The same commenter also stated that 

Exempt Investors that are not affiliated with the issuer are unlikely to become aware of their 

potential beneficial ownership reporting obligations in a timely manner and, therefore, may be 

unlikely to be able to comply with the proposed deadline under Rule 13d-1(d) given the practical 

challenges associated with making a Schedule 13G filing.242 

Some commenters expressed concern that the proposed deadlines would be unduly 

burdensome for smaller and non-institutional beneficial owners,243 with one commenter stating 

that by increasing overhead costs and expanding an already complex regulatory regime, the 

Commission’s accelerated timeline will render it particularly difficult for smaller managers, who 

 
239  See letters from ICI I; SIFMA. 
240  See letter from SIFMA. 
241  See letter from MSBA. For example, the commenter explained that obtaining EDGAR filing codes by 

making a Form ID filing requires the assistance of counsel and that such filing usually takes 7 days to be 
processed by the Commission, by which time the proposed deadline will have passed given that many 
Passive Investors are unaware of their Schedule 13G filing obligations until after they have crossed the 5% 
threshold. Id. The commenter also asserted that even if a Passive Investor is aware of its Schedule 13G 
filing obligation before it has crossed the 5% threshold, it is unlikely to take steps to prepare for such 
obligation before actually crossing the threshold. Id. In addition, the commenter noted that many Schedule 
13G filings have multiple filing persons, which requires even more time in the preparation of the filing and 
the engagement of counsel to help prepare the filing. Id. 

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



65 

cannot readily bear the costs and administrative burden of monthly filings.244 Some commenters 

also asserted that the proposed amendment to Rule 13d-1(b) raises significant concerns regarding 

harm to investment advisers and funds and would impose substantial unnecessary costs on their 

clients.245 Similarly, some commenters stated that the proposed amendment to Rule 13d-1(b) and 

(d) would create a significant risk of prematurely disclosing sensitive portfolio holdings 

information to the market, which may result in front-running, copycatting, and other abusive 

trading practices that harm advisers and their clients, including funds and their investors.246 And, 

more generally, one commenter expressed concern that the proposed amendments would create 

significant reporting and monitoring burdens for all Schedule 13G filers.247 

Opposing commenters also highlighted some other potential risks associated with the 

proposed deadlines. For example, one commenter expressed concern that reporting within such a 

short time period under the proposed amendment to Rule 13d-1(b) would increase the risk 

reported information would subsequently need to be revised through amendments to Schedule 

13G, potentially confusing the market.248 One commenter asserted that the proposed 

amendments would increase the number of unintentionally inaccurate filings.249 One commenter 

expressed concern that the proposed amendments could negatively impact the ability of investors 

 
244  See letter from MFA. 
245  See letters from ICI I; MFA. 
246  See letters from IAA; ICI I. 
247  See letter from Perkins Coie. 
248  See letter from ICI I. 
249  See letter from ABA. 



66 

and their advisors to draft meaningful disclosures and engage in thoughtful analysis.250 Another 

commenter stated that the proposed amendments could be more broadly disruptive to trading.251 

Finally, several opposing commenters expressed concern that the proposed amendments 

do not reflect the differences between Schedule 13D and 13G filers (particularly QIIs) based on 

the legislative and administrative history of sections 13(d) and (g) of the Exchange Act.252 And, 

other commenters expressed concern that the proposed amendment to Rule 13d-1(b) would be 

unprecedented and inappropriate, unnecessary to accomplish the Commission’s regulatory 

objectives, and inconsistent with the intent and administrative history of the rules under sections 

13(d) and 13(g).253  

The opposing commenters also provided some recommendations regarding the proposed 

amendments. A number of those commenters suggested a quarter-end-based initial Schedule 13G 

filing deadline for QIIs and Exempt Investors rather than a month-end-based deadline. For 

example, some commenters recommended that QIIs be required to file their initial Schedule 13G 

within 45 days after the end of a calendar quarter as of which the QII beneficially owns more 

than five percent of a covered class to align with the filing timeframe under section 13(f) and 

better reflect the distinction the Commission has historically made between QIIs and other 

institutional investors.254 Similarly, some commenters recommended that the Commission 

require that both QIIs and Exempt Investors file their initial Schedule 13G 45 days after the end 

 
250  See letter from STB; see also supra note 102. 
251  See letter from TRP. Specifically, the commenter posited that there would be additional trading and 

volatility in certain issuers just after the reporting deadline each month, as institutional investors begin the 
process of accumulating or reducing positions, followed by reduced liquidity leading up to the reporting 
deadline, as they concluded that trading. Id. 

252  See letters from ABA; ICI I.  
253  See id. 
254  See letters from Dodge & Cox; ICI I; SIFMA. 



67 

of a calendar quarter, consistent with the Form 13F255 filing deadline.256 One commenter 

recommended that QIIs be required to file their initial Schedule 13G within 15 business days 

after the end of a calendar quarter as of which the QII beneficially owns more than five percent 

of a covered class.257 Another commenter recommended that QIIs be required to file their initial 

Schedule 13G on a quarterly basis with at least a 30-day period before the filing deadline.258 

Opposing commenters also made alternative suggestions regarding the proposed 

amendments. For example, one commenter recommended that QIIs and Exempt Investors be 

required to file their initial Schedule 13G within 10 days after the end of the month in which its 

beneficial ownership exceeds five percent as of month-end.259 Another commenter recommended 

that to the extent the Commission is concerned about Schedule 13G filers acquiring additional 

shares after crossing the five percent threshold without public disclosure, it should prohibit 

trading after crossing the five percent threshold rather than accelerating the filing deadlines.260 

One commenter suggested that if the Commission seeks to apply the proposed amendments to a 

broad set of investors whose activities are largely unrelated to matters of corporate control, or 

where such matters may be implicated but are already subject to disclosure requirements under 

 
255  See infra note 280 for a discussion of Form 13F and its filing deadlines. 
256  See letters from IAA; MFA; see also IAC Recommendations (recommending that the Commission shorten 

the initial filing deadlines for QIIs and Exempt Investors to 45 days after the end of a calendar quarter). 
One of the commenters stated that a quarterly deadline would increase transparency for market participants 
as compared with the current annual deadline and noted that institutional investment managers are already 
reviewing and assessing their holdings on a quarterly basis in order to prepare Form 13F filings and are 
more equipped to submit accurate Schedule 13G filings with the same frequency. See letter from IAA. The 
commenter also asserted that aligning the deadlines for initial Schedule 13G filings with Form 13F filings 
would strike the right balance between the Commission’s concerns about information asymmetry in the 
marketplace, and advisers’ concerns about operational strains and competitive disadvantages that would 
come with publicly exposing their positions more frequently. Id. 

257  See letter from SSC. 
258  See letter from TRP. 
259  See letter from ABA. 
260  See letter from MSBA. 



68 

the existing disclosure regime, it should conduct further study and analysis to better understand 

what percentage of such investors ever are implicated in actual change in control scenarios—to 

determine the percentage of activist matters where earlier and more frequent disclosure of such 

investors’ holding would have been materially beneficial to investors.261 Another commenter 

recommended that rather than adopting the proposed amendments, the Commission should add a 

column to Form 13F requiring filers to explicitly note, for each listed class of securities, whether 

the filer has acquired over five percent beneficial ownership during the reporting period.262 And, 

one commenter recommended that the Commission consider extending the filing deadline for 

Passive Investors (e.g., to 15 or 30 days) rather than accelerating it.263 

In addition, some supporting commenters recommended that the Commission consider 

further shortening the initial Schedule 13G filing deadlines.264 Those commenters, however, did 

not specify alternative deadlines that the Commission should adopt.265 

Finally, some commenters that neither clearly supported nor opposed the proposed 

amendments made recommendations to the Commission. One commenter expressed the view 

that there should not be filing differences between institutional investors and Passive Investors 

and suggested that certain institutional investors should have more stringent filing requirements 

 
261  See letter from STB. The commenter also suggested that if the Commission’s goal is market transparency 

more generally, and not a targeted concern related to matters of corporate control, the Commission should 
consider whether more appropriate tools exist to disclose 5% beneficial ownership or material changes to 
such positions in a more concise and efficient manner, using Form 13F as an example. Id. 

262  See letter from MFA. 
263  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 has a holding over the 5% 
of outstanding shares and suggested recommended that the Commission consider increase the threshold 
from greater than 5% beneficial ownership to 10%. Id. 

264  See letters from AFREF; Freeport-McMoRan; HMA I. 
265  Id. 



69 

than Passive Investors.266 Several other commenters recommended that the Commission require 

Passive Investors to file an initial Schedule 13G in five business days rather than five calendar 

days.267 

c. Final Amendments 

We are amending Rule 13d-1(b) and (d) to shorten the initial Schedule 13G filing 

deadlines under those rules, with some modifications from the proposals in response to 

commenter concerns. Specifically, we are adopting an initial Schedule 13G filing deadline of 45 

days268 after calendar quarter-end for QIIs and Exempt Investors. In addition, consistent with our 

amendment to the initial Schedule 13D deadline, we are amending Rule 13d-1(c) to require that 

Passive Investors file their initial Schedule 13G within five business days after the date on which 

the Passive Investor acquired beneficial ownership of more than five percent of a covered class.  

As noted above, Rule 13d-1(b) and (d) currently require QIIs and Exempt Investors, 

respectively, to file an initial Schedule 13G within 45 days after calendar year-end if, as of the 

end of that year, they beneficially own more than five percent of a covered class. We are 

amending Rule 13d-1(b) and (d) to require that QIIs and Exempt Investors file their initial 

Schedule 13G within 45 days after calendar quarter-end if, as of the end of that quarter, their 

beneficial ownership exceeds five percent of a covered class (rather than five business days after 

the end of the month in which beneficial ownership exceeds five percent, as proposed). Further, 

 
266  See letter from J. Dunlop. 
267  See letters from ABA; Dodge & Cox; IAA; ICI I. Some of these 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 13G. See letters from Dodge & Cox, IAA; ICI I; see also supra note 130. 

268  If the deadline falls on a Federal holiday, a Saturday, or a Sunday, then the filing may be made on the next 
business day thereafter. 17 CFR 240.0-3 (“[I]f the last day on which [a filing] can be accepted as timely 
filed falls on a Saturday, Sunday or holiday, such [filing] may be [made] on the first business day 
following.”).  



70 

because we are adopting the new 45 days after quarter-end deadline rather than the proposed five 

business days after month-end deadline, we are not adopting the proposed amendment to delete 

the language in Rule 13d-1(b)(2) that imposes an accelerated initial reporting obligation.269 

Instead, we are amending that rule to require that such an initial Schedule 13G be filed within 

five business days (instead of the current requirement of 10 days) after the end of the first month 

in which the QII’s beneficial ownership exceeds 10 percent of a covered class, computed as of 

the last day of the month. 

The Commission adopted the current initial Schedule 13G filing deadlines of 45 days 

after year-end in Rule 13d-1(b) and (d) in the late 1970s.270 In light of the technological 

advancements and developments in the financial markets in the more than 40 intervening 

years,271 we believe it is appropriate to shorten those deadlines to ensure beneficial ownership 

information disclosed in an initial Schedule 13G is reported in a manner that is considered timely 

by modern standards. We also expect that shortening those deadlines from year-end to quarter-

end will reduce the risk that QIIs and Exempt Investors sell down their positions before the end 

of the year and avoid reporting altogether,272 which should help to ensure large accumulations of 

 
269  See Proposing Release at 13856 (“Given the proposal to shorten the initial reporting deadline [in Rule 13d-

1(b)] to five business days after the end of the month, the current provision of Rule 13d-1(b)(2) that 
operates to accelerate that initial filing deadline if beneficial ownership exceeds 10% at the end of any 
month would be unnecessary . . . .”). 

270  See supra notes 197, 199 and accompanying text. 
271  See supra notes 138-144 and accompanying text for some examples of those advancements and 

developments. 
272  See, e.g., Kristin Giglia, Note, A Little Letter, a Big Difference: An Empirical Inquiry into Possible Misuse 

of Schedule 13G/13D Filings, 116 COLUM. L. REV. 105, 115-16 (2015) (explaining that the availability of 
Schedule 13G may allow investors to “intentionally structure their acquisition strategies to exploit the gaps 
created by the current reporting regime, to their own short-term benefit and to the overall detriment of 
market transparency and investor confidence” (internal quotations omitted)). QIIs in particular may be able 
to amass sizeable amounts of beneficial ownership without reporting such positions. Rule 13d-1(b)(2) 
provides in relevant part that “it shall not be necessary to file a Schedule 13G unless the percentage of [a 

 
 



71 

beneficial ownership are reported in a timely manner, ultimately improving market 

transparency.273 

In the Proposing Release, the Commission stated its expectation that the proposed initial 

Schedule 13G deadlines under Rule 13d-1(b) and (d) (i.e., five business days after the end of the 

month in which beneficial ownership exceeds five percent of a covered class) would result in 

minimal additional burdens on filers because QIIs and Exempt Investors “already have well-

established compliance systems in place to monitor Schedule 13G ownership levels to determine 

whether filing obligations have been triggered.”274 Although some commenters agreed with this 

expectation,275 several comments disagreed and asserted that the proposed deadlines would be 

unduly burdensome for QIIs and Exempt Investors (especially those that are smaller and non-

 
covered class] beneficially owned as of the end of the calendar year is more than five percent.” 17 CFR 
240.13d-1(b)(2). As such, a QII may beneficially own in excess of 5% of a covered class for the entire year, 
sell down its position to 5% or below on the last day of the calendar year and bypass having to report at all 
under the current regulatory framework assuming that its beneficial ownership continues to be held in the 
ordinary course of business, without a disqualifying purpose or effect, and does not exceed 10% of a 
covered class.  

273  We note that some commenters asserted that the Commission did not substantiate its concerns regarding 
reporting gaps and QIIs selling down positions before the end of a reporting period to avoid a Schedule 
13G filing. See supra note 226 and accompanying text. Given the potential materiality of the information 
disclosed on Schedule 13G and its importance to the market, however, we believe it is appropriate to take 
action to reduce the risk of such reporting gaps, even absent evidence indicating that the practice of selling 
down positions to avoid a Schedule 13G filing currently is widespread. See Proposing Release at 13882, 
n.221 (noting the importance to the market of information regarding beneficial ownership, regardless of 
whether it is disclosed on Schedule 13D or 13G, based on evidence that the initial filing of Schedule 13G, 
like that of Schedule 13D, generates a positive stock price reaction, albeit smaller in magnitude). We also 
recognize that because the new filing deadline will be tied to a QII’s beneficial ownership as of calendar 
quarter-end, QIIs may still be able to avoid a reporting obligation if they sell down their positions before 
the end of a quarter. We believe, however, that risk is lower under a quarter-end-based deadline than a 
year-end-based deadline because of the increased transaction costs, as well as disruptions with respect to a 
long-term investment strategy, that would be associated with selling down and building up positions 
multiple times throughout a year. 

274  Proposing Release at 13856 (noting that “QIIs currently need to monitor beneficial ownership levels at least 
on a monthly basis in case their holdings exceed more than 10% at the end of the month” and that “Exempt 
Investors already need to monitor the level of their beneficial ownership continuously or periodically to 
ensure that the amount of their beneficial ownership does not unintentionally exceed 2% in a 12-month 
period”). 

275  See supra note 216 and accompanying text (describing and citing comment letters that asserted that the 
proposed amendments would not impose significant burdens on Schedule 13G filers). 



72 

institutional investors) given the number of tasks and amount of resources required to prepare a 

filing in such a limited amount of time276 and that such burdens are not sufficiently mitigated by 

any technological advancements to justify adopting the proposed deadlines.277 

Based on commenters’ observations regarding the potentially significant burdens that the 

proposed deadlines would impose on QIIs and Exempt Investors, we have decided to take a 

different approach from the proposal and instead amend Rule 13d-1(b) and (d) to require an 

initial Schedule 13G be filed within 45 days after calendar quarter-end. This change to a quarter-

end-based deadline, rather than the proposed month-end-based deadline, is consistent with the 

recommendations that a number of commenters made to the Commission.278 We note that those 

commenters recommended various different numbers of days after quarter-end for the 

deadline.279 Taking into account those various recommendations, believe that 45 days is the 

appropriate length of time because it aligns with the filing deadline for Form 13F,280 and many 

institutional investment managers who file a Schedule 13G are already reviewing and assessing 

 
276  See supra notes 233-247 and accompanying text. 
277  See supra notes 219-225 and accompanying text. 
278  See supra notes 254-258 and accompanying text.   
279  See letters from Dodge & Cox (recommending a filing deadline of 45 days after quarter-end); IAA (same); 

ICI I (same); MFA (same); SIFMA (same); TRP (recommending a filing deadline of at least 30 days after 
quarter-end); SSC (recommending a filing deadline of 15 business days after quarter-end). 

280  Form 13F is the reporting form filed by institutional investment managers pursuant to section 13(f) of the 
Exchange Act. Under section 13(f)(1), institutional investment managers that use the U.S. mail (or other 
means or instrumentality of interstate commerce) in the course of their business and that exercise 
investment discretion over $100 million or more in section 13(f) securities must file Form 13F. Such 
institutional investment managers must submit four Form 13F filings, with the first filing due within 45 
days after the end of the fourth quarter of the calendar year (i.e., the quarter ending Dec. 31 of the same 
calendar year that the $100 million filing threshold is reached) and the three additional filings due 45 days 
after the end of the subsequent three calendar quarters (i.e., the calendar quarters that end on Mar. 31, June 
30, and Sept. 30). See 17 CFR 240.13f-1(a)(1); see also U.S. SECURITIES & EXCHANGE COMMISSION, 
DIVISION OF INVESTMENT MANAGEMENT, Frequently Asked Questions About Form 13F, available at 
https://www.sec.gov/divisions/investment/13ffaq. 



73 

their holdings on a quarterly basis in order to prepare Form 13F filings.281 In addition, although 

most of the other amended Schedule 13D and 13G filing deadlines will be expressed in “business 

days,” we believe the potential compliance benefits of aligning the initial Schedule 13G filing 

deadlines for QIIs and Exempt Investors with the Form 13F filing deadline justify using calendar 

days rather than business days.282 

Even for those QIIs and Exempt Investors that are not Form 13F filers, the 45-day period 

after calendar quarter-end deadline will be familiar given that they currently must file their initial 

Schedule 13G within 45 days after calendar year-end.283 As such, we believe that many of those 

beneficial owners are well-positioned to submit their Schedule 13G filings within 45 days after 

calendar quarter-end. This deadline, therefore, is likely to be less burdensome and should require 

fewer changes to QIIs’ and Exempt Investors’ existing compliance operations than the proposed 

month-end-based deadline. We also expect that the extended filing deadline (i.e., 45 days rather 

than the proposed five business days) will address some commenters’ concerns that the more 

compressed time period under the proposed deadlines could have negatively impacted the 

accuracy and usefulness of initial Schedule 13G filings.284 

 
281  See infra section IV.B.3.b, Table 4 (presenting statistics regarding the number of Schedule 13G filers that 

also filed Form 13F in 2022, noting that 84% of QIIs and 10% of Exempt Investors also filed Form 13F). 
282  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). 

283  In addition, the amended deadline may result in the same amount of time to file as under the current rules, 
depending on the quarter in which the filing obligation is triggered. That is, if a QII or Exempt Investor 
becomes the beneficial owner of more than 5% of a covered class on or after Oct. 1 (the beginning of the 
fourth calendar quarter) and remains above the 5% threshold as of Dec. 31 (both calendar year-end and the 
end of the fourth calendar quarter), then they would have the same amount of time to prepare and submit 
their initial Schedule 13G filing under both the current and amended Rule 13d-1(b) and (d). 

284  See supra notes 248-250 and accompanying text. 



74 

Further, a 45-day, quarter-end-based deadline (instead of the proposed five-business day, 

month-end-based deadline) should help mitigate concerns that some opposing commenters 

expressed regarding the risk of QIIs and Exempt Investors prematurely disclosing sensitive 

portfolio holdings information to the market (i.e., “front-running” and “free-riding”),285 

especially given that many of those Schedule 13G filers already are obligated to disclose their 

holdings via Form 13F on a quarterly basis. We also believe that, as compared with the current 

year-end-based deadline, a quarter-end-based deadline will increase transparency for market 

participants and better reflects the technological advancements and developments in the financial 

markets since the Commission adopted Rule 13d-1(b) and (d).286 Thus, we believe that this 

deadline will address the goals that prompted the Commission’s reassessment of those rules in 

the Proposing Release while, at the same time, avoiding inordinately burdening Schedule 13G 

filers. 

In addition, as discussed above, Rule 13d-1(c) currently requires Passive Investors to file 

an initial Schedule 13G within 10 days of acquiring beneficial ownership of more than five 

percent of a covered class. As with our final amendment to Rule 13d-1(a), we are amending Rule 

13d-1(c) to require that Passive Investors file their initial Schedule 13G within five business days 

after287 acquiring beneficial ownership of more than five percent of a covered class. We believe 

it is appropriate to amend the initial Schedule 13G filing deadline in Rule 13d-1(c) to match the 

initial Schedule 13D filing deadline in Rule 13d-1(a) in order to maintain the historical 

 
285  See supra note 246 and accompanying text; see also infra section IV.C.2.b. 
286  See, e.g., letter from IAA (“A quarterly deadline significantly increases transparency for market 

participants as compared with the current annual deadline.”).  
287  See supra note 136 for a discussion of a revision we are making to Rule 13d-1(c) to clarify that the five-

business day deadline is determined beginning on the day after the date on which a person acquires 
beneficial ownership of more than 5% of a covered class. 



75 

regulatory consistency between the deadlines in Rule 13d-1(c) and (a) and to facilitate the overall 

goals of increasing transparency in beneficial ownership and ensuring that investors receive 

material information in a timely manner.  

Consistent with our rationale for shortening the initial Schedule 13D deadline, we believe 

that many Passive Investors are large and sophisticated enough to prepare and file an initial 

Schedule 13G within five business days.288 The change to a five-business day deadline from the 

proposed five-calendar day deadline should mitigate commenters’ concerns regarding the 

burdens that a shortened deadline would impose on Passive Investors and the workability of that 

deadline.289 Further, we note that research indicates that at least some beneficial owners may 

improperly rely on Rule 13d-1(c) to file a Schedule 13G in lieu of a Schedule 13D to obscure 

their control purpose.290 Given this increased likelihood, as compared to QIIs and Exempt 

Investors,291 of Passive Investors ultimately having a control purpose with respect to an issuer, 

we believe it is appropriate to shorten their initial Schedule 13G filing deadline to five business 

days in order for that deadline to continue to mirror the initial Schedule 13D filing deadline. This 

 
288  See, for example, infra section IV.B.3.b, Table 4, which indicates that 31% of Passive Investors that filed a 

Schedule 13G in 2022 also filed a Form 13F (which would only be required if, among other things, they 
exercise investment discretion over $100 million or more in section 13(f) securities). 

289  See supra note 241 and accompanying text. 
290  See Kristin Giglia, Note, A Little Letter, a Big Difference: An Empirical Inquiry into Possible Misuse of 

Schedule 13G/13D Filings, 116 COLUM. L. REV. 105, 119 (2015) (“Activists can fly under the radar, 
planning to effect large changes to the issuer and even acquiring up to twenty percent ownership interest at 
a relatively low price, all while maintaining that their intent is still ‘passive.’”). 

291  Id. at n.160 (noting that QIIs and Exempt Investors are less likely than Passive Investors “to switch to a 
[Schedule] 13D filing”). 



76 

is consistent with the Commission’s decision to require Passive Investors to file their initial 

Schedule 13G in 10 days, the same deadline as Schedule 13D, when it adopted Rule 13d-1(c).292 

3. Rule 13d-2(a) and (b) 

Section 13(d)(2) requires that an amendment must be filed to the statement required 

under section 13(d)(1) if any material change occurs in the facts set forth in the statement filed. 

Section 13(d)(2) does not, however, identify a specific deadline by which such amendment must 

be filed. Instead, Rule 13d-2(a) provides that such amendment must be filed with the 

Commission “promptly.”293 The obligation to file an amendment under current Rule 13d-2(a) is 

not limited to acquisitions. Instead, changes in the disclosure narrative that are material also must 

be reported in an amendment, as must material changes in the level of beneficial ownership 

caused by an involuntary change in circumstances, such as a reduction in the amount of 

beneficial ownership caused solely by an increase in the number of shares outstanding.294  

Section 13(g)(2) requires that an amendment be filed to the statement required under 

section 13(g)(1) if any material change occurs in the facts set forth in the statement filed, but like 

section 13(d)(2), does not identify a deadline by which such amendment must be filed. Rule 13d-

2(b), however, does specify a deadline and provides that for all persons who report beneficial 

ownership on Schedule 13G, an amendment shall be filed “within forty-five days after the end of 

 
292  Amendments to Beneficial Ownership Reporting Requirements, Release No. 34-39538 (Jan. 12, 1998) [63 

FR 2854, 2854 (Jan. 16, 1998)] (stating that “the Commission is imposing some safeguards” on Passive 
Investors, including that an “[i]nitial Schedule 13G must be filed within 10 days (instead of year end)” 
because “a control purpose reflects the state of mind of a filing person and there are incentives to disclose 
less information”). The Commission also indicated that, as compared to QIIs and Exempt Investors, Passive 
Investors are more likely to represent “voting blocks that have the potential of affecting or influencing 
control of the issuer” which, therefore, warrants more timely notice to the market of their existence. Id. at 
2855. 

293  17 CFR 240.13d-2(a). 
294  See id. (requiring an amendment “[i]f any material change occurs in the facts set forth in the Schedule 13D” 

including “any material increase or decrease in the percentage of the class beneficially owned”). 



77 

each calendar year if, as of the end of the calendar year, there are any changes in the information 

reported in the previous filing on that Schedule [13G].”295  

a. Proposed Amendments 

In the Proposing Release, the Commission proposed to amend Rule 13d-2(a) to require 

that all amendments to Schedule 13D be filed within one business day after the date of the 

material change that triggers the amendment obligation. The Commission proposed this change 

from the “promptly” standard to establish a specified filing deadline, remove any uncertainty as 

to the date on which an amendment is due, and help ensure that beneficial owners amend their 

filings in a more uniform and consistent manner.296 The Commission stated that it did not believe 

that requiring Schedule 13D amendments to be filed within one business day after the date on 

which a material change occurs would place those filers at a disadvantage.297 The Commission 

also stated that because an amendment to a Schedule 13D only requires that the material change 

be reported and not a complete set of new narrative responses to each of the disclosure form’s 

individual line items,298 it expected that those amendments should present a lower administrative 

burden than the initial Schedule 13D filing.299 In addition, the Commission noted that that the 

proposed amendment would be consistent with its existing view that, under the current 

“promptly” standard in Rule 13d-2(a), “[a]ny delay beyond the date the filing reasonably can be 

 
295  17 CFR 240.13d-2(b). 
296  Proposing Release at 13857. 
297  Id. 
298  Under Rule 13d-2(a), the Schedule 13D filer only has an obligation to “file or cause to be filed with the 

Commission an amendment disclosing that [material] change.” See also 17 CFR 240.12b-15, titled 
“Amendments,” which explains that “[a]mendments filed pursuant to this section must set forth the 
complete text of each item as amended.” 

299  Proposing Release at 13857. 



78 

filed may not be prompt” and that an amendment to a Schedule 13D reasonably could be filed in 

as little as one day following the material change.300 

The Commission also proposed to amend Rule 13d-2(b) to require that a Schedule 13G 

be amended within five business days of the end of the month in which a material change occurs 

in the information previously reported. The Commission stated that accelerating the deadline for 

amendments from the current standard of 45 days after the end of the calendar year would help 

ensure that the information reported would be timely and useful.301 The Commission also noted 

that this proposed deadline would be consistent with the proposed five-business day deadline 

from the end of the month applicable to QIIs’ and Exempt Investors’ initial Schedule 13G filing 

obligations arising under Rule 13d-1(b) and (d).302 In addition, the Commission proposed a 

“business day” standard for the proposed deadline to partially mitigate the time pressures 

resulting from the reduction of the current 45-day deadline.303  

The Commission further proposed to amend Rule 13d-2(b) to substitute the term 

“material” in place of the term “any” to serve as the standard for determining the type of change 

that will trigger an amendment obligation under Rule 13d-2(b). The Commission noted that, 

unlike sections 13(d)(2) and 13(g)(2), Rule 13d-2(b) does not include an express materiality 

qualifier for Schedule 13G amendments and simply requires an amendment for “any change.”304 

At the time Rule 13d-2(b) was adopted, however, the Commission stated that there is a 

 
300  Id. at n.67 (quoting In re Cooper Laboratories, Release No. 34-22171 (June 26, 1985)). 
301  Id. at 13857. 
302  Id. 
303  Id. 
304  Id. at 13857-58. 



79 

materiality standard inherent in the provisions governing Schedule 13G filings.305 This inherent 

materiality standard is based on the fact that any disclosure provided by a Schedule 13G filer, in 

light of the infrequency of the reports and comparatively minimal statements required to be 

made, is effectively material.306 The Commission’s proposed change, therefore, was intended to 

merely codify this view in the text of Rule 13d-2(b). 

b. Comments Received 

The Commission received a variety of comments on the proposed amendments to Rule 

13d-2(a) and (b). Several commenters supported the proposed amendments.307 Some of those 

commenters supported revising the Schedule 13D and 13G amendment deadlines for many of the 

same reasons they supported accelerating the initial Schedule 13D and 13G filing deadlines.308 

In addition, several commenters supported the proposed amendments to Rule 13d-2(a) 

and (b) based on changes in technology and developments in the financial markets.309 One 

commenter agreed with the concern in the Proposing Release that material information about 

potential change of control transactions is not being disseminated to the public in a manner that 

would be considered timely in today’s financial markets.310 Other commenters asserted that the 

 
305  Id. at 13858. 
306  Id. (citing Filing and Disclosure Release at 18489 (stating the Commission’s belief that because “the 

information required by Schedule 13G has been reduced to the minimum necessary to satisfy the statutory 
purpose, . . . a materiality standard is inherent in those requirements” and “it is unnecessary to further 
minimize it by the insertion of an express materiality standard”)). 

307  See, e.g., letters from AFREF (supporting only the proposed amendment to Rule 13d-2(a)); Anonymous 3; 
Anonymous 5; Anonymous 11; Anonymous 12; Anthony R.; BRT (same); C. Robinson; Engineer; FedEx; 
Freeport-McMoRan; HMA I; Jonah; J. Pieper; J. Soucie; Juan; Mark C.; Mike; Nasdaq; P. Worts; SIFMA 
AMG (same); TIAA (same); T. Mirvis, et al. (same); Todd. In addition, one commenter, which neither 
clearly supported nor opposed the proposed amendment to Rule 13d-2(b), supported the proposed shift 
from an “any change” to a “material change” standard. See letter from IAA. 

308  See supra notes 38-41, 43-44 and accompanying text; see also supra note 211 and accompanying text. 
309  See, e.g., letters from BRT; C. Robinson; FedEx; Freeport-McMoRan; Nasdaq; T. Mirvis, et al. 
310  See letter from BRT. 



80 

proposed amendments would not impose significant costs or burdens on beneficial owners of 

more than five percent of a covered class311 and that the proposed amendments would be 

consistent in balancing the need for adequate disclosures to investors with burdens placed on 

filers to accurately prepare required disclosures.312 

A number of commenters opposed the proposed amendments to Rule 13d-2(a) and (b).313 

Several commenters disagreed with the Commission’s technological advancement-based 

justifications for the proposed acceleration of the beneficial ownership reporting deadlines,314 

some of whom raised many of the same concerns that they expressed with respect to the 

proposed acceleration of the initial Schedule 13D and 13G filing deadlines.315 One commenter 

stated that filing a Schedule 13D amendment is not just a question of technology, but often a 

question of marshalling complex and evolving facts and making difficult disclosure 

judgments.316 

Some commenters focused solely on the proposed amendment to Rule 13d-2(a), 

expressing concern that a one-business day deadline would be unduly burdensome and may not 

 
311  See, e.g., letters from Anonymous 11; BRT; J. Soucie. 
312  See letter from FedEx. 
313  See, e.g., letters from A. Day; ABA (opposing only the proposed amendment to Rule 13d-2(a)); AIMA; B. 

Mason; Dodge & Cox; EEI (same); EIM I (same); Hoak and Co. (Apr. 11, 2022) (“Hoak”) (same); ICI I; 
MFA; MSBA (same); NVCA (same); Perkins Coie; SIFMA (opposing only the proposed amendment to 
Rule 13d-2(b)); SIFMA & SIFMA AMG (same); SSC (same); STB; TRP (same). 

314  See, e.g., letters from ABA; Dodge & Cox; IAA; ICI I; TIAA. 
315  See supra notes 92-94, 220-224 and accompanying text. 
316  See letter from ABA. The commenter also noted that filing a Schedule 13D amendment depends on many 

factors, including the complexity of the information, the pace of developments of the information, and the 
number of persons or parties who have an interest in the disclosure and need to review the information, 
contribute to its drafting, and, if they are signing the Schedule 13D, are subject to liability for the accuracy 
of the information. Id.81 

be enough time to prepare a Schedule 13D amendment in all circumstances.317 For example, one 

commenter stated that in its experience, it generally takes two to three business days, and in 

some cases longer, to compile and file such amendments.318 One commenter noted that if the 

Commission adopts the proposed structured data requirements,319 this will add more time to the 

process of preparing a Schedule 13D amendment and may make the proposed one-business day 

deadline impractical.320 Another commenter asserted that the proposed extension of the filing 

“cut-off” time to 10 p.m.321 would not be sufficient to offset the burden associated with meeting 

the proposed one-business day deadline for a Schedule 13D amendment.322 

Further, several commenters expressed concerns regarding the effect of the proposed 

amendment to Rule 13d-2(a) on the accuracy of Schedule 13D amendments.323 For example, one 

of those commenters asserted that the proposed amendment would make filing accurate 

amendments nearly impossible.324 Some commenters expressed concern that by providing 

Schedule 13D filers with insufficient time to prepare and file amendments, the proposed 

 
317  See, e.g., letters from ABA; AIMA; EIM I; Hoak; ICI I; MFA; MSBA; Perkins Coie; STB; see also letter 

from MFA & NAPFM. 
318  See letter from STB. The commenter also noted that while the one-business day deadline may be feasible 

for an investor engaged in a change of control objective, as that investor may have (1) been taking 
preparatory steps toward such goal, (2) an internal deal team and external advisors actively engaged in the 
project, and (3) built the Schedule 13D amendment obligation into its workstream, there are many 
situations requiring a Schedule 13D amendment in which such advance notice and planning is not possible 
or practical. Id. The commenter further asserted that practical concerns regarding the ability to file an 
amendment pursuant to Rule 13d-2(a) in a timely manner may cause some Schedule 13D filers to avoid 
filing amendments for changes in their Schedule 13D disclosures, preferring to take more risk that their 
determination on materiality is later questioned than risk having a “late” filing with the Commission. Id. 

319  See infra section II.F for a discussion of the proposed structured data requirement for Schedules 13D and 
13G. 

320  See letter from ABA. 
321  See infra section II.A.5 for a discussion of the proposed extension of the filing “cut-off” time for Schedules 

13D and 13G. 
322  See letter from Hoak. 
323  See, e.g., letters from ABA; EEI; Hoak; MFA; NVCA. 
324  See letter from NVCA. 



82 

amendment would increase the likelihood of errors and risk of liability.325 Another commenter 

noted that the proposed amendment to Rule 13d-2(a) could decrease transparency by increasing 

the risk of errors in Schedule 13D amendments.326 

Commenters also expressed concerns about other potential downsides associated with the 

proposed amendment to Rule 13d-2(a). For example, some commenters expressed concern that 

the proposed amendment could negatively impact the ability of investors and their advisors to 

draft meaningful disclosures and engage in thoughtful analysis.327 Some commenters noted that 

the proposed amendment to Rule 13d-2(a) may not leave adequate time to prepare the filing in 

the event of unforeseen circumstances, including the possibility that a necessary approver or 

signer may not be available.328 And, one commenter stated that there have been very few, if any, 

abuses associated with the current “promptly” regime and asserted that it has worked well and 

effectively.329 

In addition, some commenters questioned the basis for the proposed amendment to Rule 

13d-2(a). For example, some commenters noted that a one-business day deadline for Schedule 

13D amendments would be more restrictive than the filing deadline for a Form 8-K.330 Similarly, 

 
325  See, e.g., letters from EIM I; Hoak; MFA. 
326  See letter from Hoak. 
327  See letters from ABA; STB; see also supra note 102. 
328  See letters from EEI; Hoak. 
329  See letter from AIMA. 
330  See letters from EIM I; MFA. Those commenters also stated that the Commission has not justified 

imposing such a restrictive deadline on Schedule 13D amendments, especially given the relatively 
importance of a Form 8-K. Id. One of those commenters noted that Schedule 13D amendments often 
disclose agreements between the beneficial owner and the issuer, and issuers typically have four business 
days to publicly disclose such agreements on Forms 8-K after entering into them and often prefer to be the 
first to disclose in order to control the initial message to the market, and the proposed deadline would 
deprive issuers of this opportunity. See letter from MFA. The commenter also asserted that the proposed 
Schedule 13D amendment deadline would make it more difficult for issuers and Schedule 13D filers to 

 
 



83 

some commenters noted that Form 8-K and section 16 filings do not have as restrictive filing 

deadlines as proposed under Rule 13d-2(a).331 One commenter asserted that the “promptly” 

standard under Rule 13d-2(a) has “generally been understood” to mean within two business days 

and disagreed with the Proposing Release that Commission precedent supports a one-business 

day interpretation of that standard.332 

Further, one commenter stated that the proposed amendment to Rule 13d-2(a) would 

“unnecessarily sacrifice” the flexibility that the current version of the rule provides.333 Other 

commenters noted that the promptness of a Schedule 13D amendment filing obligation under 

Rule 13d-2(a) currently is determined by considering the facts and circumstances related to such 

filing and urged the Commission to continue to consider the variation in circumstances that can 

lead to an amendment obligation rather than applying the same standard in all circumstances.334 

One commenter asserted that the proposed amendment to Rule 13d-2(a) could lead to a large 

increase in the number of late Schedule 13D amendment filings.335  

 
coordinate their messages regarding material agreements they have entered into and may force investors to 
publicly disclose an agreement in principle through a Schedule 13D amendment before the terms are 
finalized, creating the risk of prematurely disseminating information to the market that turns out to be 
inaccurate or incomplete. Id. 

331  See letters from MFA; STB. Those commenters also asserted that the Form 8-K and section 16 filing 
deadlines acknowledge the balance between the importance of getting disclosures to investors in a timely 
manner, with the complexity and labor required in order to create such filings in a complete and thoughtful 
manner, noting that section 16 filings require even less narrative disclosure than a Schedule 13D 
amendment. Id. 

332  See letter from EIM I. 
333  See letter from ABA. The commenter stated that, as the Commission has acknowledged in the past, in order 

to serve the policies of the Williams Act, the timing for public filings should vary based on the 
circumstances. Id. 

334  See letters from MFA; STB. The commenters noted, for example, that a one-business day deadline may not 
be appropriate for Schedule 13D amendments with respect to material changes that do not have any nexus 
to a change or influence in corporate control. Id. 

335  See letter from ABA. 



84 

In addition, some commenters expressed concern about the costs of the proposed 

amendment to Rule 13d-2(a) relative to its benefits. For example, one commenter stated that the 

proposed amendment to Rule 13d-2(a) does not appropriately balance the need for prompt 

disclosure of important, market-moving events with the need to avoid imposing an undue, 

impracticable burden on investors making more routine filings.336 Another commenter asserted 

that the burdens and risks of the proposed amendment to Rule 13d-2(a) associated with venture 

capital funds that make Schedule 13D filings exceed its benefits.337  

Several commenters338 opposed the proposed amendment to Rule 13d-2(b) for many of 

the same reasons that they opposed the proposed acceleration of the initial Schedule 13G filing 

deadlines for QIIs and Exempt Investors.339 In addition, one commenter broadly asserted that the 

costs of the proposed amendment to Rule 13d-2(b) “far outweigh any perceived benefits.”340 

Another commenter noted that many Schedule 13G filers have filing obligations with respect to 

multiple issuers and that the proposed amendment may require “hundreds of filings on a monthly 

basis, as their investments fluctuate perpetually.”341 And, other commenters expressed the same 

 
336  See letter from MFA. 
337  See letter from NVCA. Specifically, the commenter asserted that the burden of inaccurate Schedule 13D 

amendments and the associated risks are far greater than any benefit to be gained from the information that 
a venture capital fund is reducing its share ownership in the ordinary course of exiting investments and 
providing returns to limited partner-investors. Id. The commenter also noted that the proposed amendment 
would impose substantial compliance burdens on venture capital funds that make Schedule 13D filings and 
expressed concern that inaccurate Schedule 13D amendments caused by the proposed accelerated deadline 
could result in giving the market information that is misleading, particularly to retail investors, which could 
reduce liquidity and negatively impact an issuer’s share price, harming all investors other than short sellers. 
Id. 

338  See, e.g., letters from MFA; Perkins Coie; STB; TIAA; TRP. 
339  See supra notes 226-228, 235-236, 251 and accompanying text. 
340  See letter from MFA. The commenter further stated that the benefits of the proposed amendment would be 

minimal because Schedule 13G filers generally do not have control intent and already disclose their 
holdings on Form 13F. Id. 

341  See letter from MFA. 



85 

concerns about the proposed amendments to Rule 13d-2(a) and (b) that they expressed with 

respect to the proposed acceleration of the initial Schedule 13D and 13G filing deadlines.342 

Finally, some commenters made recommendations to the Commission regarding the 

proposed amendments to Rule 13d-2(a) and (b). For example, some commenters that generally 

supported the proposed amendments recommended that the Commission consider further 

shortening the filing deadlines.343 Further, specifically with respect to the proposed amendment 

to Rule 13d-2(a), one supporting commenter recommended that the Commission include an 

assets under management-based threshold for the proposed accelerated Schedule 13D filing 

deadlines.344 Another commenter that generally supported revising the Schedule 13D 

amendment deadline recommended that the Commission require that Schedule 13D amendments 

be filed within three business days.345 

Conversely, several opposing commenters recommended that the Commission retain the 

requirement that Schedule 13D amendments be filed promptly, but require that they be filed 

within no more than a specified number of days after the relevant triggering event (with 

recommendations varying between two and four business days).346 One opposing commenter 

suggested that the Commission require that Schedule 13D amendments be filed within five 

 
342  See supra notes 99, 106, 226, 243 and accompanying text; see also letter from MFA & NAPFM. 
343  See letters from Freeport-McMoRan; HMA I. 
344  See letter from A. Day. 
345  See letter from SIFMA AMG. 
346  See, e.g., letters from ABA; Dodge & Cox; ICI I; MFA. One of those commenters also noted that to the 

extent that a Schedule 13D filer is able to file earlier, the filer would still be obligated to do so because the 
rule would still require prompt filings. See letter from ABA. Alternatively, the commenter suggested that 
the Commission require that certain categories of amendments (e.g., dispositions or acquisitions of 
beneficial ownership of 1% or more) be filed within a specified one or two business day window. Id. 
Similarly, another commenter recommended that the Commission add a narrative setting forth its timing 
expectations in different situations for the filing to satisfy the “prompt” standard, including those where a 
shorter filing deadline would be required. See letter from MFA. 



86 

business days.347 Other commenters, which either generally opposed or neither clearly supported 

nor opposed the proposed amendment to Rule 13d-2(a), recommended that the Commission 

require that Schedule 13D amendments be filed within two business days.348 

In addition to focusing on the Schedule 13D filing deadline, some opposing commenters 

made other recommendations with respect to the proposed amendment to Rule 13d-2(a). For 

example, one opposing commenter asserted that a Schedule 13D amendment should not be 

required for involuntary changes in circumstances caused by the issuer because such 

amendments do not relate to the Schedule 13D filer’s action or intent and are already disclosed to 

the market by the issuer.349 Another opposing commenter recommended that if the Commission 

believes that a one-business day interpretation of “promptly” is not being properly observed, it 

should clarify that in situations involving acquisition of corporate control, “promptly” means one 

business day.350 One commenter, which neither clearly supported nor opposed the proposed 

amendment to Rule 13d-2(a), recommended that the Commission define the percentage 

 
347  See letter from AIMA. 
348  See, e.g., letters from EEI; EIM I; Hoak; IAA; Perkins Coie. Several of those commenters asserted that two 

business days would be consistent with the current general understanding of the “promptly” standard. See 
letters from EIM I; IAA. Some commenters indicated that a one-business day deadline for Schedule 13D 
amendments would be too “aggressive from an operational perspective,” would be extremely difficult for 
filers to comply with, and could result in inadvertent errors, see letter from IAA, and that a two-business 
day deadline would be less onerous for investors yet would ensure the accuracy and transparency of the 
information in their filings. See letter from EEI. 

349  See letter from Hoak. 
350  See letter from STB. The commenter recommended that the Commission engage in further study to 

determine the percentage of Schedule 13D filers that ultimately engage in activities that impact corporate 
control and the number of such cases in which a Schedule 13D amendment is not filed within the one-
business day timeframe. Id. The commenter also suggested that the Commission engage in further study 
regarding the different circumstances under which Schedule 13D amendments are filed and consider 
whether requiring such amendments to be filed within the one business day timeframe would materially 
improve the information provided to investors relating to such issuer control matters. Id. 



87 

ownership change that is deemed a “material change” as the specified percentage only, and that it 

omit the subjective “facts and circumstances” part of the standard.351 

Further, a number of opposing commenters made recommendations regarding the 

proposed amendment to Rule 13d-2(b). For example, several commenters recommended that the 

Commission require Schedule 13G amendments to be filed within 45 days after the end of a 

quarter in which a material change occurred, consistent with the amendment frequency for Form 

13F.352 One commenter recommended that QIIs be required to file an amended Schedule 13G 

within 20 business days after the end of a quarter in which a material change has occurred.353 

One commenter, which neither clearly supported nor opposed the proposed amendment to Rule 

13d-2(b), recommended that the Commission require that Schedule 13G amendments be filed 

within 10 days after the end of the month in which a material change occurs.354 

In addition to focusing on the Schedule 13G amendment deadline, some commenters 

made other recommendations with respect to Rule 13d-2(b). For example, one opposing 

commenter suggested that the Commission conduct further study and analysis to understand 

what percentage of Schedule 13G filers are involved in change in control scenarios.355 A number 

of commenters, which either generally opposed or neither clearly supported nor opposed the 

proposed amendment to Rule 13d-2(b), also requested that the Commission clarify what 

 
351  See letter from IAA. 
352  See, e.g., letters from Dodge & Cox; IAA; ICI I. 
353  See letter from SSC. The commenter also recommended that materiality be defined as more than a 5% 

change in beneficial ownership. Id. 
354  See letter from ABA. 
355  See letter from STB. The commenter also suggested that if the Commission’s goal is market transparency, 

and not a targeted concern related to matters of corporate control, the Commission should consider whether 
there are more appropriate tools to disclose significant beneficial ownership positions or material changes 
to such positions in a more concise and efficient manner (e.g., Form 13F). Id. 



88 

constitutes a “material change” for Schedule 13G filers.356 One commenter recommended that 

the Commission carve out QIIs from the accelerated filing deadline, including because QIIs must 

certify that they do not have a control intent.357 And, one commenter recommended that the 

Schedule 13G amendment filing deadline be expressed in business days.358 

c. Final Amendments 

We are amending Rule 13d-2(a) and (b) to revise the Schedule 13D and 13G amendment 

filing deadlines under those rules. In response to commenter concerns, however, we are making 

some changes to the proposed deadlines. Specifically, we are adopting a Schedule 13D 

amendment filing deadline of two business days359 after the date of a material change and a 

Schedule 13G amendment filing deadline of 45 days after calendar quarter-end. We also are 

amending Rule 13d-2(b) to require an amendment to a Schedule 13G be filed only if a “material 

change” occurs. 

As noted above, Rule 13d-2(a) currently requires that an amendment be filed promptly if 

a material change occurs in the facts set forth in a Schedule 13D. Although the Commission 

proposed to amend Rule 13d-2(a) to replace the “promptly” standard with a one-business day 

deadline, we are instead adopting a two-business day deadline in light of the comments received. 

As noted in the Proposing Release, establishing a specified filing deadline for Schedule 13D 

 
356  See, e.g., letters from ABA; IAA; ICI I; STB. Several of those commenters requested that the Commission 

confirm that a change in beneficial ownership of less than 5% will not be deemed “material” for purposes 
of the rule. See letters from IAA; ICI I; STB. Further, one of those commenters recommended that the 
Commission clarify whether a Schedule 13G amendment obligation would be triggered based on actual 
trading activity of an investor or whether such obligation could be triggered based on changes in the 
number of outstanding shares. See letter from STB. The commenter also requested clarification as to 
whether an investor would be permitted to “net” purchases and sales for purposes of the analysis. Id.  

357  See letter from TIAA. 
358  See letter from IAA. 
359  See supra note 134 for a discussion of the new definition of “business day” that we are adopting for 

purposes of Regulation 13D-G. 



89 

amendments should remove any uncertainty as to the date on which an amendment is due and 

help ensure that beneficial owners amend their filings in a more uniform and consistent 

manner.360 We note, however, that several commenters disagreed with the Commission’s 

expectation that the proposed one-business day deadline would impose minimal incremental 

burdens on Schedule 13D filers.361 To the contrary, those commenters expressed concerns about 

the workability of a one-business day deadline for filing Schedule 13D amendments and 

described the burdens that beneficial owners would incur trying to meet that deadline.362  

We believe that shifting from the proposed one-business day deadline to a two-business 

day deadline will address those concerns and provide beneficial owners with adequate time to 

prepare and file a Schedule 13D amendment. Relevantly, several commenters, including some 

that generally opposed the proposed amendment, recommended that the Commission adopt a 

two-business day deadline under Rule 13d-2(a).363 We agree with those commenters that a two-

business day deadline, as compared to a one-business day deadline, would be less onerous for 

beneficial owners while at the same time ensuring that investors and markets are provided with 

material information disclosed in Schedule 13D amendments in a sufficiently prompt manner. 

 
360  Proposing Release at 13857; see also letter from EIM I (stating that replacing the “promptly” standard with 

a two-business day deadline would “provid[e] a more objective deadline”). For that reason, we also 
disagree with commenters who recommended we should retain a flexible standard. See supra notes 333-
334 and accompanying text. We note that those recommendations were made, in part, in response to the 
proposed one-business day deadline. See, e.g., supra note 334 (describing some commenters’ assertion that 
a one-business day deadline may not be appropriate for Schedule 13D amendments with respect to material 
changes that do not have any nexus to a change or influence in corporate control). As such, the additional 
time provided by the two-business day deadline we are adopting should address some of these concerns. 
This view is consistent with several commenters’ assertions that “promptly” is generally understood to 
mean two business days. See supra note 348. 

361  Id. (expressing the Commission’s belief “that requiring Schedule 13D amendments to be filed within one 
business day after the date on which a material change occurs will [not] place those filers at a 
disadvantage” and noting that “those amendments should present a lower administrative burden than the 
initial Schedule 13D filing”). 

362  See supra notes 317-322 and accompanying text. 
363  See supra note 348 and accompanying text. 



90 

We also believe that giving beneficial owners additional time, as compared to the proposed 

deadline, to prepare their Schedule 13D amendments will reduce the risk of erroneous or 

incomplete filings, addressing a concern that some commenters expressed with respect to the 

proposed one-business day deadline and helping to preserve the utility of those filings.364 

Further, as discussed above, Rule 13d-2(b) currently requires that an amendment be filed 

within 45 days of calendar year-end if there were any changes to the information previously 

reported on Schedule 13G during that year. Similar to our amendments to the initial Schedule 

13G filing deadlines under Rule 13d-1(b) and (d), we are revising Rule 13d-2(b) to require that a 

Schedule 13G amendment pursuant to that rule be filed within 45 days after calendar quarter-end 

if, during that quarter, there were any material changes to the information previously reported 

(rather than five business days after the end of the month in which a material change occurred, as 

proposed). Thus, there are two components to our amendment to Rule 13d-2(b): we are both 

shortening the deadline for the filing of a Schedule 13G amendment and adding an express 

qualifier to require an amendment only if there is a material change to the information 

previously reported. 

We believe that accelerating the Schedule 13G amendment deadline will help ensure the 

information reported is timely and useful.365 Numerous supporting commenters also echoed this 

point.366 We note, however, that several commenters asserted that the proposed month-end-based 

deadline would be unduly burdensome for Schedule 13G filers and that such burdens are not 

sufficiently mitigated by any technological advancements to justify adopting the proposed 

 
364  See supra notes 323-326 and accompanying text. 
365  Proposing Release at 13857. 
366  See supra note 308 and accompanying text. 



91 

deadline,367 reiterating many of the concerns that were expressed about the proposed 

amendments to Rule 13d-1(b) and (d).368  

To mitigate those concerns, and to conform to the initial Schedule 13G filing deadlines 

applicable to QIIs and Exempt Investors under Rule 13d-1(b) and (d),369 we are instead adopting 

a quarter-end-based deadline for Schedule 13G amendments under Rule 13d-2(b). This change 

from the proposal comports with the recommendations that several commenters that opposed the 

proposed amendment to Rule 13d-2(b) made to the Commission.370 Consistent with the 

comments provided on the proposed amendments to Rule 13d-1(b) and (d), we note that those 

commenters that suggested a quarter-end-based Schedule 13G amendment deadline 

recommended various different numbers of days after quarter-end for the deadline.371 Taking 

into consideration those various recommendations, as we noted in the context of our amendments 

to Rule 13d-1(b) and (d),372 we believe that 45 days is the appropriate length of time because it 

aligns with the filing deadline for Form 13F, and many institutional investment managers who 

file a Schedule 13G are already reviewing and assessing their holdings on a quarterly basis in 

order to prepare Form 13F filings. In addition, although most of the other amended Schedule 

13D and 13G filing deadlines will be expressed in “business days,” we believe the potential 

 
367  See supra notes 314-316, 338-342 and accompanying text. 
368  See supra section II.A.2. 
369  We believe that aligning the Schedule 13G amendment deadline under Rule 13d-2(b) with the new quarter-

end Schedule 13G filing deadlines for Exempt Investors and QIIs under Rule 13d-1(b) and (d) will promote 
compliance with those rules, as it preserves the uniformity currently in effect with respect to the year-end 
filing deadlines under those rules.  

370  See supra notes 352-353 and accompanying text.  
371  See letters from Dodge & Cox (recommending a filing deadline of 45 days after quarter-end); IAA (same); 

ICI I (same); SSC (recommending a filing deadline of 20 business days for QIIs after quarter-end). 
372  See supra section II.A.2.c. 



92 

compliance benefits of aligning the Schedule 13G amendment deadline with the Form 13F filing 

deadline justify using calendar days rather than business days.373 

Even for those Schedule 13G filers that are not Form 13F filers, the 45-day period after 

calendar quarter-end deadline will be familiar given that they currently must file their Schedule 

13G amendment 45 days after calendar year-end.374 As such, we believe that many of those 

beneficial owners are well-positioned to submit their Schedule 13G filings 45 days after calendar 

quarter-end, and we expect that this change from the proposal will produce the same benefits and 

mitigate opposing commenters’ concerns to the same degree as our amendments to Rule 13d-

1(b) and (d).375 

Finally, we also are revising the text of Rule 13d-2(b), as proposed, to substitute the term 

“material” in place of the term “any” to serve as the standard for determining the type of change 

that will trigger an amendment obligation under Rule 13d-2(b). As discussed in the Proposing 

Release, this change is merely intended to codify the Commission’s previously stated view that 

there is an inherent materiality standard in the provisions governing Schedule 13G filings.376 We 

note that several commenters requested that the Commission clarify what constitutes a “material 

 
373  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). 

374  In addition, the amended deadline may result in the same amount of time to file as under the current rules, 
depending on the quarter in which the filing obligation is triggered. That is, if a material change occurs to 
the information previously reported on Schedule 13G between Oct. 1 (the beginning of the fourth calendar 
quarter) and Dec. 31 (both calendar year-end and the end of the fourth calendar quarter), then the filer 
would have the same amount of time to prepare and submit their Schedule 13G amendment under both the 
current and amended Rule 13d-2(b). 

375  Id. See supra note 273 for a discussion of why we believe that it is appropriate to accelerate the Schedule 
13G filing deadlines, notwithstanding some commenters’ assertion that the Commission did not 
substantiate its concerns regarding Schedule 13G reporting gaps and QIIs selling down positions before the 
end of a reporting period to avoid a Schedule 13G filing. See supra note 339 and accompanying text.  

376  See Proposing Release at 13858; see also supra note 306 and accompanying text. 



93 

change,” with some of those commenters recommending that the Commission deem a change in 

beneficial ownership of less than five percent to not be “material” for purposes of Rule 13d-

2(b).377 The term “material,” however, already is defined in Rule 12b-2378 and is a familiar, 

established concept in the Federal securities laws.379 As such, we do not believe it is necessary or 

advisable to adopt a new materiality standard for purposes of Schedule 13G amendments under 

Rule 13d-2(b) or to provide an express safe harbor from the application of Rule 13d-2(b) for 

certain specified de minimis changes in beneficial ownership.  

We recognize that Rule 13d-2(a) provides that a “material change” for purposes of that 

rule includes “any material increase or decrease in the percentage of the class beneficially 

owned” and provides that “[a]n acquisition or disposition of beneficial ownership of securities in 

an amount equal to one percent or more of the class of securities shall be deemed ‘material’ for 

purposes of this section.”380 We also note, however, that these are non-exclusive circumstances 

in which an amendment obligation has been triggered.381 Thus, although this language in Rule 

13d-2(a) provides guidance for beneficial owners to determine when a Schedule 13D amendment 

obligation arises under that rule, it is fundamentally different from the express safe harbor that 

 
377  See supra note 356 and accompanying text. 
378  17 CFR 240.12b-2 (stating that the term “material,” when used to qualify a requirement for the furnishing 

of information as to any subject, limits the information required to those matters to which there is a 
substantial likelihood that a reasonable investor would attach importance in determining whether to buy or 
sell the securities registered). 

379  See, e.g., Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988) (noting that the U.S. Supreme Court 
“explicitly has defined a standard of materiality under the securities laws” to mean that “there must be a 
substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable 
investor as having significantly altered the ‘total mix’ of information made available” (quoting TSC 
Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976))). 

380  17 CFR 240.13d-2(a). 
381  Id. (providing that a material change includes, “but [is] not limited to,” a “material increase or decrease in 

the percentage of the class beneficially owned” and that “acquisitions or dispositions of less than [one 
percent of the class of securities] may be material, depending upon the facts and circumstances”). 



94 

some commenters requested with respect to the Schedule 13G amendment obligation under Rule 

13d-2(b). Further, because both Rule 13d-2(a) and (b) will now share the same materiality 

standard for determining when an amendment is due, the language in Rule 13d-2(a), including 

the statement that “[a]n acquisition or disposition of beneficial ownership of securities in an 

amount equal to one percent or more of the class of securities shall be deemed ‘material,’” is 

equally instructive for purposes of determining what changes are material under Rule 13d-2(b). 

4. Rule 13d-2(c) and (d)  

Rule 13d-2(c) governs the amendment obligation for QIIs whose beneficial ownership 

exceeds 10 percent of a covered class. Under Rule 13d-2(c), QIIs are required to file an 

amendment to their Schedule 13G within 10 days after the end of the first month in which their 

beneficial ownership exceeds 10 percent of a covered class, calculated as of the last day of the 

month. Once across the 10 percent threshold, QIIs are further required under current Rule 13d-

2(c) to file additional amendments within 10 days after the end of the first month in which their 

beneficial ownership increases or decreases by more than five percent of the covered class, 

calculated as of the last day of the month. 

Rule 13d-2(d) governs the amendment obligation for Passive Investors whose beneficial 

ownership exceeds 10 percent of a covered class. Under current Rule 13d-2(d), Passive Investors 

are required to “promptly” file an amendment to their Schedule 13G upon acquiring greater than 

10 percent of a covered class. Once across the 10 percent threshold, Passive Investors are further 

required under current Rule 13d-2(d) to file additional amendments “promptly” if their beneficial 

ownership increases or decreases by more than five percent of the covered class.  

The amendment obligations arising under Rule 13d-2(c) and (d) are in addition to the 

general amendment requirement in Rule 13d-2(b), which is discussed in more detail in section 



95 

II.3 above. To comply with Rule 13d-2(c) and (d), QIIs and Passive Investors, depending on 

their beneficial ownership levels, may have to amend their Schedule 13G filings more frequently 

and do so throughout the year.  

a. Proposed Amendments 

In connection with the proposed amendment to Rule 13d-2(b),382 the Commission 

proposed to amend Rule 13d-2(c) to require that QIIs file an amendment to their Schedule 13G 

within five days after the date on which their beneficial ownership exceeds 10 percent of a 

covered class, rather than 10 days after the end of the month. Similarly, once across the 10 

percent threshold, the proposed amendment would have required QIIs to file additional 

amendments five days after the date on which their beneficial ownership increases or decreases 

by more than five percent of the covered class, rather than 10 days after the end of the month. 

The Commission intended that these amendments, when considered in the context of the 

proposed amendment to Rule 13d-2(b), would preserve the utility of Rule 13d-2(c) as a provision 

that provides the market with earlier notice of QIIs’ beneficial ownership exceeding 10 percent 

of a covered class and, thereafter, upon their beneficial ownership of the covered class increasing 

or decreasing by more than five percent.383 The Commission also expressed the view that the 

imposition of such an accelerated deadline is appropriate in the context of our proposed 

amendment to Rule 13d-2(c) because the high thresholds in that rule—10 percent beneficial 

ownership of a covered class and any subsequent five percent increase or decrease in beneficial 

ownership—warranted that the amendment be rapidly disseminated to the market.384 And, 

 
382  See supra section II.A.3.a. 
383  Proposing Release at 13858. 
384  Id. 



96 

consistent with its rationale for proposing to shorten the other deadlines, the Commission noted 

that QIIs may have access to the same technology as other Schedule 13D and 13G filers to 

satisfy this deadline, especially given the size and sophistication of the persons eligible to file as 

QIIs.385  

The Commission also proposed to amend Rule 13d-2(d) to change the amendment filing 

deadline from the “promptly” standard to one business day after the date on which an 

amendment obligation arises. The Commission proposed this amendment for substantially the 

same reasons it proposed to shorten the filing deadline for the initial Schedule 13G386 and change 

the filing deadline for Schedule 13D amendments.387  

b. Comments Received 

Commenters expressed a variety of views regarding the proposed amendments to Rule 

13d-2(c) and (d). A number of commenters supported the proposed amendments.388 Some of 

those commenters supported the proposed amendments for many of the same reasons they 

supported the revising the other Schedule 13D and 13G filing deadlines.389 

Some supporting commenters also expressed their expectation that the proposed 

amendments to Rule 13d-2(c) and (d) would not impose significant costs to beneficial owners of 

more than five percent of a covered class.390 One commenter asserted that the proposed 

 
385  Id. 
386  See supra section II.A.2.a. 
387  See supra section II.A.3.a. 
388  See, e.g., letters from AFREF (expressly supporting only the proposed amendment to Rule 13d-2(d)); 

Anonymous 3; Anonymous 5; Anonymous 11; Anonymous 12; Anthony R.; C. Robinson; Engineer; 
FedEx; Freeport-McMoRan; HMA I; J. Pieper; J. Soucie; Jonah; Juan; Mark C.; Mike; Nasdaq; P. Worts; 
Todd. 

389  See supra notes 38-40, 43-44 and accompanying text; see also supra notes 211, 308 and accompanying 
text. 

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



97 

amendments would be consistent in balancing the need for adequate disclosures to investors with 

burdens placed on filers to accurately prepare required disclosures.391 This commenter also 

supported the proposed amendments based on changes in technology and developments in the 

financial markets.392 

Several commenters opposed the proposed amendments to Rule 13d-2(c) and (d).393 

Some of those commenters opposed the proposed amendments for many of the same reasons 

they opposed revising the other Schedule 13D and 13G filing deadlines.394  

In addition, some commenters also expressed concern that the proposed amendment to 

Rule 13d-2(c) would impose significant and unnecessary additional reporting burdens on QIIs, 

including costs related to enhancing their systems to comply with potential intra-month 

reporting.395 Another commenter asserted that retaining the current Schedule 13G amendment 

filing deadline under Rule 13d-2(c) would be consistent with the Commission’s historical 

recognition that beneficial ownership by QIIs does not raise the same concerns as beneficial 

ownership by investors that hold positions with a control intent and, therefore, it is appropriate to 

minimize the reporting burdens on QIIs.396 

 
391  See letter from FedEx. 
392  See id. 
393  See, e.g., letters from A. Day; ABA; AIMA; B. Mason; Dodge & Cox; EEI (opposing only the proposed 

amendment to Rule 13d-2(d)); ICI I; MFA; MSBA (same); Perkins Coie; SSC (opposing only the proposed 
amendment to Rule 13d-2(c)); TIAA (same). 

394  See supra notes 99, 101-102, 226, 236, 243, 247, 250, 327 and accompanying text. 
395  See, e.g., letters from ABA; ICI I; MFA. One commenter noted that proposed amendment represents a 

radical change for QIIs as it will require them to shift from monitoring and reporting Schedule 13G 
positions on a monthly basis to a daily basis. See letter from MFA. The commenter also stated that the 
proposed amendment would be particularly burdensome for algorithmic traders whose investments are in a 
perpetual state of flux. Id. 

396  See letter from ICI I. 



98 

With respect to the proposed amendment to Rule 13d-2(d), one commenter asserted that 

the proposed one business day deadline is unreasonable given that many Passive Investors 

require assistance of counsel and that a filing under that rule may require input by multiple 

parties before being filed.397 One commenter stated that the proposed amendment would 

compromise the accuracy of Schedule 13G amendments and also would not allow for the 

possibility that a necessary approver or signer may not be available.398 

Commenters also criticized the Commission’s justifications for the proposed amendments 

to Rule 13d-2(c) and (d). For example, several commenters disagreed with the Commission’s 

technological advancement-based justifications for the proposed amendments,399 some of whom 

raised many of the same concerns that they expressed with respect to the proposed amendments 

to the other Schedule 13D and 13G filing deadlines.400 One commenter also noted that Passive 

Investors generally do not have access to specialized technology that would make it practical for 

them to file an amended Schedule 13G on the proposed accelerated basis.401 And, some 

commenters asserted that the costs of the proposed amendments to Rule 13d-2(c) and (d) would 

exceed their benefits.402 

Commenters also made some recommendations regarding the proposed amendments. For 

example, one commenter that generally opposed the proposed amendment to Rule 13d-2(c) 

recommended that the Commission require that Schedule 13G amendments pursuant to that rule 

 
397  See letter from MSBA. 
398  See letter from EEI. 
399  See, e.g., letters from Dodge & Cox; IAA; ICI I; MSBA.  
400  See supra notes 92-94, 220, 223 and accompanying text.  
401  See letter from MSBA. 
402  See letters from ABA; MFA. One commenter stated that because QIIs do not have any control intent, the 

timing of their beneficial ownership reporting is not a source of meaningful concern. See letter from ABA. 



99 

be filed within 45 days after the end of a quarter, consistent with the amendment frequency for 

Form 13F.403 

Some commenters that opposed the proposed amendment to Rule 13d-2(d) recommended 

a two-business day deadline under that rule,404 with one commenter asserting that such a 

deadline would be less onerous for investors yet would ensure the accuracy and transparency of 

the information in their filings.405 One such commenter expressed the view that the Commission 

should require that Schedule 13G amendments under Rule 13d-2(d) be filed promptly, but within 

no more than some period of time (e.g., between two and four business days).406 Another 

opposing commenter suggested that the Commission require that Schedule 13G amendments 

pursuant to Rule 13d-2(d) be filed within 10 business days because Passive Investors “lack 

control intent and certify to that effect.”407 

c. Final Amendments 

We are amending Rule 13d-2(c) and (d) to revise the Schedule 13G amendment filing 

deadlines under those rules. In response to commenter concerns, however, we are making some 

changes from the proposed deadlines. Specifically, we are adopting a filing deadline of five 

business days408 after the end of the first month in which an amendment obligation is triggered 

 
403  See letter from IAA. 
404  See letters from EEI; Perkins Coie. 
405  See letter from EEI. 
406  See letter from ABA. 
407  See letter from IAA. The commenter further noted that “Passive Investors (and QIIs) who lose eligibility to 

file on Schedule 13G – for example, by changing to a control intent – currently have 10 calendar days . . . 
to file their initial Schedule 13D reflecting this change in intent” and that “[i]t seems inconsistent with the 
materiality of the information disclosed to require Passive Investors who remain passive to file a Schedule 
13G amendment in a shorter timeline than formerly-Passive Investors who have to file a Schedule 13D.” 
Id. 

408  See supra note 134 for a discussion of the new definition of “business day” that we are adopting for 
purposes of Regulation 13D-G. 



100 

under Rule 13d-2(c) and two business days after the date on which an amendment obligation is 

triggered under Rule 13d-2(d). 

As noted above, Rule 13d-2(c) currently requires QIIs to file a Schedule 13G amendment 

within 10 days after the end of the first month in which their beneficial ownership exceeds 10 

percent of a covered class and, once across the 10 percent threshold, within 10 days after the first 

month in which their beneficial ownership increases or decreases by more than five percent. 

Although the Commission proposed to revise Rule 13d-2(c) to shorten the filing deadline to five 

days after the date on which an amendment obligation arises under that rule, we are instead 

retaining the month-end-based filing deadline and shortening that deadline from 10 days after 

month-end to five business days after month-end. The Commission based its proposed deadline 

under Rule 13d-2(c), in large part, on the proposal to shorten the Schedule 13G amendment 

deadline under Rule 13d-2(b) from a calendar year-end-based deadline to a month-end-based 

deadline.409 Therefore, if we had adopted the Commission’s proposed amendment to Rule 13d-

2(b), then Rule 13d-2(c), in its current form—which as noted above requires that QIIs file a 

Schedule 13G amendment within 10 days after the end of the first month in which the triggering 

event occurs—would not be of any value. 

As discussed above, however, we did not adopt the Commission’s proposed month-end-

based deadline under Rule 13d-2(b).410 Instead, we revised Rule 13d-2(b) to require that a 

Schedule 13G amendment be filed within 45 days after the end of a calendar quarter in which a 

material change occurs to the information previously reported. Because Rule 13d-2(b) will have 

 
409  See Proposing Release at 13858 (stating that the proposed amendments to Rule 13d-2(c), “when considered 

in the context of our proposed amendment to Rule 13d-2(b), preserve the utility of Rule 13d-2(c) as a 
provision that provides the market with earlier notice of” significant changes in QIIs’ beneficial 
ownership). 

410  See supra section II.A.3.c.101 

a quarter-end-based filing deadline, the month-end-based deadline in Rule 13d-2(c) will continue 

to have utility as a provision that provides the market with earlier notice of QIIs’ beneficial 

ownership exceeding 10 percent of a covered class and, thereafter, upon their beneficial 

ownership increasing or decreasing by more than five percent. In addition, we expect that 

retaining the month-end-based deadline in Rule 13d-2(c) will address the concerns that several 

commenters expressed about the burdens that the proposed amendment would impose on QIIs.411 

Notwithstanding those commenters’ concerns, we believe it is appropriate to accelerate 

the filing deadline in Rule 13d-2(c) in order for investors to receive material information in a 

timely manner in light of the technological advancements and other developments in the 

financial markets412 in the more than 40 years since the 10-day deadline was adopted.413 As such, 

we are shortening Rule 13d-2(c)’s filing deadline from 10 days after month-end to five business 

days after month-end. Because the deadline is being expressed in “business days” instead of 

“days,”414 and given the size and sophistication of the persons eligible to file as QIIs, we do not 

expect that this new filing deadline under Rule 13d-2(c) will be unduly burdensome. 

In addition, as discussed above, Rule 13d-2(d) currently requires that Passive Investors 

file a Schedule 13G amendment promptly upon acquiring beneficial ownership of more than 10 

percent of a covered class and, once across the 10 percent threshold, promptly upon increasing or 

decreasing their beneficial ownership by more than five percent. As with the Schedule 13D 

 
411  See supra notes 394-396 and accompanying text. 
412  See supra notes 138-144 and accompanying text for some examples of those advancements and 

developments. 
413  See Filing and Disclosure Release (adopting the predecessor to current Rule 13d-2(c)).  
414  The five-business day deadline after month-end, as compared to a hypothetical five-calendar day deadline, 

will give beneficial owners additional time before their Schedule 13G amendment is due if the filing period 
encompasses days that are not business days (i.e., Saturday, Sunday, or a Federal holiday). 



102 

amendment deadline under Rule 13d-2(a), the Commission proposed to change the deadline 

under Rule 13d-2(d) from the “promptly” standard to one business day.415 For the same reasons 

that we changed the filing deadline for Schedule 13D amendments to two business days,416 and 

to retain the historical consistency with that deadline, we also are amending Rule 13d-2(d) to 

change the amendment filing deadline from the current “promptly” standard to two business days 

after the date on which an amendment obligation arises.  

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

Regulation 13D-G states that Schedules 13D and 13G should be prepared in accordance 

with Regulation S-T, which governs the preparation and submission of documents filed 

electronically on the Commission’s EDGAR system.417 In accordance with 17 CFR 232.12, 

electronic filings may be submitted to the Commission Monday through Friday, except Federal 

holidays, from 6 a.m. to 10 p.m. Eastern Time.418 Under Rule 13(a) of Regulation S-T, however, 

most filings must be submitted by direct transmission commencing on or before 5:30 p.m. 

Eastern Time in order to be deemed filed on the same business day.419 Most filings submitted by 

direct transmission commencing after 5:30 p.m. will be deemed filed as of the next business 

day.420 Rule 13(a)(4) of Regulation S-T, however, sets forth certain exceptions from that 5:30 

p.m. “cut-off” time. Specifically, it provides that certain filings—namely, Forms 3, 4 and 5, 

Form 144, and Schedule 14N—“submitted by direct transmission on or before 10 p.m. [Eastern 

 
415  See Proposing Release at 13858. 
416  See supra section II.A.3.c. 
417  The preamble to Regulation 13D-G states, in relevant part, that “[t]his regulation should be read in 

conjunction with Regulation S-T (part 323 of this chapter), which governs the preparation and submission 
of documents in electronic format” (all capitalized letters in the original). 

418  17 CFR 232.12(c).  
419  See 17 CFR 232.13(a)(2). 
420  Id. 



103 

Time] shall be deemed filed on the same business day.”421 Rule 13(a)(4), therefore, effectively 

extends the “cut-off” time for these filings from 5:30 p.m. to 10 p.m. 

In addition, Rule 201 of Regulation S-T and 17 CFR 232.202 (“Rule 202 of Regulation 

S-T”) address hardship exemptions from EDGAR filing requirements, and Rule 13(b) of 

Regulation S-T addresses the related issue of filing date adjustments. A filer may obtain a 

temporary hardship exemption under current Rule 201 of Regulation S-T if it experiences 

unanticipated technical difficulties that prevent the timely submission of an electronic filing by 

submitting a properly formatted paper copy of the filing under cover of Form TH.422 

Alternatively, instead of pursuing a hardship exemption, a filer may request a filing date 

adjustment under Rule 13(b) of Regulation S-T. That rule addresses circumstances in which a 

filer attempts in good faith to file a document with the Commission in a timely manner, but the 

filing is delayed due to technical difficulties beyond the filer’s control.423 In those instances, the 

filer may request a filing date adjustment.424 The staff may grant the request if it appears that the 

adjustment is appropriate and consistent with the public interest and the protection of 

investors.425  

a. Proposed Amendments 

In the Proposing Release, the Commission proposed to amend Rule 13(a)(4) of 

Regulation S-T to provide that any Schedule 13D or Schedule 13G, including any amendments 

 
421  17 CFR 232.13(a)(4). Rule 13(a)(3) also provides the same accommodation for registration statements or 

any post-effective amendment thereto filed pursuant to 17 CFR 230.462(b) (“Rule 462(b)”). See 17 CFR 
232.13(a)(3). 

422  17 CFR 232.201(a). 
423  17 CFR 232.13(b). 
424  Id. 
425  Id. 



104 

thereto, submitted by direct transmission on or before 10 p.m. Eastern Time on a given business 

day will be deemed filed on the same business day.426 Conversely, under the proposed 

amendment, any Schedule 13D or 13G filing not submitted by direct transmission by 10 p.m. on 

its due date will be assigned a filing date of the next business day, and for purposes of 

compliance with the applicable reporting requirements, would be considered late. The 

Commission proposed this extension of the “cut-off” time to ease filers’ administrative burdens 

in connection with the proposed accelerated filing deadlines for Schedule 13D and 13G filings, 

including those filers located in different time zones.427 

The Commission also proposed to amend Rule 201(a) of Regulation S-T to remove a 

Schedule 13D or 13G filer’s ability to rely on a temporary hardship exemption under that rule. 

The Commission noted that this proposal would be consistent with the treatment of Forms 3, 4, 

and 5, which have a 10 p.m. “cut-off” time under Rule 13(a)(4) of Regulation S-T and are 

ineligible for a temporary hardship exemption under Rule 201(a) of Regulation S-T.428 The 

Commission also based this proposal on the following factors: the relative ease of using the 

EDGAR on-line filing system; the proposed extended 10 p.m. Eastern Time filing deadline; the 

limited value to the public of paper filings; and the availability of a filing date adjustment under 

the same circumstances as a temporary hardship exemption would have been available but for 

the proposed amendment.429  

 
426  Notwithstanding the proposed extension of the time period in which accepted Schedule 13D and 13G 

filings may be made and still be considered timely, the Commission stated that filer support hours would 
not be extended. Proposing Release at 13859, n.82. Thus, filer support would continue to remain available 
only until 5:30 p.m. Eastern Time as is currently the case. 

427  Proposing Release at 13859. 
428  Id. 
429  Id. at 13859-60. 



105 

b. Comments Received 

Commenters largely supported the proposed amendments to Rules 13(a)(4) and 201(a) of 

Regulation S-T,430 with only one commenter expressly opposing the proposed amendment to 

Rule 201(a) of Regulation S-T.431 One of the supporting commenters asserted that additional 

time to file would be critical under the Commission’s proposed acceleration of the Schedule 13D 

and 13G filing deadlines.432 Another supporting commenter noted that the proposed amendment 

to Rule 13(a)(4) would conform to the section 16 filing deadlines and help ease the compliance 

burdens of shortened filing deadlines and time zone differences.433 

Some commenters also made recommendations in connection with the proposed 

amendments to Rules 13(a)(4) and 201(a) of Regulation S-T. One supporting commenter 

recommended that the Commission extend filer support hours beyond 6 p.m. Eastern Time.434 

Another commenter, which neither clearly supported nor opposed the proposed amendment to 

Rule 201(a), stated that it would not object to making a temporary hardship exemption 

unavailable to Schedules 13D and 13G filers as long as a filer may request a filing date 

adjustment under Rule 13(b) of Regulation S-T if it experiences unanticipated technical 

difficulties that prevent the timely submission of an electronic filing.435 

c. Final Amendments 

 
430  See letters from EIM I (supporting only the proposed amendment to Rule 13(a)(4)); Engineer; Hoak 

(same); IAA (same); ICI I. 
431  See letter from EIM I. 
432  See letter from ICI I. 
433  See letter from IAA. 
434  See letter from ICI I. 
435  See letter from IAA. 



106 

We are amending Rules 13(a)(4) and 201(a) of Regulation S-T as proposed. Thus, the 

filing “cut-off” time for Schedules 13D and 13G under Rule 13(a)(4) of Regulation S-T will be 

extended from 5:30 p.m. to 10 p.m. Eastern Time. In addition, the temporary hardship exemption 

under Rule 201(a) of Regulation S-T will be made unavailable for Schedule 13D and 13G filers. 

Schedule 13D and 13G filers will, however, remain eligible to request a filing date adjustment 

under Rule 13(b) of Regulation S-T.436 

We are adopting these amendments as proposed for the same reasons the Commission 

discussed in the Proposing Release,437 which were largely supported by the commenters.438 We 

note that a commenter also requested that we extend filer support hours beyond 6 p.m. Eastern 

Time.439 As the Commission noted in the Proposing Release, however, the amendment to Rule 

13(a)(4) of Regulation S-T mirrors the existing filing “cut-off” time for Forms 3, 4, and 5.440 In 

extending the filing “cut-off” time for those forms, the Commission declined to extend filer 

support hours.441 We also decline to do so here in light of the relative ease of using the EDGAR 

 
436  One commenter requested that we allow Schedule 13D and 13G filers to request a filing date adjustment 

under Rule 13(b) of Regulation S-T if they experience unanticipated technical difficulties. See supra note 
435 and accompanying text. For example, as noted above and consistent with the Commission’s statement 
in the Proposing Release, “[f]iling date adjustments may . . . be made if a filer is unable to submit its 
Schedule 13D or 13G as a result of an EDGAR outage . . . under Rule 13(b) of Regulation S-T on the 
grounds that such outage constitutes technical difficulties beyond the filer’s control.” Proposing Release at 
13860, n.84. 

437  See Proposing Release at 13859-60 (“We are proposing to amend Rule 201(a) of Regulation S–T to make 
temporary hardship exemptions unavailable to filers of Schedules 13D and 13G because of: The relative 
ease of using the EDGAR on-line filing system; the proposed extended 10 p.m. eastern time filing deadline; 
the limited value to the public of paper filings; and the availability of a filing date adjustment under the 
same circumstances as a temporary hardship exemption would have been available but for the proposed 
amendment.”); see also supra section II.A.5.a. 

438  See supra section II.A.5.b. 
439  See supra note 434 and accompanying text.  
440  Proposing Release at 13859, n.82. 
441  See Mandated Electronic Filing and Website Posting for Forms 3, 4 and 5, Release No. 34-47809 (May 7, 

2003) [68 FR 25788 at 25793 (May 13, 2003)] (“[W]e have amended Rule 13(a) to provide that any Form 
3, 4 or 5 submitted by direct transmission on or before 10 p.m. Eastern time is deemed filed on the same 
business day. However, filer support hours will not be correspondingly extended . . . .”). 



107 

on-line filing system, the extension of the “cut-off” time by four and a half hours, and the 

availability of a filing date adjustment if the filer experiences unanticipated technical difficulties 

as previously described.  

B. Proposed Amendment to Rule 13d-3 Regarding the Use of Cash-Settled 

Derivative Securities 

Neither section 3(a) nor section 13(d) of the Exchange Act defines the term “beneficial 

owner” or “beneficial ownership.” Regulation 13D-G similarly does not expressly define those 

terms. To provide clarity, the Commission adopted Rule 13d-3, which provides standards for the 

purpose of determining whether a person is a beneficial owner subject to section 13(d) and 

section 13(g).442 Over the years, some observers have raised concerns about the ability of 

investors in cash-settled derivative securities to influence or control an issuer by, for example, 

pressuring a counterparty to the derivative transaction to make certain decisions regarding the 

voting and disposition of substantial blocks of securities of the reference issuer.443 To address 

these and related concerns,444 the Commission proposed new Rule 13d-3(e). 

1. Proposed Amendment 

 
442  Adoption of Beneficial Ownership Disclosure Requirements, Release No. 34-13291 (Feb. 24, 1977) [42 FR 

12342 (Mar. 3, 1977)]. The Commission emphasized that “[a]n analysis of all relevant facts and 
circumstances in a particular situation is essential in order to identify each person possessing the requisite 
voting power or investment power.” Id. at 12344. 

443  See, e.g., Maria Lucia Passador, The Woeful Inadequacy of Section 13(d): Time for a Paradigm Shift?, 13 
VA. L. & BUS. REV. 279, 296-99 (2019) (“[I]n the recent past, cash-settled equity derivatives—mainly call 
and security-based options—were frequently used not only with a speculative and hedging purpose, but 
also with the immediate, explicit, and specific aim of silently accumulating a leading (or even control) 
position in public companies.”); Wachtell Petition, supra note139, at 8 (“Even in the absence of voting or 
dispositive power, participants in large hedging transactions gain influence in a number of ways. . . . 
[V]oting of the shares may be subject to counterparty influence or control, either directly or because the 
counterparty is motivated to vote the hedged shares in a way that will please the investor and induce them 
to continue to transact with such counterparty. . . . Even those derivatives that are characterized as ‘cash-
settled’ may ultimately be settled in kind, creating further market pressure as the participants need to 
acquire shares for such settlement.”).  

444  Proposing Release at 13861. 



108 

The Commission proposed to add new paragraph (e) to Rule 13d-3 to deem certain 

holders of cash-settled derivative securities, other than SBS, to be the beneficial owners of the 

reference covered class. Proposed Rule 13d-3(e)(1) would have treated a holder of a cash-settled 

derivative security, excluding SBS, as the beneficial owner of the equity securities in the covered 

class referenced by the cash-settled derivative security if such person held the cash-settled 

derivative security with the purpose or effect of changing or influencing the control of the issuer 

of the class of equity securities, or in connection with or as a participant in any transaction 

having that purpose or effect.445 The Commission included this control-based standard in 

proposed Rule 13d-3(e) to ease the administrative burdens associated with the application of this 

proposed provision by employing a familiar standard under Regulation 13D-G.446 In addition, 

proposed Rule 13d-3(e) would have set forth the formula for calculating the number of equity 

securities that a holder of a cash-settled derivative security would be deemed to beneficially 

own.447  

In proposing Rule 13d-3(e), the Commission noted that non-SBS cash-settled derivative 

securities held with the purpose or effect of changing or influencing control of the issuer may be 

used to influence the voting, acquisition, or disposition of any shares the holder’s counterparty 

 
445  Proposing Release at 13862. Proposed paragraph (e)(1) also would have included a provision stating that 

any securities that are not outstanding but are referenced by the relevant cash-settled derivative security 
would be deemed to be outstanding for the purpose of calculating the percentage of the relevant covered 
class beneficially owned by the holder of the derivative security. Id. at 13862-63. Those reference 
securities, however, would not have been deemed to be outstanding for the purpose of any other person’s 
calculation of the percentage of the covered class it beneficially owns. Id. 

446  Id. (noting that “the concept ‘purpose or effect of changing or influencing the control of the issuer’ is a 
familiar one under Regulation 13D-G, both in the context of determining whether a person is a beneficial 
owner under Rule 13d-3 and for purposes of determining whether a beneficial owner is eligible to report on 
Schedule 13G in lieu of Schedule 13D under Rule 13d-1”). 

447  See id. at 13863 (describing that formula and providing illustrative examples of its application). The 
Commission also proposed three notes to Rule 13d-3(e) that would have clarified the application of the 
proposed rule’s formula. Id. at 13863-64. 



109 

may have acquired in a hedge, proprietary investment, or otherwise.448 The Commission also 

stated that a non-SBS cash-settled derivative holder’s probability of success in exerting influence 

or control over the issuer of the reference security may increase given that any voting power the 

derivative holder held would be magnified by minimizing the number of shares that potentially 

could be voted against the holder’s plans or proposals.449 Finally, the Commission recognized 

that holders of non-SBS cash-settled derivative securities may position themselves to acquire any 

reference securities that the counterparty may acquire to hedge the economic risk of that 

transaction.450 The Commission also noted that holders of non-SBS cash-settled derivative 

securities may present their economic positions to persuade an issuer or its shareholders to 

engage with them.451 The Commission concluded, therefore, that these persons’ holdings of non-

SBS cash-settled derivative securities may implicate the policies underlying section 13(d).452 

2. Comments Received 

Commenters were divided on proposed Rule 13d-3(e). Many commenters expressed 

general support for the proposed amendment.453 A number of these commenters indicated that 

 
448  Id. at 13862. 
449  Id. The Commission acknowledged the possibility that derivative counterparties may have a business 

relationship to develop and protect, and thus may ultimately cast votes in accordance with the preference of 
the derivative holder or not vote the shares. See id. 

450  Id. 
451  Id. 
452  Id. (citing the Filing and Disclosure Release, which notes that section 13(d)’s legislative history indicates 

that the purpose of that section is “to provide information to the public and the affected issuer about rapid 
accumulations of its equity securities” by “persons who would then have the potential to change or 
influence control of the issuer.”). 

453  See, e.g., letters from Andres Loubriel (Feb. 19, 2022) (“A. Loubriel”); AFL-CIO; AFREF; AFREF, et al.; 
Anonymous (Feb. 25, 2022) (“Anonymous 7”); Better Markets I; Convergence; Dan Pierce (Feb. 20, 2022) 
(“D. Pierce”); Freeport-McMoRan; FundApps; HMA I; Justin G. (Feb. 19, 2022) (“Justin G.”); Labor 
Unions; Mark C.; NIRI; P. Worts; PL Salvati;Henry T Hu, Allan Shivers Chair in the Law of Banking and 
Finance at the University of Texas Law School (Apr. 11, 2022) (“Prof. Hu”); Robert Rutkowski (Apr. 12, 
2022) (“R. Rutkowski”); Samuel Ryan, Senior Battery Test Engineer, ESS Inc. (Feb. 18, 2022) (“S. 
Ryan”); SCG; Sen. Baldwin, et al.; T. Reilly; Todd; WLRK I; WLRK II; see also Letter Type C. 



110 

proposed Rule 13d-3(e) would add needed market transparency.454 One commenter expressed 

the view that the proposal would mitigate what it described as “hidden risk concentration.”455 

Another commenter stated that the proposal would provide “the markets more generally with full 

information” and allow stockholders to better assess whether to support or oppose activists’ 

proposals.456 Some commenters asserted that an investment fund used derivatives (reportedly 

forward purchase contracts) to conceal an economic interest in an issuer that it later converted 

into a profitable beneficial ownership stake ultimately reported on Schedule 13D.457   

  Opposing commenters, by contrast, raised numerous objections to proposed Rule 13d-

3(e).458 Some of these commenters questioned whether there was a sound basis for the 

proposal.459 One commenter asserted that the proposal was not based on empirical analysis or 

“evidence to establish . . . an actual problem in the marketplace” and is a “solution in search of a 

problem.”460 Other commenters asserted that holders of cash-settled derivative securities should 

not be deemed beneficial owners because such derivative securities confer no control or 

 
454  See, e.g., letters from AFL-CIO; AFREF; Better Markets I; Convergence; D. Pierce; FundApps; Justin G.; 

Labor Unions; NIRI; P. Worts; PL Salvati; Prof. Hu; SCG; WLRK I; WLRK II. 
455  See letter from Better Markets I. 
456  See letter from WLRK II. 
457  See letters from NIRI; SCG. 
458  See, e.g., letters from ABA; AIMA; B. Mason; CIRCA I; CIRCA III; EIM I; IAA; ICI I; ICM; J. Kennedy; 

MFA; Robert Plesnarski, O’Melveny & Myers LLP (June 27, 2023) (“O’Melveny & Myers”); Perkins 
Coie; Prof. Gordon; Profs. Bishop and Partnoy I; Profs. Bishop and Partnoy II; Profs. Bishop and Partnoy 
III; Profs. Eccles and Rajgopal; SIFMA; SIFMA AMG; SIFMA & SIFMA AMG; STB; TIAA. We note 
that several commenters expressed concern that proposed Rule 13d-3(e) would “[a]ssign[] voting rights to 
derivative holders.” See, e.g., letter from Susanne Trimbath, Ph.D., Economist, Author, Retired Professor 
(June 24, 2023); see also Letter Type B; Letter Type D, available at https://www.sec.gov/comments/s7-06-
22/s70622-typed.htm; Letter Type E, available at https://www.sec.gov/comments/s7-06-22/s70622-
typee.htm. For avoidance of doubt, we note that neither proposed Rule 13d-3(e) nor any of the other 
Proposed Amendments, nor any of the final amendments we are adopting, would have that effect. 

459  See letters from CIRCA I; MFA; Profs. Bishop and Partnoy III; SIFMA; SIFMA AMG. 
460  See letter from EIM I. 



111 

influence over the voting or disposition of the reference equity securities.461 Some commenters 

asserted that in actuality, a counterparty would not look to the derivative holder as to whether to 

acquire for hedging purposes, or how to vote and/or dispose of, any securities of the reference 

class or that doing so would be contrary to market practice and/or standard industry legal 

documentation.462 Several opposing commenters asserted that investors in cash-settled derivative 

securities already may be subject to regulation as beneficial owners under existing Rule 13d-3 in 

applicable circumstances or that the Commission could proceed via interpretation or other means 

and without a rule amendment.463 Similarly, one commenter stated that it may not be necessary 

to deem investors in cash-settled derivative securities beneficial owners if the Commission is 

satisfied that derivative counterparties can effectively and irrevocably contract out of the right to 

convert such derivatives to either physical ownership of underlying shares or any other form of 

voting rights.464  

In addition, some opposing commenters expressed concerns regarding proposed Rule 

13d-3(e) related to the APA or the Commission’s statutory authority to adopt the proposal. For 

example, some commenters said that the proposal represents an inappropriate expansion of the 

 
461  See letters from ABA; AIMA; CIRCA I; EIM I; IAA; MFA; STB; TIAA.  
462  See letters from ABA; CIRCA I; EIM I; O’Melveny & Myers; SIFMA; SIFMA AMG; STB. 
463  See letters from AIMA; CIRCA I; EIM I; IAA; ICI I; MFA; Profs. Bishop and Partnoy II; Profs. Bishop 

and Partnoy III; SIFMA; SIFMA AMG. One commenter expressly recommended that the Commission 
issue interpretive guidance on this point. See letter from Profs. Bishop and Partnoy II; see also letter from 
Profs. Bishop and Partnoy III. Similarly, another commenter suggested that the Commission “publish 
clarifying guidance explaining that the beneficial ownership determination for all cash-settled derivatives is 
consistent with the treatment of SBS, as described in the 2011 Release.” See letter from IAA. The “2011 
Release” that the commenter refers to is Beneficial Ownership Reporting Requirements and Security-Based 
Swaps, Release No. 34-64628 (June 8, 2011) [76 FR 34579 (June 14, 2011)], which we henceforth refer to 
as the “Security-Based Swaps Release.” 

464  See letter from Wm. Robertson Dorsett, Columbia Law School (Feb. 11, 2022). 



112 

applicable statutory provisions465 or would be arbitrary and capricious, if adopted.466 Further, 

one commenter emphasized that “[b]y focusing on speculative harms; failing to engage seriously 

with the question whether new or different rules were needed to combat them; and failing to 

consider costs, the Proposed Rule falls short of providing a sound justification for the proposals 

being made.”467 The commenter stated that “[f]or these reasons, the Commission has not 

satisfied its obligations under sections 3(f) and 23(a)(2) of the Exchange Act.”468  

Finally, some opposing commenters discussed other concerns regarding proposed Rule 

13d-3(e). Some commenters expressed concern that the proposal would inhibit activist 

investment strategies.469 Other commenters expressed concern that the proposed rule, including 

its “change of control” standard, is overly broad, unclear, and would be difficult to administer.470 

Many commenters indicated that the proposal’s computational methodology, including the need 

to conduct daily calculations, would be complex or increase the compliance burden of the rule.471 

In addition, one commenter noted that the “concept of beneficial ownership is used . . . in many 

other federal and state laws and rules, as well as in contracts” and, therefore, “expanding the 

 
465  See letters from ABA; IAA; MFA; Wm. Robertson Dorsett, Columbia Law School (Apr. 11, 2022). One of 

these commenters also stated that the proposal would be inconsistent with the Commission’s interpretation 
in the Security-Based Swaps Release. See letter from MFA. Another commenter questioned the 
Commission’s authority to adopt proposed Rule 13d-3(e) “when Rule 13d-3(a) and all relevant authority 
relating to an understanding of beneficial ownership has historically required a showing of control over the 
voting or the disposition of securities.” See letter from ABA. 

466  See letter from EIM I. 
467  See letter from SIFMA; see also letter from SIFMA & SIFMA AMG.  
468  See letter from SIFMA. The commenter also recommended that the Proposed Amendments be revised and 

re-proposed for notice and comment. See id. 
469  See letters from CIRCA I; MFA. 
470  See letters from ABA; CIRCA I; EIM I; IAA; MFA; Perkins Coie; SIFMA; SIFMA AMG; TIAA; see also 

IAC Recommendations (stating that the proposed rule, together with the Commission’s proposed 17 CFR 
240.10B-1 (“Rule 10B-1”), could “cause confusion in the markets and make compliance difficult for 
market participants” and recommending that the two proposed rules be better aligned). 

471  See letters from ABA; AIMA; IAA; ICI I; Profs. Bishop and Partnoy I; SIFMA; SIFMA AMG; SIFMA & 
SIFMA AMG; STB; TIAA; see also letter from MFA & NAPFM. 



113 

definition of ‘beneficial ownership’” as proposed in Rule 13d-3(e) could have “significant 

unintended consequences.”472 Further, another commenter indicated that the proposed rule’s 

expansion of the scope of the matters that may give rise to beneficial ownership “could result in 

potential and significant overreporting by [investment] advisers, leading to unfounded inferences 

from public filings that holders of cash-settled derivatives may have voting and investment 

power over securities that they do not, in fact, have, nor do they have the right to acquire.”473 

3. Commission Guidance 

We are not adopting proposed paragraph (e) to Rule 13d-3 to deem certain holders of 

cash-settled derivative securities as beneficial owners of the reference covered class. Consistent 

with the views expressed by several commenters, we have determined that Commission guidance 

on the applicability of existing Rule 13d-3 to cash-settled derivative securities, similar to the 

guidance provided in the Security-Based Swaps Release,474 would provide sufficient clarity.475 

The Commission explained in the Security-Based Swaps Release the circumstances under 

which a holder of a SBS may become a beneficial owner as determined under Rule 13d-3. It 

noted that “our existing regulatory regime may require the reporting of beneficial ownership” in 

cases in which a SBS (1) “confers voting and/or investment power (or a person otherwise 

acquires such power based on the purchase or sale of a [SBS]),” (2) “is used with the purpose or 

 
472  See letter from ICI I. 
473  See letter from IAA; see also letters from MFA and Perkins Coie that expressed similar concerns about 

excessive beneficial ownership reporting and potential market confusion even though the persons holding 
cash-settled derivatives ordinarily have mere economic exposure and no power to vote a reference security 
or influence or change control of an issuer. 

474  See supra note 463 and accompanying text. 
475  See letter from IAA; see also letter from Profs. Bishop and Partnoy II (stating that, under existing Rule 

13d-3, holders of cash-settled derivative securities may be subject to regulation as beneficial owners of the 
reference equity securities in applicable circumstances, and recommending that the Commission not adopt 
proposed Rule 13d-3(e) but instead issue “guidance on cash-settled derivatives” and “articulat[e] how the 
Commission’s current rules continue to prohibit problematic conduct related to the [Proposing Release]”). 



114 

effect of divesting or preventing the vesting of beneficial ownership as part of a plan or scheme 

to evade the reporting requirements,” or (3) “grants a right to acquire an equity security.”476 

Although the determination under Rule 13d-3 as to whether the holder of any cash-settled 

derivative security is the beneficial owner of the reference covered class ultimately will depend 

on the relevant facts and circumstances, the above-described reasoning in the Security-Based 

Swaps Release (the three elements of which correspond to Rule 13d-3(a), (b), and (d)(1), 

respectively) provides an instructive analytical framework with respect to cash-settled derivative 

securities.  

As is the case with persons holding cash-settled SBS, Rule 13d-3 similarly may be 

applied to holders of non-SBS cash-settled derivatives477 to treat those persons as beneficial 

owners in applicable instances. Although non-SBS derivative securities settled exclusively in 

cash generally are designed to represent only an economic interest, discrete facts and 

circumstances could arise where the holder of these securities may have voting or investment 

power as described in Rule 13d-3(a) or otherwise could be deemed to be a beneficial owner as 

determined under Rule 13d-3(b) or (d), as described below. First, under Rule 13d-3(a), to the 

extent a non-SBS cash-settled derivative security provides its holder, directly or indirectly, with 

exclusive or shared voting or investment power, within the meaning of that rule, over the 

reference covered class through a contractual term of the derivative security or otherwise, the 

holder of that derivative security may become a beneficial owner of the reference covered class. 

Second, to the extent a non-SBS cash-settled derivative security is acquired with the purpose or 

 
476  Security-Based Swaps Release at 34582. 
477  Some commenters expressed the view that non-SBS cash-settled derivatives only represent an economic 

interest and that section 13 generally should not or does not apply to these securities. See letters from ABA; 
IAA; MFA; Perkins Coie. 



115 

effect of divesting its holder of beneficial ownership of the reference covered class or preventing 

the vesting of that beneficial ownership as part of a plan or scheme to evade the reporting 

requirements of section 13(d) or 13(g), the derivative security may be viewed as a contract, 

arrangement, or device within the meaning of those terms as used in Rule 13d-3(b). The holder 

of such cash-settled derivative security, therefore, may be deemed a beneficial owner under Rule 

13d-3(b) in this context. Finally, under Rule 13d-3(d)(1), a person is deemed a beneficial owner 

of an equity security if the person (1) has a right to acquire beneficial ownership of the equity 

security within 60 days or (2) acquires the right to acquire beneficial ownership of the equity 

security with the purpose or effect of changing or influencing the control of the issuer of the 

security for which the right is exercisable, or in connection with or as a participant in any 

transaction having such purpose or effect, regardless of when the right is exercisable.478 As the 

Commission stated in the Security-Based Swaps Release, Rule 13d-3(d)(1) applies regardless of 

the origin of the right to acquire the equity security.479 If such a right originates in a derivative 

security that is nominally “cash-settled” or from an understanding in connection with that 

derivative security, Rule 13d-3(d)(1) would apply. 

C. Proposed Amendments to Rule 13d-5  

 
478  See Rule 13d-3(d)(1)(i). The first prong described above (i.e., the lead-in of Rule 13d-3(d)(1)(i)) applies to 

any “right to acquire,” including but not limited to those enumerated in Rule 13d-3(d)(1)(i)(A) through (D). 
The second prong described above (i.e., the proviso of Rule 13d-3(d)(1)(i)) applies to any “security or 
power” specified in Rule 13d-3(d)(1)(i)(A) through (C), thereby excluding Rule 13d-3(d)(1)(i)(D) (namely, 
“any right to acquire . . . pursuant to the automatic termination of a trust, discretionary account or similar 
arrangement”) from the types of securities or powers that, if held, can result in the holder being deemed a 
beneficial owner regardless of when the right is exercisable. Thus, the holder of any right to acquire 
beneficial ownership as described in Rule 13d-3(d)(1)(i)(D) will be subject to being deemed a beneficial 
owner pursuant to Rule 13d-3(d)(1) if the right creates an entitlement to acquire securities of the underlying 
covered class within 60 days. 

479  Security-Based Swaps Release at 34582. 



116 

In the Proposing Release, the Commission proposed to amend Rule 13d-5 to, among 

other things: 

• Revise Rule 13d-5(b)(1) to remove the potential implication that it sets forth the 

exclusive legal standard for group formation under section 13(d)(3) or 13(g)(3); 

• Add new paragraph (b)(1)(ii) to specify that if a person, in advance of filing a 

Schedule 13D, discloses to any other person that such filing will be made and such 

other person acquires securities in the covered class for which the Schedule 13D will 

be filed, those persons will have formed a group within the meaning of section 

13(d)(3); and 

• Add new paragraph (b)(2)(i) to specify that when two or more persons “act as” a group 

under section 13(g)(3) of the Act, the group will be deemed to have become the 

beneficial owner, for purposes of section 13(g)(1) and (2) of the Exchange Act, of the 

beneficial ownership held by its members. 

Rather than adopt these amendments, we instead are issuing guidance on the operation of 

existing Rule 13d-5(b) and sections 13(d)(3) and 13(g)(3) that clarifies and affirms that, among 

other matters, two or more persons who “act as” a group for purposes of acquiring, holding, or 

disposing securities may be treated as a group.  

In addition to the foregoing, we are adopting certain amendments to Rule 13d-5 that the 

Commission included in the Proposing Release. Specifically, we are:  

• Adding new paragraph (b)(1)(ii) to specify that a group subject to reporting 

obligations under section 13(d) shall be deemed to acquire any additional equity 

securities acquired by a member of the group after the group’s formation; 



117 

• Adding new paragraph (b)(1)(iii) to carve out from paragraph (b)(1)(ii) any intra-

group transfers of equity securities; 

• Adding new paragraph (b)(2)(i) to specify that a group regulated under section 13(g) 

shall be deemed to acquire any additional equity securities acquired by a member of 

the group after the group’s formation; 

• Adding new paragraph (b)(2)(ii) to carve out from paragraph (b)(2)(i) any intra-group 

transfers of equity securities; 

• Redesignating current Rule 13d-5(b)(1) as Rule 13d-5(b)(1)(i) to accommodate the 

inclusion of these amendments, but otherwise not altering the substance of that rule; 

and 

• Making other technical changes to Rule 13d-5.480 

Those amendments, as well as our guidance, are discussed in more detail below. 

1. Proposed Rule 13d-5(b)(1)(i), (b)(2)(i), and (b)(1)(ii)  

a. Proposed Amendments 

 In the Proposing Release, the Commission proposed to amend Rule 13d-5 to track the 

statutory text of sections 13(d)(3) and (g)(3) and specify that two or more persons who “act as” a 

group for purposes of acquiring, holding, or disposing of securities are treated as a group.481 

Specifically, the Commission proposed to redesignate Rule 13d-5(b)(1) as Rule 13d-5(b)(1)(i) 

and revise it to, among other things, remove the reference to an agreement between two or more 

persons and instead indicate that when two or more persons act as a group under section 

13(d)(3), the group will be deemed to have acquired beneficial ownership of all of the equity 

 
480  See supra note 22.  
481  Proposing Release at 13868-69. 



118 

securities of a covered class beneficially owned by each of the group’s members as of the date on 

which the group is formed. The Commission also proposed new Rule 13d-5(b)(2)(i), which 

would contain nearly identical language to proposed Rule 13d-5(b)(1)(i), with conforming 

changes to address circumstances in which two or more persons act as a group under section 

13(g)(3) and the group is deemed to become the beneficial owner of all of the equity securities of 

a covered class beneficially owned by each of the group’s members as of the date on which the 

group is formed. 

The Commission proposed these amendments, among other things, to (1) make clear that 

“the determination [under sections 13(d)(3) and 13(g)(3)] as to whether two or more persons are 

acting as a group does not depend solely on the presence of an express agreement and that, 

depending on the particular facts and circumstances, concerted actions by two or more persons 

for the purpose of acquiring, holding or disposing of securities of an issuer are sufficient to 

constitute the formation of a group,” and (2) eliminate any potential for Rule 13d-5(b)(1) to be 

misconstrued as the definition of a group and consequently used as a basis to narrow the 

application of sections 13(d)(3) and 13(g)(3).482  

In addition, the Commission proposed to amend Rule 13d-5 to include new paragraph 

(b)(1)(ii). The proposed paragraph would provide that a person who shares information about an 

upcoming Schedule 13D filing such person is or will be required to make with respect to a 

covered class, to the extent this information is not yet public and was communicated with the 

purpose of causing others to make purchases of securities of the same covered class, and a 

person who subsequently purchases securities of that class based on this information, will have 

formed a group within the meaning of section 13(d)(3).  

 
482  Id.  



119 

b. Comments Received 

Commenters expressed a wide range of views on proposed Rule 13d-5(b)(1)(i) and 

(b)(2)(i).483 A number of commenters supported the amendments.484 One supporting commenter 

expressed the view that the proposed amendments would ensure that the terms of sections 13(d) 

and (g) will be applied as originally intended.485 Another commenter observed that the proposed 

amendments appear designed to simply adhere to the underlying statutory language in the 

Exchange Act.486 One commenter stated that it supported the proposed amendments and 

observed that, under the proposed amendments, compliance with the group formation rules 

would not depend on whether an express or implied agreement exists among the parties that are 

acting together.487 One commenter asserted that the proposed amendments “could prevent 

sophisticated investors from skirting reporting requirements when coordinating accumulations of 

significant stakes” which could “help[] ensure retail investors have fair insight.”488 

Several commenters expressed views rejecting criticism that the proposed amendments 

would interfere with shareholder activism or collaboration.489 One of these commenters 

disagreed with the contention by other commenters that such amendments would prevent the 

build-up of ownership stakes and chill shareholder communications.490 Another commenter 

 
483  Although commenters generally focused on proposed Rule 13d-5(b)(1)(i) and did not explicitly address 

proposed Rule 13d-5(b)(2)(i), given the substantial similarity of those proposed rules, we treat comments 
on proposed Rule 13d-5(b)(1)(i) as also applying to proposed Rule 13d-5(b)(2)(i) unless the comment letter 
stated otherwise.  

484  See letters from AFREF; AFREF, et al.; BRT; Freeport-McMoRan; Labor Unions; Nasdaq; NIRI; P. 
Worts; Perkins Coie; R. Rutkowski; SCG; Sen. Baldwin, et al.; T. Reilly; WLRK I; WLRK II. 

485  See letter from NIRI. 
486  See letter from WLRK II. 
487  See letter from SCG. 
488  See letter from P. Worts. 
489  See letters from AFL-CIO; Sen. Baldwin, et al.; WLRK II. 
490  See letter from Sen. Baldwin, et al.  



120 

disagreed with concerns that the proposal “would put mainstream institutional investors at risk of 

being deemed part of a group simply because they take a meeting with an activist or management 

and indicate that they may be inclined to vote in favor of their proposed course of action.”491 

This commenter further stated that it did not view the proposal as propounding a definition of 

“group” that would consider a “regular passive institutional investor” as a member of a group 

with an activist simply because it met with an activist, heard its proposed plans, and signaled it 

would likely use its voting power to support the activist’s proposed campaign.492 One commenter 

stated a similar view, asserting that nothing in the proposal would limit the ability of investors to 

engage with company management.493 

In addition, although the IAC did not make a recommendation with respect to the 

proposed amendments to Rule 13d-5 “because of a lack of consensus on the effects of the 

proposed definition of a ‘group’ and how that would impact shareholder communication,” the 

IAC stated that it “agree[d] with the SEC’s description of existing case-law regarding the 

definition of ‘group’” and “would support the inclusion of such description in any final 

rulemaking regarding Schedule 13D reporting to highlight to market participants the scope of 

such case law when considering the applicability of the ‘group’ rules.”494  

Numerous commenters opposed the proposed amendments, largely because, in their 

view, the proposed amendments would eliminate a requirement that there be some form of 

 
491  See letter from WLRK II. 
492  See id. 
493  See letter from Sen. Baldwin, et al. 
494  See IAC Recommendations.121 

“agreement” among members of a group.495 Some opposing commenters expressed the view that 

the proposal—particularly the removal of some form of an “agreement”—would exceed the 

Commission’s authority under the Exchange Act or raise concerns under the APA or the U.S. 

Constitution.496 One commenter asserted that eliminating the “agreement” requirement in 

determining whether a group has been formed would contravene the plain meaning of the 

statutory text, disregard the legislative history, and depart from “long-established” judicial 

precedent.497 The same commenter asserted that the initial adoption of Rule 13d-5, with what the 

commenter described as its express requirement for an agreement to exist in order to establish 

group status, simply reflected the Commission’s affirmation of established judicial precedent, 

not an unwarranted departure from the statutory language.498 A number of commenters 

expressed similar points of view, and, among other things, used canons of construction or 

statutory analysis to assert that persons can only “act as” a group under section 13(d)(3) if an 

agreement exists among the group members.499 Another commenter suggested the absence of the 

term “agreement” from section 13(d)(3) did not restrict the Commission’s capacity to use the 

 
495  See letters from Andrew L. Stern, SEIU (Apr. 11, 2022) (“A. Stern”); ABA; AIMA; Steven M. Rothstein, 

Managing Director, Ceres Accelerator for Sustainable Capital Markets, Ceres, Inc. (Apr. 11, 2022) 
(“Ceres”); CIRCA I; CIRCA III; Dodge & Cox; EIM I; HMA II; IAA; ICI I; ICM; MFA; Neuberger 
Berman Group LLC (Apr. 11, 2022) (“NBG”); O’Melveny & Myers; Benjamin Edwards, Associate 
Professor of Law, University of Nevada, Las Vegas, William S. Boyd School of Law, Sarah C. Haan, 
Professor of Law and Cary Martin Shelby, Professor of Law, Washington and Lee University School of 
Law, Geeyoung Min, Assistant Professor of Law, Michigan State University College of Law, Faith 
Stevelman, Professor of Law, New York Law School (Apr. 12, 2022) (“Prof. Edwards, et al.”); Prof. 
Gordon; David H. Webber, Professor of Law and Paul M. Siskind Scholar, Boston University School of 
Law (Apr. 11, 2022) (“Prof. Webber”); Profs. Bishop and Partnoy I; Profs. Bishop and Partnoy II; Profs. 
Bishop and Partnoy III; Halit Coussin, Chief Legal Officer & Chief Compliance Officer, Pershing Square 
Capital Management, L.P. (Apr. 11, 2022) (“PSCM”); Rice Management; SIFMA; SIFMA AMG; SIFMA 
& SIFMA AMG; SSC; STB; TRP.  

496  See letters from CIRCA I; EIM I; ICI I; MFA; Prof. Edwards, et al.; PSCM; SIFMA. 
497  See letter from EIM I.  
498  See id. 
499  See letters from CIRCA I; EIM I, MFA; SIFMA; SIFMA AMG. 



122 

term “agree” in Rule 13d-5(b) because administrative rulemakings commonly include language 

not present in a statute in order to implement congressional intent.500 

Some opposing commenters expressed concern that the proposed amendments would 

introduce a standard that was overly broad and that could chill or eliminate shareholder 

communications with other shareholders, issuers’ management and/or other parties.501 One 

commenter expressed the view that the proposal could deter investors from engaging in “socially 

valuable activism” and noted that to the extent that the proposed rules resulted in restraints on 

shareholder communications, that may lead to claims that the proposed rules burden investors’ 

First Amendment rights.502 The commenter also stated that the Commission “should take care to 

minimize any burdens on investors’ expression.”503 Other commenters anticipated that under the 

proposed amendments, ordinary course business transactions or conversations, without more, 

could result in a finding of group formation.504 One commenter raised the concern that the 

proposed rule would produce disruptive collateral consequences, including in relation to 

ownership reporting under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 Act as it 

is uncertain whether being deemed a member of a group would deprive an investor of relying on 

the “passive investor” exemption from the antitrust notification requirements under that 

statute.505 A number of commenters also asserted that the proposed amendments would prompt 

 
500  See letter from PSCM. 
501  See letters from A. Stern; ABA; Ceres; CIRCA I; Dodge & Cox; EIM I; IAA; MFA; NBG; Prof. Edwards, 

et al.; Prof. Gordon; Prof. Webber; Profs. Bishop and Partnoy II; Rice Management; SIFMA; STB; TRP; 
see also letter from MFA & NAPFM. 

502  See letter from Prof. Edwards, et al. 
503  Id.  
504  See letters from HMA II; IAA; MFA; Perkins Coie; Prof. Gordon; Profs. Bishop and Partnoy I; SIFMA; 

SIFMA AMG; SSC; TRP. 
505  See letter from PSCM. 



123 

litigation over whether communications between parties resulted in group formation.506 Some 

commenters expressed the view that the resulting increase in uncertainty that would be caused by 

the proposed amendments also would result in additional legal exposure under Exchange Act 

section 16 for persons alleged to have formed a group.507 

Opposing commenters also criticized the proposed amendments as inconsistent with 

those Federal court opinions that have addressed the standard for group formation.508 One 

commenter asserted that courts have recognized an “agreement” as being a necessary element of 

group formation based on the need for a “workable compromise” between the regulatory 

objective of having a statute’s policies implemented, on one hand, and the market’s need for 

clear rules, on the other hand.509 Another commenter expressed concern that the proposed 

amendments would, in its view, dispense “with more than 40 years of practice and court 

decisions” and replace them “with a vague, circular rule . . . impossibly burdensome to market 

participants.”510 One commenter noted that Federal courts “have consistently held that the 

existence of an agreement is necessary to establish the existence of a ‘group’ under Section 

13(d).”511 Other commenters expressed the view that the existing standards in Rule 13d-5(b) 

have worked well for decades or are not in need of reform.512 Notwithstanding these and other 

 
506  See letters from ABA; Dodge & Cox; EIM I; Prof. Edwards, et al.; Prof. Gordon; PSCM; Rice 

Management; SIFMA. 
507  See letters from ABA; EIM I; SIFMA; see also letter from MFA & NAPFM. 
508  See letters from AIMA; CIRCA I; EIM I; ICI I; MFA; PSCM; SIFMA; SIFMA AMG.  
509  See letter from SIFMA. 
510  See letter from SIFMA AMG. 
511  See letter from EIM I (“Until now, courts have sensibly required and the markets have understood that 

there must be an agreement (whether implicit or explicit) between shareholders before they could be legally 
found to be a group and subject to the consequences of such a finding.”). 

512  See letters from AIMA; EIM I; ICI I; Profs. Bishop and Partnoy II; PSCM; SSC; STB.  



124 

similar criticisms,513 we note that multiple opposing commenters recognized that, even today, the 

determination of whether or not a group exists is ultimately dependent upon the facts and 

circumstances.514 

A number of commenters offered suggestions on how the Commission should proceed 

with respect to the proposed amendments.515 Some commenters expressed the view that the 

Commission should set forth more specific parameters of what joint conduct or communications 

may result in group formation.516 A few commenters offered alternative language to be used in 

any revision the Commission may ultimately adopt.517 One commenter encouraged the 

Commission to consider exempting QIIs from any new “group formation” provisions so long as 

QIIs act consistently with the requirements of Rule 13d-1(b).518 One commenter suggested that 

the Commission adopt the equivalent of an exemption from section 16 for any groups formed 

pursuant to the proposed amendments.519 Another commenter suggested that the proposed 

amendments should not be adopted unless a safe harbor is created for securities dealing 

activities.520 One commenter recommended no change to the proposal but expressed the view 

 
513  See letters from AIMA; CIRCA I; ICI I; MFA; PSCM. 
514  See letters from EIM I; ICI I; Profs. Bishop and Partnoy I; PSCM; SIFMA; STB. 
515  See letters from ABA; AFREF; AIMA; HMA II; IAA; ICI I; Labor Unions; MFA; Perkins Coie; Profs. 

Bishop and Partnoy II (expressing the view that it would be sufficient for the Commission to issue guidance 
instead of adopting a rule change and recommending that the Commission take the position that it “intends 
to enforce the ‘group’ definition as it stands”); SIFMA; SSC; STB; TRP. 

516  See letters from ABA; HMA II; IAA; Perkins Coie; TRP. 
517  See letters from ABA; MFA. 
518  See letter from ABA. 
519  See letter from SIFMA. One commenter, which generally supported the proposal, similarly recommended 

that the Commission address concerns that the proposal could result in a “regular passive institutional 
investor” becoming a member of a group with an activist simply because it met with the activist, heard its 
proposed plans, and signaled that it would likely use its voting power to support the activist’s proposed 
campaign. See letter from WLRK II. 

520  See letter from SIFMA. 



125 

that the proposed rules would not interfere with shareholder rights to engage in, among other 

things, shareholder activism on ESG issues, collaboration on shareholder proposals under 17 

CFR 240.14a-8 (“Rule 14a-8”), and “vote no” initiatives and any concerns regarding the filing 

obligations of such investor groups could be clarified by the Commission in an explanatory 

statement issued with any final rule.521 Another commenter stated the Commission should 

consider whether the public dissemination of information on message boards or through media 

interviews, and, by extension, social media platforms, could result in group formation.522  

 A number of commenters recommended no change be made to current Rule 13d-

5(b)(1),523 which, according to some of these commenters, would result in retention of the 

“agreement” standard. One commenter made reference to existing Rule 13d-5(b) and advocated 

for the Commission to retain what it referred to as the “current ‘group’ definition,” including the 

requirement that there be an agreement to act as a group, because the current provision does not: 

(1) chill shareholder engagement; (2) create the challenge to determine whether a group has been 

formed or if an exemption applies; or (3) make activist campaigns more difficult to pursue.524 

Commenters also expressed differing views on proposed Rule 13d-5(b)(1)(ii). Some 

commenters expressly supported the proposal.525 One commenter stated that because information 

about a planned Schedule 13D filing is clearly material to investors, it makes sense to deem 

 
521  See letter from Labor Unions. 
522  See letter from STB. 
523  See letters from AIMA; ICI I; SIFMA; SSC. 
524  See letter from AIMA. 
525  See letters from Perkins Coie; R. Rutkowski; Reilly Steel, Ph.D. Candidate, Department of Politics, 

Princeton University, and Zohar Goshen, Jerome L. Greene Professor of Transactional Law, Columbia Law 
School (May 22, 2023) (“R. Steel and Prof. Goshen”) (supporting the proposal conditionally, if Congress 
does not take the action that the commenter recommended as the primary course of action and if the 
Commission actively enforces the proposed rule and seeks expansive remedies); SCG. 



126 

tippers and tippees to be acting as a group even without an explicit agreement.526 Another 

commenter, while expressing the view that modifications should be made to the Commission’s 

overall proposed amendments relating to group formation, stated that the “definition of who 

should constitute a ‘group’ under the proposal . . . should only apply to the sharing of material 

nonpublic information related to not yet disclosed large positions instead of efforts to improve 

the long-term corporate governance of companies.”527 

Other commenters opposed the proposal.528 One commenter analyzed the proposed rule 

text and observed that linking “indirectly discloses” to the “with the purpose of causing” clause 

appears intended to establish a presumption, for all practical purposes, that an acquisition by 

“such other person” was “based on such information.”529 Another commenter similarly 

expressed the view that such a rule would be unfair given that an adviser may also have 

independently determined to acquire or even continue to hold the same securities and disclosure 

of the imminent Schedule 13D may have been outside of the adviser’s control and without his or 

her input or expression of approval.530 Another commenter similarly asserted that the proposed 

rule would place those who receive information from a blockholder at risk of inadvertently 

 
526  See letter from SCG. 
527  See letter from R. Rutkowski. 
528  See letters from Dodge & Cox; EIM I; HMA I (stating its belief that “straightforward application of 

existing law” is sufficient); IAA; PSCM (citing proposed Rule 13d-5(b)(1)(iii) but apparently referring to 
proposed Rule 13d-5(b)(1)(ii)); SIFMA; SIFMA AMG.  

529  See letter from SIFMA AMG (adding that this apparent presumption would be unfair, inappropriate, and 
poorly tailored, and citing to the example of a client acquiring shares from a dealer who also coincidentally 
acquires shares). 

530  See letter from IAA (observing that that adoption of any such rule would be unfair absent some intent to 
form a group because certain parties could be restricted from buying shares just because a third party told 
an adviser that it was going to file a Schedule 13D). 



127 

becoming subject to group reporting obligations in circumstances that were “never intended to be 

covered by Section 13.”531 

Some commenters provided recommendations to revise the proposal.532 One commenter 

suggested the Commission alternatively “impose a prohibition on tipping by an activist as soon 

as it reaches the 5 percent disclosure threshold until it files a Schedule 13D.”533 One commenter 

recommended that the Commission address concerns that the proposal could result in a passive 

institutional investor becoming a member of a group with an activist simply because it met with 

the activist, heard its proposed plans, and signaled that it would likely use its voting power to 

support the activist’s proposed campaign by revising proposed Rule 13d-5(b)(1)(ii) to include its 

suggested alternative text.534 One commenter, who neither clearly supported nor opposed the 

proposal, stated that it would be “deeply troubled if the Commission were to invent a new, 

extremely difficult to establish element to insider trading law, such as a requirement that the 

recipient of the tip have an intention of coordinating with the tipper or make its purchases in 

reliance on the non-public information that the tipper provided.”535 A commenter objected to the 

concept of “indirect” disclosure within proposed Rule 13d-5(b)(1)(ii) on grounds that the term 

“indirect” is “intrinsically ill-defined” and could create a presumption that certain transactions in 

the ordinary course of a market-making business were executed “based on such [indirect] 

 
531  See letter from PSCM. 
532  See letters from AIMA; IAA; Prof. Gordon; SIFMA; SIFMA AMG; STB. 
533  See letter from Prof. Gordon; see also letter from R. Steel and Prof. Goshen. 
534  See letter from WLRK II. Another commenter, which objected to the proposed amendments to Rule 13d-5 

in the Proposing Release, specifically responded to that commenter’s recommended alternative, intimating 
that the Commission should not adopt this suggested change for a variety of reasons. See letter from Profs. 
Bishop and Partnoy II. 

535  See letter from HMA I. 



128 

information.”536 Another commenter similarly suggested that the rule, if adopted, should only 

apply to situations where an express or implied intent by parties exists to form a group.537 

Commenters also expressed observations concerning the collateral consequences to an 

investor that received information about an impending Schedule 13D filing. One commenter 

implicitly asked the Commission to consider that once the tippee has the information, “[t]his 

quasi-lock-up period not only discourages other shareholders from meeting with the activist but 

also, effectively, removes the liquidity these other shareholders may provide to the market in that 

issuer.”538 Another commenter suggested the rule should clarify for how long a recipient of 

information that a Schedule 13D filing would be forthcoming must remain “frozen” from making 

further purchases, particularly if such filing does not get filed in the near term.539 

c. Commission Guidance 

As noted above, we are not adopting proposed Rule 13d-5(b)(1)(i) and (ii) and (b)(2)(i). 

The Commission’s stated objectives were to (1) align the text of Rule 13d-5(b) with the statutory 

provisions that it serves to implement while clarifying and affirming its application and operation 

and (2) provide clarity on whether a group is formed if a person shares information about an 

upcoming Schedule 13D filing that the person is or will be required to make.540 The proposed 

amendments were not intended to change how the Commission views what is meant by “act as a 

group” for purposes of sections 13(d)(3) and 13(g)(3). They were intended to codify through a 

rule amendment our views that “the determination of whether two or more persons are acting as 

 
536  See letter from SIFMA.  
537  See letter from IAA. 
538  See letter from AIMA. 
539  See letter from STB. 
540  See Proposing Release at 13869. 



129 

a group does not depend solely on the presence of an express agreement and that, depending on 

the particular facts and circumstances, concerted actions by two or more persons for the purpose 

of acquiring, holding or disposing of securities of an issuer are sufficient to constitute the 

formation of a group.”541 Several commenters generally shared our view that the formation of a 

group does not depend on the presence of an express agreement.542 However, some commenters 

raised objections to the proposal based on their view that the amendments could result in a group 

being formed for purposes of sections 13(d)(3) and 13(g)(3) absent some evidence of agreement, 

arrangement, understanding, or concerted action. That was not the Commission’s intent. Upon 

consideration of the comments received, we believe that the better approach is not to adopt the 

proposed amendment to Rule 13d-5 but instead to provide guidance as to the application of the 

existing legal standard established in sections 13(d)(3) and 13(g)(3) with respect to the formation 

of a group.543 

i. Background of the Regulatory Framework 

Sections 13(d)(3) and 13(g)(3) are identical, and each of these provisions provides that 

“[w]hen two or more persons act as a . . . group for the purpose of acquiring, holding, or 

 
541  Id. at 13868-69. 
542  See, e.g., letters from EIM I (“[A]n agreement can be constituted informally, and without a writing. The 

Commission, in adopting Rule 13d-5 in 1977, selected the word ‘agreement’ rather than ‘contract’ for a 
reason—an agreement is a less formal arrangement, which is consistent with the requirement of Section 
13(d)(3) that the persons ‘act together.’”); PSCM (“Courts, whether looking to the existence of an 
agreement out of an interpretation that Rule 13d-5(b) requires it, or as an administrable evidentiary 
standard for establishing action in concert, have interpreted the term ‘agreement’ broadly to include 
informal and unwritten arrangements, and have relied on circumstantial evidence in order to establish that 
some manner of agreement existed.”); SIFMA (“[T]he existence of a group surely does not depend on the 
intent of the members to create and wear the label of a ‘Section 13(d) group.’ It does, however, depend on 
an intent to take the coordinated actions that will create that relationship.”). Cf., letter from ABA 
(explaining that an agreement need not be “written” or “formal” and acknowledging that Rule 13d-5(b) 
could be modified to add “arrangement or understanding” to address any concern that the term “agreement” 
has been misconstrued in the context of Rule 13d-5(b)).    

543  In addition to the guidance set forth in this section, we provide additional guidance in section II.D.3 in 
connection with the discussion regarding our final disposition of the proposed exemptions under Rule 13d-
6.   



130 

disposing of securities of an issuer, such . . . group shall be deemed a ‘person.’” As the 

Commission noted in the Proposing Release, Congress enacted these provisions based on two 

practical considerations.544 First, sections 13(d)(1) and 13(g)(1), by their terms, apply to, and 

impose filing obligations upon, a single “person.”545 Second, Congress recognized the need to 

protect against the evasion of disclosure requirements by persons who collectively sought to 

change or influence control of an issuer yet who each acquired and held an amount of beneficial 

ownership at or just below the reporting threshold.546 

Congress sought to address this problem of coordinated circumvention by deeming two 

or more persons to be one person for purposes of sections 13(d) and 13(g). Based on the statutory 

treatment of two or more persons as if they were a single person when they “act as” a group for 

at least one of the three purposes specified in the statutory provisions (i.e., acquiring, holding, or 

disposing of securities of an issuer), the beneficial ownership collectively held by the group 

members is imputed to the group. If the aggregate amount of beneficial ownership exceeds five 

percent of a covered class, the group may be required to file a beneficial ownership report. The 

determination of which statutory provision (i.e., section 13(d)(3) or 13(g)(3)) applies to a group 

depends on whether a non-exempt acquisition of beneficial ownership has been made that can be 

imputed to the group and, when on its own or added to any other beneficial ownership held by 

 
544  See Proposing Release at 13865. 
545  Because sections 13(d)(3) and 13(g)(3) “deem” a group to be a single “person,” the correct articulation of 

how the statutory framework applies in this context is to a “person, including any group” and not a “person 
or group.” Thus, under sections 13(d) and 13(g) and Regulation 13D-G, groups are regulated no differently 
from natural persons or companies described in the definition of “person” under section 3(a)(9) of the 
Exchange Act.  

546  Section 13(d)(3) was enacted to prevent “easy avoidance of section 13(d)’s disclosure requirements by a 
group of investors acting together in their acquisition or holding of securities.” S. Rep. No. 550, at 8 
(1967); H.R. No. 1711, at 8-9 (1968); see also 113 CONG. REC. Bill S. 510 (Jan. 18, 1967) (noting that the 
specific provision applicable to groups was added to “close the loophole that now exists which allows a 
syndicate, where no member owns more than 10 percent, to escape the reporting requirements of the 
Securities Exchange Act”). 



131 

the group, results in the group’s beneficial ownership exceeding five percent of the covered 

class. If such an acquisition occurs, the group is subject to regulation under section 13(d).547 If 

no such acquisition attributable to the group has occurred, but the collective amount of beneficial 

ownership held by the group members exceeds five percent of a covered class at the end of a 

calendar year under current rules548 (or at the end of a calendar quarter based on the amendments 

to Rule 13d-1 we are adopting in this release), the group is subject to section 13(g).  

ii. Guidance 

Neither the statute nor our rules provide a definition of a “group.” The appropriate legal 

standard for determining whether a group is formed is found in sections 13(d)(3) and 13(g)(3). 

While some may view the language of Rule 13d-5(b) as providing a definition of “group,” we 

reiterate that neither the current rule nor its predecessor549 was designed or adopted by the 

Commission to serve as a substitute for the legal standard expressly stated in sections 13(d)(3) 

and 13(g)(3) for determining when two or more persons form a group.550  

Whether two or more persons have formed a group as contemplated by sections 13(d)(3) 

and 13(g)(3) depends on a determination of whether they acted together for the purpose of 

 
547  The operative term “after acquiring” in section 13(d)(1) makes the application of section 13(d) contingent 

upon the existence of an acquisition. Determining that an acquisition has occurred—in particular, an 
acquisition that is neither exempt nor otherwise not recognized under section 13(d)(1)—is thus necessary to 
establish the application of section 13(d).  

548  See 17 CFR 240.13d-1. 
549  The predecessor rule, Rule 13d-6, was redesignated Rule 13d-5 in 1978. See Filing and Disclosure Release. 

Unless otherwise noted, references to Rule 13d-5 in this section of the release also refer to the predecessor 
Rule 13d-6.   

550  When proposing Rule 13d-5(b), the Commission did not present the rule as a proposed definition of 
“group,” solicit comment on the sufficiency or any limitations of any such definition, or use any reference 
to the term “group” in the proposed rule text. See Disclosure of Corporate Ownership, Release No. 34-
11616 (Aug. 25, 1975) [40 FR 42212 (Sept. 11, 1975)]. Instead, the Commission explained that it was 
proposing to define the term “acquisition” to address certain technical issues with respect to section 13(d) 
and the determination of the due date for a Schedule 13D. 



132 

“acquiring,” “holding,” or “disposing of” securities of an issuer.551 Such persons could be 

viewed as acting together if they are taking concerted actions in furtherance of any of these 

purposes.552 The determination depends on an analysis of all the relevant facts and circumstances 

and not solely on the presence or absence of an express agreement, as two or more persons may 

take concerted action or agree informally.553 This approach is consistent with the statutory 

language of sections 13(d)(3) and 13(g)(3) and with the purpose of these statutory provisions.554 

It also is consistent with views previously expressed by courts and the Commission, which have 

determined that groups were established by activities that fell short of an express agreement.555 

Indeed, the Commission recognizes that for a finder of fact, including the Commission itself, to 

 
551  The Commission, in adopting Rule 13d-5(b)(1), indicated that it viewed the term “holding” as subsuming 

the term “voting,” but nevertheless expressly referenced the term “voting” in the rule for the avoidance of 
doubt. See Proposing Release at 13869 n.135 (citing Filing and Disclosure Release at 18492). 

552  See, e.g., SEC v. Levy, 706 F. Supp. 61, 69 (D.D.C. 1989) (“In order to find that a ‘group’ exists under 
Section 13(d)(3), a court must find that two or more people have formed a combination in support of a 
common objective.”); In the Matter of John A. Carley, Release No. 34-50695 (Nov. 18, 2004) (“A group 
need not be formally organized, nor memorialize its intentions in writing . . . . All that is required is that its 
members combine in furtherance of a common objective.”); In the Matter of John Joslyn, Joseph Marsh, P. 
David Lucas, Steven Sybesma, Stanley Thomas and Jon Thompson, Release No. 34-50588 (Oct. 26, 2004). 

553  Proposing Release at 13868. 
554  Both the House and Senate Reports accompanying the bill reflect an effort to prevent circumvention of the 

reporting threshold in this situation with the inclusion of a provision “that would prevent a group of persons 
who seek to pool their voting or other interests from evading the . . . statute because no one individual owns 
more than [five] percent.” See Disclosure of Corporate Equity Ownership, H.R. Rep. No. 1711, at 9 (1968) 
and Full Disclosure of Corporate Equity Ownership and in Corporate Takeover Bid, S. 510, Report of the 
S. Comm. On Banking and Currency, 90th Cong. 1, 8 (1967). As such, the reports noted that section 
13(d)(3) “is designed to obtain full disclosure of the identity of any person or group obtaining the benefits 
of ownership [b]y reason of any contract, understanding, relationship, agreement or other arrangement” 
(emphasis added). S. Rep. No. 550, at 8 (1967); H.R. Rep. No. 1711, at. 8-9 (1968), as reprinted in 1968 
U.S.C.C.A.N. 2811, 2818. Id. 

555  Group activity may be demonstrated by circumstantial evidence. See Proposing Release at 13868, n. 132 
(citing SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1162 (D.C. Cir. 1978) and noting as indicia of group 
formation: (1) the presence of a common plan or goal, Fin. Gen. Bankshares, Inc. v. Lance, 1978 WL 1082, 
at *9 (D.D.C. 1978); (2) “considerable dissatisfaction” with certain officers and a “desire to reduce” those 
officers’ role in company management, Id. at *10; (3) strategy meetings with, among others, attorneys, SEC 
v. Levy, 706 F. Supp. 61, 70 (D.D.C. 1989); (4) a pattern of coordinated stock purchases, Hallwood Realty 
Partners, LP v. Gotham Partners, LP, 286 F.3d 613, 618 (2d Cir. 2002); (5) the solicitation of others to 
join the group, Wellman v. Dickinson, 682 F.2d 355 363-364 (2d Cir. 1979), cert. denied sub. nom. 
Dickinson v. SEC, 460 U.S. 1069 (1983); or (6) the existence of communications between and among 
group members. Gen. Aircraft Corp. v. Lampert, 556 F.2d 90, 95 (1st Cir. 1977)); see also supra note 482. 



133 

determine that a group has been formed under section 13(d)(3) or 13(g)(3), the evidence must 

show, at a minimum, indicia, such as an informal arrangement or coordination in furtherance, of 

a common purpose to acquire, hold, or dispose of securities of an issuer. If two or more persons 

took similar actions, that fact is not conclusive in and of itself that a group has been formed.556 

We therefore disagree with the comments raising constitutional concerns, as well as the 

comments concerning the scope of our authority under the Exchange Act and the APA. We note, 

however, that those comments were directed at the proposed amendment to Rule 13d-5 and the 

belief that the contemplated rule change meant the Commission was taking a position that a 

group could be formed without some type of an agreement, arrangement, understanding, or 

concerted action. As explained above, this is not the Commission’s view, and we are not 

adopting the proposed amendment to Rule 13d-5. Further, the commenters’ concerns are not 

implicated by the guidance we provide here. 

Relatedly, we recognize the concern expressed by some commenters that the 

Commission’s proposal to amend Rule 13d-5 could chill shareholder engagement, with, some 

commenters asserted, shareholders unable to communicate freely with each other or with the 

issuer’s management without forming a group. In response to some of the concerns raised by 

commenters, we provide guidance below on the application of the current legal standard found in 

section 13(d)(3) and 13(g)(3) to certain common types of shareholder engagement activities.557  

Question: Is a group formed when two or more shareholders communicate with each other 

regarding an issuer or its securities (including discussions that relate to improvement of the long-

 
556  The Commission recognizes that inadvertent or coincidental contact would not be sufficient to satisfy the 

standard given the absence of volitional acts made in concert or in coordination with others.      
557  Each illustration assumes that the rules adopted in this release are in effect and that the securities of the 

subject company are in a covered class.  



134 

term performance of the issuer, changes in issuer practices, submissions or solicitations in 

support of a non-binding shareholder proposal, a joint engagement strategy (that is not control-

related), or a “vote no” campaign against individual directors in uncontested elections) without 

taking any other actions?  

Response: No. In our view, a discussion whether held in private, such as a meeting between two 

parties, or in a public forum, such as a conference that involves an independent and free 

exchange of ideas and views among shareholders, alone and without more, would not be 

sufficient to satisfy the “act as a . . . group” standard in sections 13(d)(3) and 13(g)(3). Sections 

13(d)(3) and 13(g)(3) were intended to prevent circumvention of the disclosures required by 

Schedules 13D and 13G, not to complicate shareholders’ ability to independently and freely 

express their views and ideas to one another. The policy objectives ordinarily served by Schedule 

13D or Schedule 13G filings would not be advanced by requiring disclosure that reports this or 

similar types of shareholder communications. Thus, an exchange of views and any other type of 

dialogue in oral or written form not involving an intent to engage in concerted actions or other 

agreement with respect to the acquisition, holding, or disposition of securities, standing alone, 

would not constitute an “act” undertaken for the purpose of “holding” securities of the issuer 

under section 13(d)(3) or 13(g)(3).  

Question: Is a group formed when two or more shareholders engage in discussions with an 

issuer’s management, without taking any other actions? 

Response: No. For the same reasons described above, we do not believe that two or more 

shareholders “act as a . . . group” for the purpose of “holding” a covered class within the 

meaning of those terms as they appear in section 13(d)(3) or 13(g)(3) if they simply engage in a 

similar exchange of ideas and views, alone and without more, with an issuer’s management. 



135 

Question: Is a group formed when shareholders jointly make recommendations to an issuer 

regarding the structure and composition of the issuer’s board of directors where (1) no discussion 

of individual directors or board expansion occurs and (2) no commitments are made, or 

agreements or understandings are reached, among the shareholders regarding the potential 

withholding of their votes to approve, or voting against, management’s director candidates if the 

issuer does not take steps to implement the shareholders’ recommended actions? 

Response: No. Where recommendations are made in the context of a discussion that does not 

involve an attempt to convince the board to take specific actions through a change in the existing 

board membership or bind the board to take action, we do not believe that the shareholders “act 

as a . . . group” for the purpose of “holding” securities of the covered class within the meaning of 

those terms as they appear in sections 13(d)(3) or 13(g)(3). Rather, we view this engagement as 

the type of independent and free exchange of ideas between shareholders and issuers’ 

management that does not implicate the policy concerns addressed by section 13(d) or section 

13(g).  

Question: Is a group formed if shareholders jointly submit a non-binding shareholder proposal 

to an issuer pursuant to Exchange Act Rule 14a-8 for presentation at a meeting of shareholders? 

Response: No. The Rule 14a-8 shareholder proposal submission process is simply another 

means through which shareholders can express their views to an issuer’s management and board 

and other shareholders. For purposes of group formation, we do not believe shareholders 

engaging in a free and independent exchange of thoughts about a potential shareholder proposal, 

jointly submitting, or jointly presenting, a non-binding proposal to an issuer in accordance with 

Rule 14a-8 (or other means) should be treated differently from, for example, shareholders jointly 

meeting with an issuer’s management without other indicia of group formation. Accordingly, 



136 

where the proposal is non-binding, we do not believe that the shareholders “act as a . . . group” 

for the purpose of “holding” securities of the covered class within the meaning of those terms as 

they appear in section 13(d)(3) or 13(g)(3). Assuming that the joint conduct has been limited to 

the creation, submission, and/or presentation of a non-binding proposal,558 those statutory 

provisions would not result in the shareholders being treated as a group, and the shareholders’ 

beneficial ownership would not be aggregated for purposes of determining whether the five 

percent threshold under section 13(d)(1) or 13(g)(1) had been crossed.  

Question: Would a conversation, email, phone contact, or meetings between a shareholder and 

an activist investor that is seeking support for its proposals to an issuer’s board or management, 

without more, such as consenting or committing to a course of action,559 constitute such 

coordination as would result in the shareholder and activist being deemed to form a group? 

Response: No. Communications such as the types described, alone and without more, would not 

be sufficient to satisfy the “act as a . . . group” standard in sections 13(d)(3) and 13(g)(3) as they 

are merely the exchange of views among shareholders about the issuer. This view is consistent 

with the Commission’s previous statement that a shareholder who is a passive recipient of proxy 

soliciting activities, without more, would not be deemed a member of a group with persons 

conducting the solicitation.560 Activities that extend beyond these types of communications, 

 
558  The conclusion reflected in this example assumes the Rule 14a-8 or other non-binding shareholder proposal 

is submitted jointly and without “springing conditions” such as an arrangement, understanding, or 
agreement among the shareholders to vote against director candidates nominated by the issuer’s 
management or other management proposals if the non-binding proposal is not included in the issuer’s 
proxy statement or, if passed, not acted upon favorably by the issuer’s board.  

559  Examples of the type of consents or commitments given in furtherance of a common purpose to acquire, 
hold (inclusive of voting), or dispose of securities of an issuer could include the granting of irrevocable 
proxies or the execution of written consents or voting agreements that demonstrate that the parties had an 
arrangement to act in concert.  

560  Amendments to Beneficial Ownership Reporting Requirements, Release No. 34-39538 (Jan. 12, 1998) [63 
FR 2854, 2858 (Jan. 16, 1998)]. 



137 

which include joint or coordinated publication of soliciting materials with an activist investor 

might, however, be indicative of group formation, depending upon the facts and circumstances. 

Question: Would an announcement or a communication by a shareholder of the shareholder’s 

intention to vote in favor of an unaffiliated activist investor’s director nominees, without more, 

constitute coordination sufficient to find that the shareholder and the activist investor formed a 

group? 

Response: No. We do not view a shareholder’s independently-determined act of exercising its 

voting rights, and any announcements or communications regarding its voting decision, without 

more, as indicia of group formation. This view is consistent with our general approach towards 

the exercise of the right of suffrage by a shareholder in other areas of the Federal securities 

laws.561 Shareholders, whether institutional or otherwise, are thus not engaging in conduct at risk 

of being deemed to give rise to group formation as a result of simply independently announcing 

or advising others—including the issuer—how they intend to vote and the reasons why.  

Question: If a beneficial owner of a substantial block of a covered class that is or will be 

required to file a Schedule 13D intentionally communicates to other market participants 

(including investors) that such a filing will be made (to the extent this information is not yet 

public) with the purpose of causing such persons to make purchases in the same covered class, 

and one or more of the other market participants make purchases in the same covered class as a 

direct result of that communication, would the blockholder and any of those market participants 

that made purchases potentially become subject to regulation as a group? 

 
561  For example, public announcement of a voting intention qualifies for the exclusion from the definition of 

solicitation under 17 CFR 240.14a-1(l)(2)(iv). 



138 

Response: Yes. To the extent the information was shared by the blockholder with the purpose of 

causing others to make purchases in the same covered class and the purchases were made as a 

direct result of the blockholder’s information, these activities raise the possibility that all of these 

beneficial owners are “act[ing] as” a “group for the purpose of acquiring” securities of the 

covered class within the meaning of section 13(d)(3). Such purchases may implicate the need for 

public disclosure underlying section 13(d)(3) and these purchases could potentially be deemed as 

having been undertaken by a “group” for the purpose of “acquiring” securities as specified under 

section 13(d)(3).562 Given that a Schedule 13D filing may affect the market for and the price of 

an issuer’s securities, non-public information that a person will make a Schedule 13D filing in 

the near future can be material.563 By privately sharing this material information in advance of 

the public filing deadline, the blockholder may incentivize the market participants who received 

the information to acquire shares before the filing is made.564 Such arrangements also raise 

investor protection concerns regarding perceived unfairness and trust in markets.565 The final 

 
562  While each group member individually bears a reporting obligation arising under Rule 13d-1(k)(2), a tippee 

would not become a member of a group, and thus would not incur a reporting obligation, until it makes a 
purchase of securities of the same covered class in response to having been tipped even if the tippee already 
is a beneficial owner of that class. 

563  See Alon Brav, Wei Jiang, Frank Partnoy, and Randall S. Thomas, Hedge Fund Activism, Corporate 
Governance and Firm Performance, 61 J. FIN. 1729 (2008) (finding on average an abnormal short-term 
return of 7% over the window before and after a Schedule 13D filing); Marco Brecht, Julian Franks, 
Jeremy Grant, and Hammes F. Wagner, The Returns to Hedge Fund Activism: An International Study, 
CENTER FOR ECONOMIC POLICY RESEARCH, Discussion Paper No. 10507 (Mar. 15, 2015). 

564  See, e.g., Susan Pulliam, Juliet Chung, David Benoit, and Rob Barry, Activist Investors Often Leak Their 
Plans to a Favored Few, WALL ST. J. (Mar. 26, 2014), available at 
https://www.wsj.com/articles/SB10001424052702304888404579381250791474792 (“Activists, who push 
for broad changes at companies or try to move prices with their arguments, sometimes provide word of 
their campaigns to a favored few fellow investors days or weeks before they announce a big trade, which 
typically jolts the stock higher or lower.”). 

565  For example, any near-term gains made by these other investors attributable to information about the 
impending filing may cause uninformed shareholders who sell at prices reflective of the status quo to 
question the efficacy of existing regulatory framework. Even though the demand to acquire shares in the 

 
 



139 

determination as to whether a group is formed between the blockholder and the other market 

participants will ultimately depend upon the facts and circumstances, including (1) whether the 

purpose of the blockholder’s communication with the other market participants was to cause 

them to purchase the securities and (2) whether the market participants’ purchases were made as 

a direct result of the information shared by the blockholder.   

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

a. Proposed Amendments 

The Commission proposed to amend Rule 13d-5 to expressly impute acquisitions made 

by a group member after the date of group formation to the group once the collective beneficial 

ownership among group members exceeds five percent of a covered class.566 Specifically, 

proposed Rule 13d-5(b)(1)(iii) would provide that a group under section 13(d)(3) will be deemed 

to have acquired beneficial ownership of equity securities of a covered class if any member of 

the group becomes the beneficial owner of additional equity securities of such covered class after 

 
covered class may increase as a direct result of the blockholder’s communications, and in turn increase the 
prices at which selling shareholders exit, such prices may be discounted in comparison to the price such 
shareholders would have realized had the information about the impending Schedule 13D filing been 
public. See, e.g. John C. Coffee, Jr. & Darius Palia, The Wolf at the Door: The Impact of Hedge Fund 
Activism on Corporate Governance, 41 J. CORP. L. 545, 596 (2016) (explaining that “the gains that 
activists make in trading on asymmetric information—before the Schedule 13D’s filing—come at the 
expense of selling shareholders [and] represent[ ] another wealth transfer”). Consequently, this 
informational imbalance could, to the extent some perceive it to be unfair, diminish trust in markets. See, 
e.g., Georgy Chabakauri et al., Trading Ahead of Barbarians’ Arrival at the Gate: Insider Trading on Non-
Inside Information (Colum. Bus. Sch. Rsch. Paper, Jan. 2022), available at 
https://ssrn.com/abstract=4018057 (finding a significant concurrence between purchases of stock by 
insiders of the issuer and purchases by an activist in the 60 days, and particularly in the last 10 days, 
preceding a Schedule 13D filing). 

566  As the Commission noted, groups may form at a time when a class of equity securities is not yet registered 
under section 12 or the aggregate beneficial ownership held by the membership in the group on the date of 
its formation is 5% or below of a covered class. See Proposing Release at 13870. Expressly capturing post-
formation acquisitions of beneficial ownership by group members therefore can become important for 
purposes of assessing whether a group intentionally tried to evade the reporting process, determining 
whether an amendment was due for a pre-existing Schedule 13D filing, and evaluating the availability of 
the section 13(d)(6)(B) exemption. See id. 



140 

the date of the group’s formation. Similarly, proposed Rule 13d-5(b)(2)(ii) would contain nearly 

identical language, with conforming changes to address circumstances in which a member of a 

group under section 13(g)(3) becomes the beneficial owner of additional equity securities of a 

covered class after the date of the group’s formation. The Commission noted that absent an 

express provision that would treat post-formation acquisitions of beneficial ownership by group 

members as acquisitions by the group, the Commission or other affected parties must prove the 

acquisition is attributable to the group.567  

b. Comments Received 

The Commission did not receive any comments on proposed Rule 13d-5(b)(1)(iii) and 

(b)(2)(ii). 

c. Final Amendments 

For the reasons set forth in the Proposing Release,568 we are adopting the text of Rule 

13d-5(b)(1)(iii) and (b)(2)(ii) substantially as proposed. We also are redesignating these 

provisions as Rule 13d-5(b)(1)(ii) and (b)(2)(i) and slightly modifying them to account for the 

possibility that group members may make acquisitions in furtherance of the group’s common 

purpose on the same day the group has been formed. Accordingly, the rule text will now attribute 

acquisitions by group members to the group at any time after the group has been formed rather 

than after the date on which the group has been formed. 

3. Proposed Rule 13d-5(b)(1)(iv) and (b)(2)(iii) 

a. Proposed Amendments 

 
567  Proposing Release at 13870. 
568  See id.141 

The Commission proposed amendments to Rule 13d-5 to carve out from the purview of 

proposed Rule 13d-5(b)(1)(iii) and (b)(2)(ii) intra-group transfers of equity securities of a 

covered class.569 Specifically, proposed Rule 13d-5(b)(1)(iv) would provide that a group under 

section 13(d)(3) will not be deemed to have acquired beneficial ownership in a covered class if a 

member of the group becomes the beneficial owner of additional equity securities in such 

covered class through a sale by, or transfer from, another member of the group. Proposed Rule 

13d-5(b)(2)(iii) would contain nearly identical language, with conforming changes to address 

circumstances in which a member of a group under section 13(g)(3) becomes the beneficial 

owner of additional equity securities in a covered class through a sale by, or transfer from, 

another member of the group. 

b. Comments Received 

The Commission did not receive any comments on proposed Rule 13d-5(b)(1)(iv) and 

(b)(2)(iii).  

c. Final Amendments 

For the reasons set forth in the Proposing Release, we are adopting the text of Rule 13d-

5(b)(1)(iv) and (b)(2)(iii) substantially as proposed, but redesignating these provisions as Rule 

13d-5(b)(1)(iii) and (b)(2)(ii). We also are slightly modifying the rule text to account for the 

possibility that group members may make intra-group transfers on the same day but after the 

time at which the group has been formed instead of “after the date of group formation.” 

D. Proposed Amendments to Rule 13d-6 to Create Certain Exemptions 

Congress granted the Commission the authority to issue exemptions from the application 

of sections 13(d) and 13(g). The Commission can, under section 13(d)(6)(D), exempt 

 
569  Id. at 13870-71. 



142 

acquisitions “as not entered into for the purpose of, and not having the effect of, changing or 

influencing the control of the issuer or otherwise as not comprehended within the purposes of 

[section 13(d)].”570 Congress similarly granted the Commission authority, under section 

13(g)(6), to exempt any person or class of persons from section 13(g) “as it deems necessary or 

appropriate in the public interest or for the protection of investors.”571 The Commission 

exercised this authority when it adopted Rule 13d-6, titled “Exemption of certain acquisitions.” 

Rule 13d-6 currently sets forth one exemption from section 13(d) for the acquisition of securities 

of an issuer by a person who, prior to such acquisition, was a beneficial owner of more than five 

percent of the securities of the same class as those acquired, provided certain conditions are 

met.572  

1. Proposed Amendments 

In the Proposing Release, the Commission proposed to exempt certain circumstances 

from resulting in a person being deemed to have acquired beneficial ownership of, or otherwise 

to beneficially own, equity securities of a covered class for purposes of sections 13(d) and 13(g). 

Specifically, the Commission proposed to amend Rule 13d-6 to: 

• Add new paragraph (c) to create an exemption from sections 13(d)(3) and 13(g)(3) for 

certain circumstances in which two or more persons take concerted actions with respect 

to an issuer or a covered class; and 

 
570  15 U.S.C. 78(m)(d)(6). 
571  15 U.S.C. 78(m)(g)(6). 
572  17 CFR 240.13d-6. 



143 

• Add new paragraph (d) to create an exemption from sections 13(d)(3) and 13(g)(3) for 

certain circumstances in which two or more persons enter into an agreement setting forth 

the terms of a derivative security. 

The Commission proposed these amendments to Rule 13d-6 to exempt certain actions 

taken by two or more persons from the scope of sections 13(d)(3) and 13(g)(3) if those actions 

do not have the purpose or effect of changing or influencing the control of an issuer and thus are 

not within the purpose of section 13(d). 

In light of the proposed amendments to Rule 13d-5, the Commission proposed to add 

new paragraph (c) to Rule 13d-6 to avoid potentially chilling communications among 

shareholders or impeding shareholders’ engagement with issuers where those activities are 

undertaken without the purpose or effect of changing or influencing control of the issuer (and are 

not made in connection with or as a participant in any transaction having such purpose or 

effect).573 Proposed Rule 13d-6(c) would provide that two or more persons would not be deemed 

to have acquired beneficial ownership of, or otherwise beneficially own, an issuer’s equity 

securities as a group solely because of their concerted actions related to an issuer or its equity 

securities, including engagement with one another or the issuer, provided they meet certain 

conditions. The Commission noted that such interactions, depending upon the level of 

coordination and degree to which the persons advocated in furtherance of a common purpose 

specified within the statutory framework, could be found to satisfy the “act as” a group standard 

under section 13(d)(3) or 13(g)(3) for the purpose of “holding” a covered class.574 To help ensure 

that the exemption is available only where such persons independently determine to take 

 
573  Proposing Release at 13872.  
574  Id. at 13873. 



144 

concerted actions, the proposed exemption would be available only if such persons are not 

obligated to take such actions (e.g., pursuant to the terms of a cooperation agreement or joint 

voting agreement).575 

In addition, the Commission proposed to add new paragraph (d) to Rule 13d-6, in light of 

proposed new Rule 13d-3(e), to avoid impediments to certain financial institutions’ ability to 

conduct their business in the ordinary course.576 Proposed Rule 13d-6(d) would have provided 

that two or more persons would not be deemed to have formed a group under section 13(d)(3) or 

13(g)(3) solely by virtue of their entrance into an agreement governing the terms of a derivative 

security. This exemption would have been available if the agreement is a bona fide purchase and 

sale agreement entered into in the ordinary course of business. Further, the exemption would 

have been available only if such persons did not enter into the agreement with the purpose or 

effect of changing or influencing control of the issuer, or in connection with or as a participant in 

any transaction having such purpose or effect. 

2. Comments Received 

Some commenters supported proposed Rule 13d-6(c),577 while others generally supported 

the proposal’s intent but expressed some reservations regarding Rule 13d-6(c) as proposed.578 

Some of those commenters generally indicated that the exemption (as proposed or as modified in 

 
575  Id. 
576  Id. 
577  See, e.g., letters from Anonymous (Mar. 13, 2022) (“Anonymous 10”); Kerrie Waring, Chief Executive 

Officer, ICGN (June 27, 2023) (“ICGN”); Kyle (Mar. 13, 2022) (“Kyle”); Perkins Coie. 
578  See, e.g., letters from Ceres (generally supporting the proposal, but stating that the rule, as proposed, could 

create some ambiguity as to the circumstances under which a group is formed and suggesting changes to 
the proposal); Jeff Mahoney, General Counsel, Council of Institutional Investors (Apr. 8, 2022) (“CII”) 
(same); ICI I (supporting the intent of the proposal, but stating that the exemption, as proposed, would be 
too narrow and could create additional uncertainty regarding the circumstances under which a group is 
formed); Shareholder Rights Group, Interfaith Center on Corporate Responsibility and The Shareholder 
Commons (Apr. 11, 2022) (“Interfaith Center, et al.”) (endorsing the comments in the letter from Ceres). 



145 

accordance with their recommendations) could provide clarity that would help prevent the 

chilling of communications among shareholders and shareholder engagement with issuers.579 In 

addition, one commenter appeared to support the inclusion of the “no obligation” to act concept 

in the second prong of the proposed exception and noted that when the institutional investors that 

are its members act jointly, they are acting independently, consistent with their fiduciary, legal, 

and other obligations to their fund participants and beneficiaries.580 

Other commenters opposed the proposed Rule 13d-6(c) exemption.581 Some commenters 

appeared to base their opposition on the argument that such an exemption would impliedly 

define what a group is by stating what it is not.582 Several commenters said that ambiguity in the 

proposed exemption could inhibit market participants’ ability to readily discern when a “purpose 

or effect of changing or influencing control” has been manifested.583 One commenter further 

submitted that the subjective “control intent” standard likely will create more uncertainty and 

confusion than it will resolve.584 One commenter indicated, in light of its comments on the 

 
579  See letters from Ceres; CII; ICGN; ICI I; Perkins Coie. 
580  See letter from CII. 
581  See, e.g., letters from B. Mason; CIRCA I; Dennis and Mary Spohn (June 25, 2023); EIM I; NBG; Prof. 

Edwards, et al.; Prof. Gordon; Prof. Webber; see also letter from SIFMA AMG (describing the proposed 
exemption as “problematic” and recommending that it not be adopted if the Commission also does not 
adopt the proposed amendments to Rule 13d-5). 

582  See letters from CIRCA I; Prof. Edwards, et al.; Prof. Webber. These commenters characterized the 
proposed exemption as setting forth the exclusive circumstances under which two or more persons may 
engage with one another or an issuer without being regulated as a group. One of these commenters further 
said that the Commission’s description of proposed Rule 13d-6(c) “indicate[d] that two shareholders of the 
same Covered Security that coordinate in any manner regarding the holding would be deemed to be a 
group” unless those shareholders qualify for the proposed exemption and that “[t]his is not consistent with 
the legislative history underlying the Williams Act.” See letter from CIRCA I. And, one of these 
commenters asserted that the effect of proposed Rule 13d-6(c), in tandem with the proposed amendments to 
Rule 13d-5, on shareholder communications could raise concerns under the First Amendment. See letter 
from Prof. Edwards, et al.; see also supra note 503 and accompanying text. 

583  See letters from EIM I; SIFMA AMG. 
584  See letter from EIM I. 



146 

proposed amendments to Rule 13d-5, that “[t]his rule [exemption] would chill the kind of 

shareholder communications that are central to a proxy contest” and stated that “[c]onsultation 

among fellow shareholders and discussion with the activist are . . . essential.”585 

A number of commenters made recommendations regarding proposed Rule 13d-6(c).586 

Some commenters requested that coordination with respect to Rule 14a-8 shareholder proposals 

be expressly made exempt.587 Several commenters requested that coordination with respect to 

“vote no” campaigns be expressly made exempt.588 Other commenters requested that it be made 

clear that the state of mind of one person would not be imputed to another for purposes of 

determining the availability of the exemption.589 Some commenters asked that the “in connection 

with [any change of control] transaction” language be removed from the exemption.590 One of 

those commenters stated that the “in connection with” language “might be read too broadly and 

have an unintended chilling effect of the sort of communications that routinely occur today.”591 

Some commenters indicated that the “indirectly obligated to act” standard was in need of clearly 

defined boundaries and/or should be deleted.592 One of these commenters asserted that the 

 
585  See letter from Prof. Gordon. 
586  See letters from AFREF; Ceres; CII; IAA; ICGN; ICI I; Interfaith Center, et al.; NBG; Prof. Edwards, et 

al.; SSC; STB. 
587  See letters from AFREF; Ceres; ICI I; Interfaith Center, et al. 
588  See letters from AFREF; Ceres; CII; Interfaith Center, et al. For example, one commenter expressed 

support for the recommendations of another commenter that “the Commission [should] clarify the Rule 
13d-6(c) exception to ensure it covers launching and participating in ‘vote no’ campaigns and 
communications with Schedule 13D filers post-filing.” See letter from AFREF (indicating support of a 
corresponding recommendation in the letter from CII). 

589  See letters from ICI I; Interfaith Center, et al.; SSC. 
590  See letters from Ceres; CII. 
591  See letter from CII. The commenter stated “that the positive step taken by adopting Rule 13d-6(c) could be 

undercut if there is a concern among investors that communicating with a Rule 13D ‘group’ could expose 
investors to being considered as a part of that ‘group.’” Id. 

592  See letters from Ceres; CII; ICI I. 



147 

“indirectly obligated” standard is vague and would engender additional uncertainty, and 

recommended that the Commission eliminate the proposed condition that “[s]uch persons, when 

taking such concerted actions, are not directly or indirectly obligated to take such actions.”593 

One commenter stated the Commission should consider the circumstances under which investors 

advocating for specific changes (e.g., board composition or diversity) might later be subjected to 

an inquiry about whether their communications or activities were protected by the exemptions 

given the terms in the proposal such as “solely,” “only,” “indirectly,” “purpose,” “effect,” and 

“contemplated.”594 

In response to the Commission’s solicitation for comments on proposed Rule 13d-6(d), 

several commenters expressed support for the proposal.595 One commenter stated that the 

proposal would “help investors understand when they could become subject to regulation as a 

‘group’ under these circumstances and avoid costly regulatory filings for activity in the ordinary 

course of business.”596  

Several other commenters opposed the proposed Rule 13d-6(d) exemption.597 Some of 

those commenters questioned whether the proposed exemption is necessary, and implied that the 

proposal’s inclusion in this rulemaking intimates that ordinary course of business transactions 

currently present risks of group formation.598 One of those commenters said that it was fairly 

settled that a bilateral transaction, negotiated at arm’s length, would not by itself be sufficient to 

 
593  See letter from ICI I. 
594  See letter from Prof. Edwards, et al. 
595  See letters from ICGN; O’Melveny & Myers; Perkins Coie. 
596  See letter from ICGN. 
597  See letters from ABA; EIM I; Engineer; Gabriel Morales, Retail Investor (Feb. 23, 2022) (“G. Morales”); 

IAA; ICI I; J. Kennedy; PSCM; SIFMA AMG; STB. 
598  See letters from ABA; ICI I; STB. 



148 

create a group absent other indicia of group status such as agreements to vote and other 

factors.599 Another of these commenters questioned whether this proposed provision or any 

explicit exemption is necessary or would instead create further uncertainty given that market 

participants have been entering into ordinary course derivatives transactions for years without 

treating these transactions as creating a group.600 One commenter expressed concerns regarding 

potential negative collateral effects of the exemption.601 This commenter said that proposed Rule 

13d-6(d) suggests that, “outside of the safe harbor,” the parties to a derivative security 

transaction may be deemed to form a “group” and implied that the exemption’s existence would 

create a risk of eroding the confidence of parties to any “ordinary” securities purchase and sale 

transactions that they do not constitute a “group.”602 

Some commenters indicated that few dealers or market participants would be able to rely 

on the exemption or that it would not serve its intended purpose.603 Another commenter similarly 

implied the exemption should not be adopted because “financial institutions would not just be 

apprehensive about, or marginally disincentivized from, entering into transactions with an 

activist counterparty” but instead “would avoid the risk altogether, and wholly refrain from 

engaging in these transactions that are economically useful and unrelated to the purposes of 

Section 13.”604 Another commenter echoed the concerns regarding the projected heightened level 

 
599  See letter from STB. 
600  See letter from ICI I. 
601  See letter from ABA. 
602  See id. 
603  See letters from EIM I; IAA; STB. One of these commenters further reasoned that the exemption is 

arbitrary and capricious because it would treat similarly situated parties differently inasmuch as only a 
subset of dealer transactions may be viewed as having contributed to an activist’s goals. See letter from 
EIM I. 

604  See letter from PSCM. 



149 

of risk arising in relation to the exemption and stated that the exemption would significantly 

impair ordinary-course derivatives transactions by dealers and financial institutions, even with 

counterparties who do not have any control intent.605 A similar criticism was offered by a 

commenter who explained that if the proposed exemption were adopted, an implication would be 

created that counterparties to a derivative transaction agreement that did not qualify for the 

exemption would be viewed as having formed a group.606 

Some commenters expressed doubt that proposed Rule 13d-6(d) would operate to only 

exempt legitimate business activity, suggesting the purpose of the proposed amendments 

regarding group formation and derivatives would be undermined.607 One of these commenters 

said that the proposal “sounds like this is an open invitation for high profile firms to actually 

work together as a group without [repercussion] of regulation.”608 Another of these commenters 

appeared to refer to proposed Rule 13d-6(d) and expressed concern that the proposed exemption 

“will get taken advantage of too easily and will obscure transactions that might substantially and 

singlehandedly affect a security.”609 A different commenter impliedly alluded to the undermining 

of the proposed change to Rule 13d-5(b) and speculated that no benefit of other proposed rule 

changes will be received if derivative position holders can claim an exemption under a different 

law.610 

3. Final Amendments 

 
605  See letter from STB. The commenter added that “the uncertainty caused by proposed Rule 13d-6(d) may 

increase risks for market participants in otherwise established financial transactions which may inhibit such 
activity.” Id. 

606  See letter from ABA. 
607  See letters from Engineer; G. Morales; J. Kennedy. 
608  See letter from J. Kennedy. 
609  See letter from Engineer. 
610  See letter from G. Morales. 



150 

We are adopting the proposed redesignation of current Rules 13d-6 and 13d-5(b)(2) as 

Rule 13d-6(a) and (b), respectively, for the reasons set forth in the Proposing Release and as 

discussed above.611 As discussed in more detail below, however, we are not adopting proposed 

Rule 13d-6(c) or (d). 

The Commission proposed Rule 13d-6(c) in connection with proposed Rule 13d-

5(b)(1)(i) and (b)(2)(i).612 As discussed above, we are not adopting those amendments.613 

Proposed Rule 13d-6(c) was intended to avoid potentially chilling communications among 

shareholders or impeding shareholders’ engagement with issuers where those activities are 

undertaken without the purpose or effect of changing or influencing control of the issuer (and are 

not made in connection with or as a participant in any transaction having such purpose or 

effect).614 Some commenters, however, expressed concern that the exemption would in fact have 

the opposite effect.615 This concern appears to be based on their view that the exemption would 

be too narrow and impliedly define what actions would be sufficient to constitute “acting as a 

group” (i.e., any actions that would not qualify for the proposed exemption).616 To address those 

concerns, and in light of the fact that we are not adopting the amendments to Rule 13d-5 that 

prompted the proposal of the exemption in Rule 13d-6(c), we are not adopting Rule 13d-6(c). 

We also believe that the discussion and guidance we provided in section II.C.1.c above will help 

 
611  See supra note 22 for a discussion of our redesignation of current Rules 13d-6 and 13d-5(b)(2) as Rule 13d-

6(a) and (b), respectively. 
612  Proposing Release at 13872.  
613  See supra section II.C.1. 
614  Proposing Release at 13872.  
615  See supra notes 585-591 and accompanying text. 
616  See supra notes 582-584 and accompanying text. 



151 

to address the Commission’s goals of preserving shareholder communications and engagement 

with issuers that are undertaken without the purpose or effect of changing or influencing control. 

Similarly, after considering the comments received regarding proposed Rule 13d-6(d),617 

we also do not believe adoption of that exemption is necessary. Under sections 13(d)(3) and 

13(g)(3), formation of a group requires that two or more persons be found to have acted as a 

group for the purpose of acquiring, holding, or disposing “of securities of an issuer.” Many cash-

settled derivatives, including those that were intended to be covered by proposed exemption, are 

not considered “securities of [the] issuer.” Those derivatives originate with persons other than 

the issuer and simply reference a class of an issuer’s securities. The holders of such cash-settled 

derivative securities are, therefore, generally not owed a fiduciary duty by the issuer and do not 

generally have legal standing to bring a claim against the issuer. Moreover, holders of such 

derivative securities are not, by virtue of those instruments, debt or equity holders of the issuer 

and are not entitled to a right to vote or dispose of any security “of an issuer” based on their 

investment in these derivatives. Absent the circumstances in which a holder of a derivative 

settled exclusively in cash that did not originate with the issuer could become a beneficial owner 

of the reference security,618 the Commission does not believe that persons who, in the ordinary 

course of business, acquire derivative securities settled exclusively in cash would generally be 

deemed to “act as a . . . group” under sections 13(d)(3) and 13(g)(3) with the financial 

institutions that sell such derivatives. Simply put, such persons cannot be found, as a matter of 

law, to have acquired, held, or disposed “of securities of an issuer” as that term is used in 

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

 
617  See supra notes 595-610 and accompanying text. 
618  See supra section II.B.3 for a discussion of those circumstances. 



152 

While investors in a cash-settled equity-based derivative security, in order to acquire the 

derivative security, may need to enter into an agreement governing the terms of such instrument 

with a financial institution that, in the ordinary course of its business, acts as a counterparty to 

such investors, that agreement, without more, does not result in group formation. We believe that 

a bilateral transaction, negotiated at arm’s length and entered into solely for commercial 

purposes, as described, would not by itself introduce facts sufficient to find that a group exists. In 

our view, an agreement between an investor in a cash-settled derivative security and a 

counterparty entered into for the ordinary course of business would fail to satisfy the “act as a . . . 

group” element in sections 13(d)(3) and 13(g)(3) absent other indicia of group status such as 

agreements to vote or other factors.  

To offset any risk exposure to that derivative security, including any obligations that may 

arise at settlement, the financial institution counterparty may, in practice, purchase securities in 

the reference covered class and hold such reference security for the duration of the agreement. 

While it may be true that but for the joint actions of the parties in entering into the agreement, 

that specific acquisition of beneficial ownership in the covered class by the financial institution 

would not have occurred, we believe that if the counterparty acts on its own initiative and not at 

the direction of the investor or otherwise on its behalf, there is no basis to assert that the investor 

and counterparty acted in concert and thus subjected themselves to regulation as a group. As 

such, entry into such an agreement will not implicate sections 13(d)(3) and (g)(3) because the 

two persons cannot be viewed as acting as a group even given the financial institution’s 

foreseeable acquisition of securities of a covered class. Assuming that the investor and the 

financial institution did not enter into the agreement with the purpose or effect of changing or 

influencing control of the issuer, the regulatory purposes of sections 13(d) and 13(g) would not 



153 

be furthered by treating the investor and the financial institution as members of a group under 

section 13(d)(3) or section 13(g)(3) solely by virtue of their entrance—for strictly commercial 

purposes and not for purposes of acquiring, holding, or disposing of a covered class—into that 

agreement. Accordingly, we have elected not to adopt proposed Rule 13d-6(d) as the exemption 

is not needed in order for such ordinary course of business transactions in derivative securities to 

freely occur. 

E. Amendment to Schedule 13D to Clarify Disclosure Requirements Regarding 

Derivative Securities 

Schedule 13D sets forth the information that beneficial owners reporting pursuant to 

section 13(d)(1) and Rule 13d-1(a) must disclose. Item 6 of Schedule 13D requires beneficial 

owners to “[d]escribe any contracts, arrangements, understandings or relationships (legal or 

otherwise) among the persons named in Item 2 [of Schedule 13D] and between such persons and 

any person with respect to any securities of the issuer” and sets forth a non-exclusive list of 

examples of such contracts, arrangements, understandings or relationships.619 Because cash-

settled derivative securities were not expressly included among these examples, questions may 

arise as to whether beneficial owners should report their holdings of these derivative securities as 

contracts “with respect to” an issuer’s securities under the rationale that (1) only a purely 

economic, but no legal, interest is generally held through such derivatives in any class of an 

issuer’s securities and (2) the issuer’s securities are only used as a reference security. Further, as 

discussed below, the current requirement could be interpreted as excluding the disclosure of 

cash-settled options not offered or sold by the issuer, or other derivatives not originating with the 

issuer, including other cash-settled derivatives such as SBS. 

 
619  17 CFR 240.13d-101, Item 6. 



154 

1. Proposed Amendment 

In the Proposing Release, the Commission proposed to amend Schedule 13D to clarify 

the disclosure requirements with respect to derivative securities held by a person reporting on 

that schedule. The Commission noted that, at present, the formulation “with respect to securities 

of the issuer” in Item 6 might be read to suggest that contracts, arrangements, understandings or 

relationships that only create economic exposure to the issuer’s equity securities or are otherwise 

considered synthetic could be excluded.620 Accordingly, to remove any ambiguity as to the scope 

of the required disclosures, the Commission proposed to revise Item 6 to expressly state that the 

use of derivative securities, including cash-settled SBS and other derivatives settled exclusively 

in cash, which use the issuer’s securities as a reference security are included among the types of 

contracts, arrangements, understandings and relationships which must be disclosed.621 The 

Commission also proposed the amendment to clarify that the derivative security need not have 

originated with the issuer or otherwise be part of its capital structure in order for a disclosure 

obligation to arise.622 The proposed amendment thus specified that a person filing a Schedule 

13D would be required to disclose interests in all contracts, arrangements, understandings, or 

relationships, including derivative securities, that use the issuer’s equity security as a reference 

security.  

 
620  Proposing Release at 13874. 
621  Id. To further minimize any potential ambiguity regarding what interests need to be disclosed, the 

Commission also proposed to eliminate the “including but not limited to” regulatory text that precedes the 
itemization of the instruments or arrangements covered. Id. 

622  Id. 



155 

2. Comments Received 

Commenters expressed various views on the proposed amendment to Item 6 of Schedule 

13D. Some commenters supported the proposed amendment.623 One commenter, which did not 

clearly support or oppose the proposal with respect to Item 6, appeared to indicate, in connection 

with a response to a request for comment with respect to Item 7, Exhibits, that Item 6 may 

already apply to cash-settled derivatives.624 

Other commenters opposed the proposed amendment to Item 6 of Schedule 13D, stating 

that requiring disclosure of SBS arrangements in Item 6 would be confusing and indicating that it 

did not believe this disclosure would serve any additional purpose.625 One commenter explained 

that determining which type of derivative security to include in different parts of Schedule 13D 

would present a logistical challenge.626 The commenter anticipated that the compliance-related 

challenge would arise, from an operational point of view, because of the regulatory inconsistency 

created by the exclusion of SBS from the beneficial ownership calculation under proposed Rule 

13d-3(e) but the inclusion of SBS under Item 6 (to the extent they use the issuer’s equity security 

as a reference security).627 The commenter expressed additional concern that requiring disclosure 

 
623  See, e.g., letters from AFL-CIO; D. Pierce; Mark C. 
624  See letter from STB. Specifically, the commenter said that the filing of the cash-settled derivative 

instruments as an exhibit to Schedule 13D is unnecessary because the “material terms of such arrangements 
. . . can be described in” Item 6. Id. The commenter also stated that the filing of such instruments as 
exhibits would present logistical difficulties if the proposed “compressed” timeframes for reporting 
Schedule 13D amendments are adopted. Id. 

625  See, e.g., letters from IAA; Slade Thornburg (June 25, 2023) (“S. Thornburg”). 
626  See letter from IAA. 
627  Id. According to the commenter, “[n]ot only would this be confusing, but we do not believe such disclosure 

would serve any additional purpose.” Id. 



156 

of SBS arrangements under Item 6 would negate the benefits to these holders of non-disclosure 

of counterparties in proposed Schedule 10B.628  

3. Final Amendment 

We are adopting the amendment to Item 6 of Schedule 13D as proposed. Specifically, we 

are amending Rule 13d-101 to expressly state that derivative contracts, arrangements, 

understandings, and relationships with respect to an issuer’s securities, including cash-settled 

SBS and other derivatives which are settled exclusively in cash, would need to be disclosed 

under Item 6 of Schedule 13D in order to comply with section 13(d)(1) and Rule 13d-1(a). We 

also are eliminating the “including but not limited to” language in Item 6 that currently precedes 

the itemization of the instruments or arrangements covered to remove any implication that 

additional interests may need to be disclosed.  

We believe that investors could benefit from a more complete disclosure of a Schedule 

13D filer’s economic interests in the relevant issuer, including economic interests via positions in 

cash-settled derivatives. For example, disclosure of any such cash-settled derivatives may help 

investors evaluate whether their interests with respect to the issuer’s securities are aligned with 

the Schedule 13D filer’s. In addition, disclosure of this information is consistent with other 

interests required to be disclosed under Item 6, such as, for example, “division of profits or loss.”  

 
628  Id. Specifically, the commenter noted that proposed “Schedule 10B . . . would not require identification of 

the swap counterparty” while “the instruction to Item 6 requires ‘naming the persons with whom such 
contracts, arrangements, understandings, or relationships have been entered into.’” Id. Schedule 10B is a 
proposed disclosure statement containing information regarding large SBS positions and other information 
that would be required by proposed 17 CFR 240.10B-101. The Commission proposed this disclosure 
statement in a proposing release titled Prohibition Against Fraud, Manipulation, or Deception in 
Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance 
Officers; Position Reporting of Large Security-Based Swap Positions, Release No. 34-93784 (Dec. 15, 
2021) [87 FR 6652 (Feb. 4, 2022)] (“Schedule 10B Proposal”). 



157 

Our adoption of the amendment also furthers the congressional purpose of section 

13(d)(1), as demonstrated by the legislative history accompanying Congress’ enactment of this 

provision.629 The disclosures required under Item 6 of Schedule 13D originated with a 

congressional mandate. Congress specified certain information within sections 13(d)(1)(A) 

through (E) that beneficial owners must report once they incur a filing obligation. In addition to 

the disclosure required under sections 13(d)(1)(A) through (E), Congress also authorized the 

Commission to require disclosure of “such additional information” it prescribes as “necessary or 

appropriate in the public interest or for the protection of investors.”630 Under section 13(d)(1)(E), 

Congress provided that a beneficial owner must report “information as to any contracts, 

arrangements, or understandings with any person with respect to any securities of the issuer, 

including [the] transfer of any of the securities, joint ventures, loan or option arrangements, puts 

or calls, guaranties of loans, guaranties against loss or guaranties of profits, division of losses or 

profits, or the giving or withholding of proxies.”631 Consistent with the mandate of section 

13(d)(1)(E), which forms part of the basis for the disclosure requirements of existing Item 6, this 

baseline disclosure requirement has existed in Schedule 13D since 1968.  

We note that one commenter opposed the proposed amendment to Item 6. The 

commenter stated, among other things, that requiring disclosure of SBS holdings in Item 6 would 

be confusing.632 Specifically, the commenter pointed out that proposed Rule 13d-3(e) would 

 
629  See Disclosure of Corporate Equity Ownership, H.R. Rep. No. 1711, at 8 (1968) (“The purpose of section 

13(d) is to require disclosure of information by persons who have acquired a substantial interest, or 
increased their interest in the equity securities of a company by a substantial amount, within a relatively 
short period of time.” (Emphasis added)). 

630  15 U.S.C. 78m(d)(1). 
631  Id. 
632  See supra notes 626-627 and accompanying text. 



158 

have excluded SBS and stated that there would be a “logistical challenge” associated with 

excluding SBS from the beneficial ownership calculation but including them in the narrative 

disclosure in response to Item 6.633 We disagree. Item 6 (as well as the other items in Schedule 

13D) already requires disclosure of various information that does not factor into calculating a 

Schedule 13D filer’s beneficial ownership.634 We do not believe that requiring disclosure in Item 

6 of SBS that may be excluded from a Schedule 13D filer’s beneficial ownership calculation 

would present any unique complications or be more complex than disclosure of this other 

information, and the commenter did not present any specific “logistical challenges” that could 

arise from this requirement. Moreover, we are not adopting proposed Rule 13d-3(e),635 further 

diminishing this concern about potential confusion. 

The commenter also noted that the proposed amendment to Item 6 would be unnecessary 

in light of, and could conflict with, the disclosure of SBS positions in proposed Rule 10B-1.636 

While the Commission will consider concerns about a potential conflict if it takes any final 

action with respect to proposed Rule 10B-1, we note that proposed Rule 10B-1 (along with 

proposed Schedule 10B) is intended to serve a purpose different from Item 6 of Schedule 13D. 

 
633  See id. 
634  For example, Item 6 requires a description of “any contracts, arrangements, understandings or relationships 

. . . with respect to any securities of the issuer, including . . . puts or calls.” 17 CFR 240.13d-101, Item 6. If 
any such “puts or calls” include call options with respect to the issuer’s covered class that are not 
exercisable within 60 days (and were not acquired with a change of control purpose or effect), then they 
would be required to be disclosed in response to Item 6, but they would not factor into the Schedule 13D 
filer’s beneficial ownership. See Rule 13d-3(d)(1)(i). Similarly, Item 4(a) of Schedule 13D requires a 
description of “any plans or proposals which the reporting persons may have which relate to or would result 
in . . . [t]he acquisition by any person of additional securities of the issuer, or the disposition of securities of 
the issuer.” 17 CFR 240.13d-101, Item 4(a). Although such plans for potential future acquisitions or 
dispositions of securities of the issuer could, if consummated, result in changes to the Schedule 13D filer’s 
beneficial ownership, they generally would not factor into the beneficial ownership amount reflected in the 
Schedule 13D filing in which such plans are disclosed. 

635  See supra section II.B.3. 
636  See supra note 628 and accompanying text. 



159 

The Commission proposed Rule 10B-1 to, among other things, provide market participants 

(including counterparties, issuers, and issuers’ stakeholders) and regulators with access to 

information that may indicate that a person (or a group of persons) is building up a large SBS 

position, and to alert market participants and regulators to the existence of concentrated 

exposures to a limited number of counterparties, which should inform those market participants 

and regulators of the attendant risks, allow counterparties to risk manage and lead to better 

pricing of the SBS with respect to transactions with persons holding large positions in those SBS 

(as a result of all market participants having access to the information about the positions).637 

Item 6 of Schedule 13D, on the other hand, is intended to implement section 13(d)(1)(E), where 

Congress specifically mandated that the disclosure statement filed would include information as 

to any contracts, arrangements, or understandings with any person with respect to any securities 

of the issuer, including the names of relevant parties, as part of its intent to require disclosures to 

security holders regarding persons with significant holdings. Thus, in light of that congressional 

mandate, we believe it is appropriate to require disclosure of such information pursuant to Item 6 

of Schedule 13D.  

F. Structured Data Requirement for Schedules 13D and 13G 

Currently, the EDGAR Filer Manual requires Schedules 13D and 13G to be filed 

electronically on the Commission’s EDGAR system in HTML or ASCII format.638 HTML and 

 
637  Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; 

Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large 
Security-Based Swap Positions, Release No. 34-93784 (Dec. 15, 2021) [87 FR 6652, 6667, 6678 (Feb. 4, 
2022)]. 

638  EDGAR Filer Manual (Volume II) version 67 (Sept. 2023) (“EDGAR Filer Manual”), at 5-1 (requiring 
EDGAR filers generally to use ASCII or HTML for their document submissions, subject to certain 
exceptions). Schedule 13D and 13G filers are required, by rule, to comply with the requirements of the 
EDGAR Filer Manual. See 17 CFR 232.301 (“Filers must prepare electronic filings in the manner 
prescribed by the EDGAR Filer Manual, promulgated by the Commission, which sets forth the technical 
formatting requirements for electronic submissions.”). 



160 

ASCII are both unstructured data languages; thus, the disclosures reported on Schedules 13D and 

13G are not currently machine-readable.639 As a result, information disclosed on Schedules 13D 

and 13G is generally more difficult for investors and other market participants to access, 

compile, and analyze as compared to information that is submitted in a machine-readable data 

language. 

While the majority of EDGAR filings under the Commission’s rules are submitted in 

HTML or ASCII, certain EDGAR filings are submitted using machine-readable, XML-based 

languages that are each specific to the particular EDGAR document type being submitted.640 

This includes filings that, like Schedules 13D and 13G, are submitted by individuals and entities 

other than the registrant of the class of securities.641 For these EDGAR XML filings, filers are 

typically provided the option to either submit the filing directly to EDGAR in XML, or manually 

input their disclosures in a fillable web form as part of an online web application developed by 

the Commission that converts the completed form into an EDGAR-specific XML document.  

1. Proposed Amendment 

In the Proposing Release, the Commission proposed to require that beneficial ownership 

reports on Schedules 13D and 13G be filed using a structured, machine-readable data language. 

In particular, the Commission proposed to require that Schedules 13D and 13G be filed in part 

using an XML-based language specific to Schedules 13D and 13G (“13D/G-specific XML”).642 

 
639  The term “machine-readable” is defined in 44 U.S.C. 3502 as “data in a format that can be easily processed 

by a computer without human intervention while ensuring no semantic meaning is lost.” 
640  See Securities and Exchange Commission, Current and Draft Technical Specifications, available at 

https://www.sec.gov/edgar/filer-information/current-edgar-technical-specifications. 
641  Examples include the section 16 beneficial ownership reports (Forms 3, 4, and 5) and Form 13F. See id. 
642  The Commission noted that this would be consistent with the approach used for other XML-based 

structured data languages created by the Commission for certain EDGAR Forms, including the data 
languages used for reports on each of Form 13F, Form D and the section 16 beneficial ownership reports 
(Forms 3, 4, and 5). Proposing Release at 13874, n. 154.161 

For both Schedules, all disclosures, including quantitative disclosures, textual narratives, and 

identification checkboxes, would be structured in 13D/G-specific XML under the proposal, with 

the exception of the exhibits to the Schedules, which would remain unstructured. The 

Commission stated that a structured data requirement for the disclosures reported on Schedules 

13D and 13G would greatly improve the accessibility and usability of the disclosures, allowing 

investors to access, aggregate and analyze the reported information in a much more timely and 

efficient manner.643 

2. Comments Received 

Commenters largely supported the proposed structured data requirement for Schedules 

13D and 13G.644 Other commenters objected to the proposed structured data requirement for 

Schedules 13D and 13G, with one commenter expressing concern that the proposed structured 

data requirement would be unduly burdensome for small beneficial owners.645 

Some of the supporting commenters asserted that the proposed structured data 

requirement would improve the fairness and transparency of the markets.646 One commenter 

asserted that the proposal would be a fundamental step toward ensuring that the beneficial 

ownership reporting requirements remain modern and comprehensible.647 One commenter noted 

 
643  Id. at 13875. These considerations are generally consistent with objectives of the Financial Data 

Transparency Act of 2022, which directs the establishment by the Commission and other financial 
regulators of data standards for collections of information. Such data standards must meet specified criteria 
relating to openness and machine-readability and promote interoperability of financial regulatory data 
across members of the Financial Stability Oversight Council. See James M. Inhofe National Defense 
Authorization Act for Fiscal Year 2023, Pub. L. 117-263, tit. LVIII, 136 Stat. 2395, 3421-39 (2022). 

644  See, e.g., letters from Aaron Leonard (June 28, 2023); Anonymous 12; Benjamin Ng (Feb. 21, 2022) (“B. 
Ng”); Convergence; David Kraft (June 26, 2023); FundApps; HMA I; IAA; ICI I; J. Kennedy; J. Pieper; J. 
Soucie; Mike Slavens, Retail Investor and Mechanical Engineer (Feb. 19, 2022) (“M. Slavens”); Mark C.; 
P. Worts; Todd; XBRL US (Apr. 11, 2022) (“XBRL”). 

645  See, e.g., letter from A. Day; see also letters from B. Mason; S. Thornburg. 
646  See letters from Anonymous 12; J. Kennedy; M. Slavens. 
647  See letter from B. Ng. 



162 

that the proposed structured data requirement would not impose significant costs to beneficial 

owners of more than five percent of a covered class and stated that the requirement would allow 

the Commission to make use of advancing technologies in order to reduce costs to taxpayers and 

more speedily provide the public with the information it needs to accurately assess the conditions 

of the market.648 Another commenter asserted that the proposal would enable the Commission to 

process filings instantaneously and therefore allow for real-time analysis and if necessary, 

remedial action and stated that any data which cannot be easily processed by machines will 

become largely useless as the century progresses.649 In addition, one commenter agreed with the 

Commission that tagging the data reported on Schedules 13D and 13G will make it easier for 

investors and other market participants to access, compile, and analyze this information and 

expressly supported the Commission’s development of electronic “style sheets” that, when 

applied to the reported XML data, would represent that data in “human readable” format.650 

Some of the supporting commenters also made recommendations to the Commission 

regarding the proposed structured data requirement. One commenter requested that the 

Commission release the taxonomy at least six months in advance of the date by which any 

revised Schedules 13D or 13G must be filed so that reporting persons can incorporate the 

taxonomy into their filing system.651 Similarly, other commenters recommended that the 

Commission provide for a test period in which reporting persons can make test filings using the 

taxonomy in advance of the date by which the revised schedules must be filed.652 Finally, one 

 
648  See letter from J. Soucie. 
649  See letters from Convergence; FundApps. 
650  See letter from ICI I. 
651  Id. 
652  See letters from IAA; ICI I. 



163 

commenter suggested that the Commission opt for the XBRL data language, rather than creating 

an XML schema designed specifically for beneficial ownership reporting as proposed.653 

3. Final Amendment 

We are adopting the structured data requirement for Schedules 13D and 13G as proposed. 

Specifically, we are replacing the current HTML or ASCII requirement for Schedules 13D and 

13G in the EDGAR Filer Manual with a requirement to use 13D/G-specific XML for the 

disclosures reported on those Schedules.654 As is the case with other EDGAR XML filings, 

reporting persons will be able to, at their option, submit filings directly to EDGAR in 13D/G-

specific XML or use a web-based reporting application developed by the Commission that will 

generate the Schedule in 13D/G-specific XML in connection with the submission of the filing to 

EDGAR.655 

In adopting the structured data requirement as proposed, we note that commenters 

overwhelmingly supported the proposal.656 Although one commenter opposed the proposed 

structured data requirement on the basis that it would be unduly burdensome for small beneficial 

owners,657 we believe the web-based reporting application that will generate the Schedule in 

 
653  See letter from XBRL. The commenter asserted that, among other purported benefits, an XBRL-based 

standard will result in significantly lower costs and efficiencies across both reporting entities and data 
users, consistent datasets that can be easily commingled with other datasets, and enhanced validation 
capabilities to improve data quality. Id. 

654  Section 13(g)(5) of the Exchange Act provides, in part, that “the Commission shall take such steps as it 
deems necessary or appropriate in the public interest or for the protection of investors . . . to tabulate and 
promptly make available the information contained in any report filed pursuant to this subsection in a 
manner which will, in the view of the Commission, maximize the usefulness of the information to . . . the 
public.” 15 U.S.C. 78m(g)(5). The requirement proposed in this section would be consistent with this 
mandate. Although this statutory language applies only to beneficial ownership reports filed pursuant to 
section 13(g)—i.e., a Schedule 13G filed by an Exempt Investor—we believe these public benefits would 
be furthered by applying the requirement proposed in this section to all Schedule 13D and 13G filers. 

655  In addition, the Commission’s staff intends to develop electronic “style sheets” that, when applied to the 
reported XML data, will represent that data in human-readable form on EDGAR.  

656  See supra section II.F.2. 
657  See supra note 645 and accompanying text. 



164 

13D/G-specific XML should serve to reduce the burden of preparing a Schedule 13D or 13G for 

small beneficial owners (and other Schedule 13D and 13G filers), as compared to the current 

system whereby beneficial owners generally use third-party software to prepare their Schedule 

13D or 13G.658 In addition, because 13D/G-specific XML lends itself more readily to the 

development of a web-based reporting application on EDGAR than XBRL does, we believe 

13D/G-specific XML is more suitable than XBRL for structuring Schedules 13D and 13G.659 In 

response to commenters requesting a test period for the revised Schedules and requesting a 

taxonomy (i.e., schema) release at least six months before compliance is required, we are 

providing an extended voluntary compliance period during which the schema will be publicly 

available.660 The compliance period is discussed in further detail in section II.G below. 

G. Compliance Dates 

The Commission did not propose a transition period for any of the Proposed 

Amendments. Some commenters suggested, however, that the Commission should provide for an 

extended compliance period with respect to the proposed structured data requirement for 

Schedules 13D and 13G.661 Based on this feedback, we believe that an extended transition period 

for compliance with the structured data requirement is appropriate. As such, compliance with the 

structured data requirement for Schedules 13D and 13G will not be required until December 18, 

2024. We welcome, however, early compliance with this requirement, and Schedule 13D and 

 
658  For example, this web-based reporting application will contain and prompt a beneficial owner to respond to 

the Schedule 13D and 13G disclosure requirements, as set forth in Rules 13d-101 and 13d-102, 
respectively, which should make the preparation process more streamlined and convenient. 

659  See also infra section IV.D.3. 
660  See supra notes 651-652 and accompanying text. 
661  See id. 



165 

13G filers may begin to voluntarily comply with the structured data requirement on December 

18, 2023.  

In order to further reduce some of the potential burdens that commenters described, 

compliance with the revised Schedule 13G filing deadlines under Rules 13d-1 and 13d-2 will not 

be required before September 30, 2024. Thus, notwithstanding the fact that the final amendments 

will become effective on February 5, 2024, beneficial owners will continue to be required to 

comply with the current Schedule 13G filing deadlines through September 29, 2024. Beginning 

on September 30, 2024, however, beneficial owners will be required to comply with the revised 

Schedule 13G filing deadlines. For example, under Rule 13d-2(b), as amended, a Schedule 13G 

filer will be required to file an amendment within 45 days after September 30, 2024, if, as of end 

of the day on that date, there were any material changes in the information the filer previously 

reported on Schedule 13G.   

III. Other Matters 

If any of the provisions of these amendments, or the application thereof to any person or 

circumstance, is held to be invalid, such invalidity shall not affect other provisions or the 

application of such provisions to other persons or circumstances that can be given effect without 

the invalid provision or application. 

Pursuant to the Congressional Review Act, the Office of Information and Regulatory 

Affairs has designated these amendments a “major rule,” as defined by 5 U.S.C. 804(2). 

IV. Economic Analysis 

A. Overview  

As discussed in section II, the final amendments generally shorten the filing deadlines for 

initial Schedule 13D and 13G filings, together with other changes described below. These filings 



166 

are required in accordance with sections 13(d) and 13(g) of the Exchange Act. Section 13(d) was 

enacted in 1968 with the intent to alert issuers and the marketplace to rapid accumulations of 

equity securities by persons who would then have the potential to change or influence control of 

the issuer.662 Section 13(g), subsequently enacted in 1977, was intended, together with section 

13(d), to provide a “comprehensive disclosure system of corporate ownership” applicable to all 

persons who are the beneficial owners of more than five percent of a covered class.663 

The efficiency of financial markets rests on material information becoming public in a 

timely fashion. In addition to protecting investors, greater availability of information allows 

securities prices to better reflect their issuers’ fundamental value, and ultimately promotes capital 

formation. The widespread enactment of laws and regulations that restrict the use of information 

obtained by virtue of insider status, as well as regulations that restrict selective disclosure to 

certain persons in the absence of public disclosure, point to the public-good nature of rules 

requiring public disclosure. 

This same principle motivates the requirement to disclose beneficial ownership of 

significant shareholders with the potential to change or influence control of the issuer. 

Knowledge of who is influencing control is highly material.664 Investors benefit from this 

information just as they benefit from material information regarding their investments more 

broadly. The five-business day deadline balances the interest of investors to be in possession of 

material information with the interest of investors seeking changes in control that may benefit 

 
662  See H.R. Rep. No. 1711, at 8 (1968).  
663  See S. Rep. No. 114, at 14 (1977). 
664  For the purpose of this economic analysis, the term “significant shareholders” is used to represent persons 

with a large shareholding in a particular issuer. The terms “blockholders” and “significant stockholders” 
were used to represent such persons in the Proposing Release. 



167 

shareholders, and is longer than the filing deadline for other settings involving ownership 

changes, such as for Form 4 under Exchange Act section 16 reporting.665  

Moreover, as we discuss below, studies suggest that traders other than the filer may be in 

a position to become aware of a potential activist campaign and buy stock of the target issuer 

immediately prior to a Schedule 13D filing, thereby benefiting directly from foreknowledge of 

the filing rather than their own efforts.666 Shortened filing deadlines may lessen the opportunity 

for these traders to gain such an advantage, as discussed below, which could enhance trust in 

markets and thereby capital formation. Finally, shortening the deadline is expected to reduce 

overall informational asymmetries in the market. Both theoretical and empirical studies have 

connected information asymmetry, and in particular the presence of informed traders, to wider 

bid-ask spreads.667 We therefore expect shortening the initial Schedule 13D filing deadline to 

improve liquidity.668  

Shortening the initial Schedule 13D filing deadline will have costs. Specifically, activist 

investors will have less time in which to accumulate shares before the filing deadline and, 

therefore, before the price of the stock reflects their plans. This may reduce their expected profit, 

and accordingly some of the incentives for activism. However, although we cannot predict with 

 
665  Some commenters indicated that the Commission failed to appropriately justify the shortened filing 

deadlines or identify an associated market failure, or stated that the information asymmetry between a filer 
and the market is not a market failure or otherwise problematic. See, e.g., letters from AIMA; EIM I; IAA; 
ICM; Profs. Bishop and Partnoy I; Profs. Eccles and Rajgopal; Profs. Swanson, Young, and Yust; SIFMA; 
SIFMA AMG; TIAA. We agree that the initial information asymmetry between a prospective filer and the 
market is not a market failure because in its absence, the filer may not be sufficiently rewarded for the 
expenses of its efforts expended in information acquisition and in pursuing changes at the issuer, which 
often have market-level benefits. Nevertheless, an earlier resolution of this information asymmetry is 
expected to have the benefits discussed in this economic analysis. 

666  See infra section IV.C.1.a.iii. 
667  See infra section IV.C.1.a.iv. 
668  See id. 



168 

precision the magnitude of the ultimate effect on activism and how the overall markets and 

activists themselves will respond to these changes, we believe it is likely that the shortened 

deadline will not significantly reduce the level of activism as we expect most campaigns will not 

be affected by the amended deadline, based on our analysis of historical campaigns, and most 

activists will have ability to adapt to the shortened deadline through various alternatives.  

We are also, among other things, revising the filing deadlines for Schedule 13D and 13G 

amendments and amending Item 6 of Schedule 13D, which requires the disclosure of certain 

contracts, arrangements, understandings, and relationships, to remove any implication that a 

person is not required to disclose interests in all derivative securities that use a covered class as a 

reference security. Each of these final amendments may allow investors and other market 

participants to make better-informed decisions by accelerating the disclosure of information or 

expanding the amount of information disclosed. The final amendments also require that Schedule 

13D and Schedule 13G be filed using a structured, machine-readable data language, which may 

facilitate the extraction and analysis of information in the filings, and make technical changes to 

Regulation S-T associated with extending the filing “cut-off” time from 5:30 p.m. to 10 p.m., 

which may ease the compliance costs for filers. 

We are mindful of the costs and benefits of the final amendments.669 Below, we discuss 

in more detail the economic effects of the final amendments, including their anticipated costs and 

benefits and, integrated into that discussion, the likely effects of the final rules on efficiency, 

 
669  Section 3(f) of the Exchange Act [17 U.S.C. 78c(f)] requires the Commission, when engaging in 

rulemaking where it is required to consider or determine whether an action is necessary or appropriate in 
the public interest, to consider, in addition to the protection of investors, whether the action will promote 
efficiency, competition, and capital formation. Further, section 23(a)(2) of the Exchange Act [17 U.S.C. 
78w(a)(2)] requires the Commission, when making rules under the Exchange Act, to consider the impact 
that the rules would have on competition, and prohibits the Commission from adopting any rule that would 
impose a burden on competition not necessary or appropriate in furtherance of the Exchange Act. 



169 

competition, and capital formation.670 We also analyze the potential costs and benefits of 

significant alternatives to the final amendments. 

B. Baseline 

The baseline against which the costs, benefits, and the effects on efficiency, competition, 

and capital formation of the final amendments are measured consists of the current state of the 

market and the current regulatory framework. The economic analysis considers existing 

regulatory requirements, including recently adopted rules, as part of its economic baseline 

against which the costs and benefits of the final amendments are measured.671  

1. Current Schedule 13D and 13G Filing Requirements 

The current Schedule 13D and Schedule 13G filing requirements are discussed in detail 

in section II.A above.672 Briefly, an initial Schedule 13D is currently required to be filed within 

 
670  Several commenters raised concerns about the Proposing Release’s discussion of potential effects on 

efficiency, competition, and/or capital formation. See, e.g., Craig Lewis, Review of the Economic Analysis 
for Proposed Rule Amendments to Modernize Beneficial Ownership Reporting, exhibit to letter from EIM I 
(“Lewis Study I (exhibit to letter from EIM I)”) (stating that the discussion of efficiency, competition, and 
capital formation in the Proposing Release “appears to be an afterthought and glosses over or fails to 
address many important points”); see also letters from AIMA; B. Sharfman; Profs. Schwartz and Shavell I; 
Profs. Schwartz and Shavell II. Our analysis of potential effects on efficiency, competition, and capital 
formation has been revised and expanded from the Proposing Release and has been integrated into the 
discussion of the benefits and costs of the final amendments. 

671  See, e.g., Nasdaq v. SEC, 34 F.4th 1105, 1111-15 (D.C. Cir. 2022). This approach also follows 
Commission staff guidance on economic analysis for rulemaking. See Staff’s “Current Guidance on 
Economic Analysis in SEC Rulemaking” (Mar. 16, 2012), available at 
https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf (“The economic 
consequences of proposed rules (potential costs and benefits including effects on efficiency, competition, 
and capital formation) should be measured against a baseline, which is the best assessment of how the 
world would look in the absence of the proposed action.”); Id. at 7 (“The baseline includes both the 
economic attributes of the relevant market and the existing regulatory structure.”). The best assessment of 
how the world would look in the absence of the proposed or final action typically does not include recently 
proposed actions, because that would improperly assume the adoption of those proposed actions.  

672  Other disclosure requirements may also apply to significant shareholders. For example, persons deemed 
beneficial owners of more than 10% of any class of equity securities (other than certain exempted 
securities) registered under Exchange Act section 12 are also considered to be insiders for the purpose of 
Exchange Act section 16 and subject to the associated disclosure requirements. For example, these persons 
must file with the Commission an initial report on Form 3 either within 10 days after becoming an insider 

 
 



170 

10 days after any acquisition of beneficial ownership of a covered class that results in a person 

directly or indirectly being the beneficial owner of more than five percent of the covered class. 

Among other disclosures, the reporting person must describe, pursuant to Item 6 of Schedule 

13D, any contracts, arrangements, understandings, or relationships among the reporting persons 

or between the reporting persons and any other person with respect to any securities of the issuer. 

In addition, a Schedule 13D amendment must be filed “promptly” upon any material change in 

the facts reported in the Schedule 13D filing, inclusive of any amendments thereto.673 

The initial filing deadline for the initial Schedule 13G varies by investor category. QIIs 

and Exempt Investors must file an initial Schedule 13G within 45 days after the end of the 

calendar year in which their beneficial ownership exceeds five percent of a covered class at the 

end of the last day of that calendar year. Further, if a QII beneficially owns more than 10 percent 

of a covered class as of the last day of any month, then the initial Schedule 13G must be filed 

within 10 days after the end of that month. Passive Investors must file an initial Schedule 13G 

within 10 days of acquiring beneficial ownership of more than five percent of a covered class. 

For all Schedule 13G filers, if, as of the end of the calendar year, there are any changes in 

the information previously reported in a Schedule 13G filing, a Schedule 13G amendment must 

 
of an issuer that already has a class of equity securities registered under section 12, or upon the issuer’s 
initial registration of the class of equity security under section 12. 15 U.S.C. 78p(a)(2)(A)-(B). Also, 
acquisitions of ownership stakes exceeding certain dollar thresholds trigger the premerger notification 
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Public Law 94–435, 90 Stat. 
1383 (1976), as administered by the Federal Trade Commission and Department of Justice. In general, we 
do not expect these additional disclosure requirements to significantly affect the costs and benefits of the 
final rules. 

673  As noted supra in section II.A.3 the Commission has expressed that under the current standard, “[a]ny 
delay beyond the date the filing reasonably can be filed may not be prompt” and an amendment to a 
Schedule 13D reasonably could be filed in as little as one day following the change (citing In re Cooper 
Laboratories, Release No. 34-22171 (June 26, 1985)). Some commenters indicated that the requirement for 
Schedule 13D amendments to be made “promptly” has generally been understood to mean within two 
business days. See letters from EIM I; IAA. 



171 

be filed within 45 days after the end of that calendar year. In addition, QIIs must file a Schedule 

13G amendment within 10 days after the end of the first month in which their beneficial 

ownership either exceeds 10 percent of a covered class, or, once across that threshold, increases 

or decreases by more than five percent of the covered class. Similarly, Passive Investors must 

“promptly” file a Schedule 13G amendment upon acquiring beneficial ownership of more than 

10 percent of a covered class, or, once across that threshold, if they increase or decrease their 

beneficial ownership by more than five percent of the covered class. 

2. Market Trends 

There have been significant changes in the technological, financial market, and 

regulatory environment since the enactment of the Williams Act.674 In particular, various new 

technologies developed over this time period facilitate the filing process, including both the 

preparation and submission of a filing. For example, communications have become easier and 

faster over this time, facilitating the gathering of information to be disclosed and any necessary 

coordination among parties. Further, information technologies used to compile the necessary 

data and prepare and transmit filings may have helped to reduce the time required to produce and 

submit filings. Also, electronic submission relieves filers of the need to mail or hand deliver 

filings. On the other hand, as some commenters noted, some of the tasks necessary for filers’ 

preparation and submission of filings have not been automated or otherwise accelerated.675 

 
674  See Proposing Release at 13851. Several commenters identified trends that were not discussed in the 

Proposing Release or indicated that the economic analysis in the Proposing Release could have been 
enhanced by considering additional evidence regarding changes over time. See letters from Charlie Penner 
and Bob Eccles (Apr. 12, 2022) (“C. Penner and Prof. Eccles”); CIRCA I; CIRCA IV; ICM; Prof. Gordon; 
PSCM; SCG; Lewis Study I (exhibit to letter from EIM I) (requesting “evidence that efficiency 
enhancements have increased the pace at which investors build beneficial ownership positions”). In 
response to these comments, this discussion has been expanded relative to the discussion in the Proposing 
Release with respect to changes since the enactment of the Williams Act. See supra notes 138-141 and 
accompanying text. 

675  See infra notes 866-867 and accompanying text. 



172 

Further, as one commenter noted, information technologies have also facilitated easier and faster 

access to filings, which may reduce the time for the information in filings to reach market 

participants even under the same deadline.676 Modern information technologies and the faster 

pace of communication may also allow investors and other market participants to react more 

quickly to disclosures, such that they may benefit more from disclosures being made a few days 

earlier than they might have in earlier decades, when decision-making may have proceeded at a 

slower pace. 

In addition to the ease of communication, the introduction of electronic trading, new 

types of financial contracts and instruments, and advances in order-splitting and other trade 

execution optimization techniques, as well as the rise of dark pools,677 may facilitate an investor 

accumulating a large equity stake more quickly than at the time of the enactment of the Williams 

Act. On the other hand, we also recognize that accumulating significant ownership could instead 

be more difficult in the face of modern algorithmic and high-frequency trading, more 

sophisticated surveillance of equity trading and ownership by other traders, market participants, 

and issuers,678 and the defenses and tactics currently used by issuers with respect to potential 

unsolicited takeover bids or shareholder activism.679  

 
676  See letter from CIRCA IV. 
677  See letter from SCG. A dark pool is a private forum for trading securities. See also Order Competition 

Rule, Release No. 34-96495 (Dec. 14, 2022) [88 FR 128 (Jan. 3, 2023)] (for further discussion on dark 
pools). 

678  See letter from ICM. 
679  Researchers have found that the increased use of low-threshold poison pills within the last decade or two 

could increase the difficulty of accumulating an equity stake beyond a certain size. See, e.g., Ofer Eldar et 
al., The Rise of Anti-Activist Poison Pills (Working Paper, Jan. 2023), available at 
https://ssrn.com/abstract=4198367; Nicole Boyson & Pegaret Pichler, Hostile Resistance to Hedge Fund 
Activism, 32 REV. FIN. STUD. 771 (2019) (“Boyson & Pichler 2019 Study”). Commenters discussed an 
increased use of poison pills as well as a more general increase in anti-takeover or “anti-activist” defenses. 
See letters from CIRCA I; EIM III; ICM; Prof. Gordon; PSCM. 



173 

At least one study presents evidence that, despite variations in the number of filings from 

month to month and from year to year, the absolute number of initial or total Schedule 13D 

filings made per year did not increase overall from 1985 to 2012.680 Commission staff analysis of 

more recent filings supports the observation that the number of total filings made per year has 

not increased over recent decades; in fact, the number of Schedule 13D filings has decreased 

somewhat in the most recent decade.681 Further, according to academic research examining 

different time periods and subsets of filings from 1985 through 2018, there has been no 

significant change in the average level of beneficial ownership of a covered class reported in 

individual initial Schedule 13D filings over that time horizon.682 Commission staff analysis of 

 
680  See, e.g., Ulf von Lilienfeld-Toal & Jan Schnitzler, What is Special About Hedge Fund Activism? Evidence 

from 13-D Filings, Swedish House of Fin. Rsch. Paper No 14-16 (June 4, 2014), available at 
https://ssrn.com/abstract=2506704 (“Lilienfeld-Toal and Schnitzler 2014 Study”) (plotting, in Figure 1 
therein, the number of initial and total Schedule 13D filings per month from 1985 through 2012, and 
demonstrating substantial month-to-month variation and a slight overall downward trend overall in initial 
and total Schedule 13D filings). 

681  Staff reviewed the number of Schedule 13D and 13D/A filings on EDGAR each year from 1997 (the first 
full year after the phase-in of electronic filing was complete) through 2022, available at 
https://www.sec.gov/dera/data/dera_edgarfilingcounts, and found no clear trend in the number of these 
filings per year over the last decade, but found that the rate of Schedule 13D filings over the last decade 
was somewhat lower than the rate in the earlier part of the sample period. For example, for the years 1997 
through 2010, the average number of filings per year were approximately 2,800 and 5,200 for initial and 
amended Schedule 13D filings respectively, which are generally consistent with the monthly rates of filings 
reported for 1985 through 2012 in the Lilienfeld-Toal and Schnitzler 2014 Study. In contrast, for the years 
2011 through 2022, the average number of filings per year were roughly 1,400 and 4,100 for initial and 
amended Schedule 13D filings respectively. This decline is roughly commensurate with the decline in the 
number of publicly listed companies. Staff also reviewed the number of Schedule 13G filings on EDGAR 
each year from 1997 through 2022, from the same source, and found no clear trend in the number of such 
filings per year over this period. 

682  See, e.g., Lilienfeld-Toal and Schnitzler 2014 Study (based on data from all Schedule 13D filings from 
1985 through 2005, including data from paper filings obtained via Thomson Research); Lucian Bebchuk et 
al., Pre-Disclosure Accumulations by Activist Investors: Evidence and Policy, 39 J. CORP. L. 1, 14-17 
(2013) (“Bebchuk et al. 2013 Study”) (based on data from Schedule 13D filings by hedge funds from 1994, 
the advent of electronic trading, through 2007). Subsequent research on more recent samples of Schedule 
13D filings by hedge funds shows reported average ownership levels consistent with the Bebchuk et al. 
2013 Study. See, e.g., Alon Brav et al., Governance by Persuasion: Hedge Fund Activism and Market-
Based Shareholder Influence, OXFORD RSCH. ENCYCLOPEDIA OF ECON. AND FIN. (2022) (“Brav et al. 2022 
Study”) (based on data from Schedule 13D filings by hedge funds from 1994 through 2018). 



174 

more recent filings supports the observation that the average level of beneficial ownership 

reported in initial Schedule 13D filings has not meaningfully changed in recent decades.683  

There is also research that addresses whether other developments may have changed the 

significance of lower ownership stakes in an issuer’s securities over time. For example, some 

observers have stated that the increase in stock ownership by institutional investors, the rise of 

proxy advisory services,684 and regulatory and legal developments regarding shareholder 

communications may have made it easier for an investor with a lower ownership stake to 

influence other shareholders, and, ultimately, the issuer.685 On the other hand, others have stated 

that the increased presence of institutional investors may make it more difficult for an investor 

with a lower ownership stake to exert control, without the support of these institutional 

investors.686 Overall, it is unclear whether regulatory, legal, and market developments have led 

activist campaigns by investors with lower ownership stakes to become more or less effective 

over time.687 That said, researchers have noted that today’s market for corporate control, in 

 
683  See sections IV.B.3.a.i and ii below for details on the filings analyzed by staff. 
684  Proxy advisory firms (or proxy voting advice businesses) provide voting services that can help 

shareholders, primarily investment advisers and institutional investors, manage their substantive and 
procedural proxy voting needs with respect to the public companies they own, including assisting these 
shareholders in making their voting determinations on behalf of their own clients and handling other 
aspects of the voting process. See, e.g., Exemptions from the Proxy Rules for Proxy Voting Advice, Release 
No. 34-89372 (July 22, 2020) [85 FR 55082 (Sept. 3, 2020)]. 

685  See, e.g., John C. Coffee, Jr. & Darius Palia, The Wolf at the Door: The Impact of Hedge Fund Activism on 
Corporate Governance, 41 J. CORP. L. 545, 553-71 (2016); see also letter from SCG (stating that “activists 
today have more resources, often win the support of highly influential proxy advisors, can readily share 
their views on financial news networks, and have access to … modern financial instruments that they can 
use to postpone disclosure”). 

686  See, e.g., Ian Appel et al., Standing on the Shoulders of Giants: The Effect of Passive Investors on Activism, 
32 REV. FIN. STUD. 2720 (2019) (“Appel et al. 2019 Study”). 

687  It is difficult to measure how the effectiveness of activist campaigns may have changed over time because, 
among other things, the outcomes of campaigns are heterogeneous and thus difficult to compare, the costs 
of most campaigns are not observable, and the threat of a campaign can have significant effects without 
being associated with an observable campaign. Commenters expressed mixed views on whether activist 

 
 



175 

contrast to that at the time of the enactment of the Williams Act and the Commission’s original 

adoption of the related rules, prominently features investors with minority interests in issuers 

who seek to influence these issuers’ governance or corporate policies by convincing other 

shareholders to support their causes instead of pursuing direct control of issuers through majority 

ownership.688  

3. Affected Parties and Current Market Practices689 

The parties affected by the final amendments include: all investors that are required or 

potentially required to report their beneficial ownership of covered classes on Schedules 13D and 

13G; the issuers of covered classes; shareholders of these issuers who are not Schedule 13D or 

13G filers; and other investors, market participants, and issuers. Below we provide information 

about the current nature of Schedule 13D and Schedule 13G filings and filers, which has not 

changed markedly since publication of the Proposing Release. 

 
campaigns have become more or less effective over time. See, e.g., letters from WLRK II (describing an 
“increasing effectiveness of activist campaigns and their decreased cost”); Profs. Bishop and Partnoy I 
(stating that “the impact that shareholder activists are having on corporate America is modest and in 
decline” and citing a practitioner study “describing the number of board seats secured by activists as ‘lower 
than in recent years’” and “describing the number of activist campaigns in 2021 as ‘in line with 2020’s 
slower pace’”). 

688  See, e.g., Brav et al. 2022 Study; see also letter from Profs. Bishop and Partnoy I (stating that “public 
company boards are no longer monitored by hostile takeovers, so activism is the remaining recourse”). 

689  Commenters specifically suggested the Commission consider the interaction between the final amendments 
and the Short Position Reporting Proposal, its proposal relating to the reporting of securities loans, and the 
security-based swap reporting portion of the Schedule 10B Proposal. See letters from Profs. Bishop & 
Partnoy I; EIM IV at 4-5; ICI II at 7 n. 13; see also Reporting of Securities Loans, Release No. 34-94315 
(Feb. 25, 2022) [87 FR 11659]. These proposals, or portions of proposals, have not been adopted and thus 
have not been considered as part of the baseline here. To the extent those proposals or portions of proposals 
are adopted in the future, the baseline in those subsequent rulemakings will reflect the regulatory landscape 
that is current at that time. 



176 

a. Schedule 13D Filings 

i. Number of Filings, Filer Types, and Time to File 

During calendar year 2022, the Commission received a total of 5,179 Schedule 13D 

filings, including 1,161 initial filings and 4,018 amendments.690 Overall, these initial filings and 

amendments involved 2,194 unique lead filers.691 Additional details specific to the initial filings, 

including their breakdown and characteristics by filer type, are presented in Table 1.692  

 
690  These estimates are based on staff analysis of EDGAR filings. The Proposing Release reported that the 

Commission received 10,542 Schedule 13D filings (2,288 initial filings and 8,254 amendments) in calendar 
year 2020. As noted in the DERA Memorandum, based on further staff review of these reported statistics, 
we believe they included duplicate records, and that the actual number of unique Schedule 13D filings 
received in 2020 was 5,288 filings (1,148 initial filings and 4,140 amendments), which is similar to the 
counts provided for 2022 above. One commenter addressing the DERA Memorandum questioned whether 
data pertaining to other filing years used in the analyses in that memorandum include “similar double 
counting.” See letter from EIM IV. Staff reviewed to verify that duplicate records were not included in the 
statistics and analyses in the DERA Memorandum or in this economic analysis. 

691  This estimate is based on staff analysis of EDGAR filings. “Lead filer” indicates the filer that submits a 
filing to the Commission, though the same filing may include information about additional co-filers and 
their beneficial ownership of securities.  

692  These estimates are based on staff analysis of EDGAR filings. The “Prominent Activists” category is based 
on the classification of the filer as either (or both) (i) a member of the Insightia (previously Activist Insight) 
“Activist Top Ten” list in any of the 10 years (2014 to 2023) that this list has been published, which 
represent Insightia’s ranking of the most influential activists over the past year, based on the quantity, size, 
and performance of their activist investments; or (ii) a “Sharkwatch 50” activist in the FactSet 
SharkRepellent database as of 2021, which represents FactSet’s compilation of the 50 most significant 
activists based on, e.g., the number and impact of their campaigns as of that date. The “Other Institutions” 
category is based on filings by institutions (primarily partnerships, corporations, investment advisors, and 
banks) that do not fall in the “Prominent Activist” category. The “Other Individuals” category is based on 
filings that report holdings of individuals and no other filer type and that do not fall in the “Prominent 
Activist” category; filings that report holdings of individuals who are co-filing as affiliates or part of a 
group with institutions (none of whom fall in the “Prominent Activist” category) are included in the “Other 
Institutions” category. Information about the number of days from the trigger date to the filing date of the 
Schedule 13D and the beneficial ownership percentage reported in the Schedule 13D, respectively, are 
based on a subset of filings (about 98% of the filings) for which we were able to extract the required 
information. The “median ownership reported in filing” row represents the median, across filings, of the 
maximum beneficial ownership percentage separately reported in a filing and may thus understate the 
aggregate ownership of a group of co-filers. Based on hand-collection of aggregate ownership in a random 
subsample of 2021 filings, we estimate that this approach does not fully aggregate all of the ownership 
reported by a group of co-filers in approximately 7% of the filings. In contrast, alternative algorithms we 
considered to aggregate ownership reported in different fields in a given filing very often vastly overstated 
ownership due to the double-counting of shares whose beneficial ownership could be attributed to multiple 
affiliates. 



177 

Table 1 

Initial Schedule 13D Filings in 2022 by Filer Type 

 Prominent 
Activists 

Other 
Institutions 

Other 
Individuals 

All 
Filings 

Number of unique lead filers 22 720 252 994 

Number of initial filings 60 843 258 1,161 

Median calendar days from trigger 
date* to filing date 9 10 11 10 

Median ownership reported in filing 6.6% 15.0% 10.5% 13.0% 
* The trigger date is the date on which the investor has acquired beneficial ownership of more than 5% of a class 

of equity securities described in section 13(d)(1) of the Exchange Act and Rule 13d-1(i), or, for an investor 
previously eligible to file a Schedule 13G in lieu of a Schedule 13D pursuant to Rule 13d-1(b) or (c), the date on 
which the investor becomes ineligible to report on Schedule 13G. 

We present the breakdown of filer type in the initial Schedule 13D filings under the 

baseline in Table 1 to characterize the affected parties. We did not limit our analyses of costs and 

benefits to any of these categories.693 

A detailed day-by-day breakdown of the percentage of the filings made each day after the 

trigger date is provided in Figure 1 below.694 

 
693  See letter from EIM IV (stating that the categorization of filers by type in the DERA Memorandum implied 

that “activists (prominent or otherwise) warrant separate regulatory scrutiny”). This commenter also raised 
concerns about the reliability of the FactSet SharkRepellent database used to identify “prominent activists,” 
including whether the data is “accurate and current.” We note that the FactSet SharkRepellent database 
including the “Sharkwatch 50” is used, currently, by both academics (see, e.g., Ian Appel & Vyacheslav 
Fos, Short Campaigns by Hedge Funds (Working Paper, Feb. 2023), available at 
https://ssrn.com/abstract=3242516) and practitioners (see, e.g., the activist surveillance tool offered at 
Activist Surveillance, THE CONFERENCE BOARD, https://www.conference-board.org/proxyvoting) to 
identify prominent activists. We also note that the categorization “prominent activist” is used in the 
production of descriptive statistics that characterize Schedule 13D filings and the affected parties but does 
not contribute to key results or estimates of our analyses. Nevertheless, given this commenter’s concerns, 
staff revised its approach to identifying “prominent activists” by supplementing the “Sharkwatch 50” with 
an annual ranking of top activists published by Insightia (including a total of 34 “top ten” activists over 10 
years) to compile a broader list of “prominent activists.” See supra note 692. This revision resulted in the 
addition of five Schedule 13D filers from our 2011-2021 sample to the category of “prominent activists.” 

694  This figure is based on staff analysis of EDGAR filings and reflects the subset of filings (1,136 of the total 
1,161 filings reported in Table 1) for which required information could be extracted. 



178 

Figure 1. Days between trigger date and the filing of initial Schedule 13D filings in 2022  

 

About 71 percent of all of the initial Schedule 13D filings in 2022 were filed within the 

existing 10-day filing window (represented by the dark grey bars),695 with about 34 percent of 

the filings being made on the filing deadline.696 Approximately 29 percent of the initial Schedule 

13D filings, representing about 41 percent of all of the initial Schedule 13D filings that were 

filed by the current filing deadline, were filed within the amended five-business day deadline.  

 
695  We note that approximately 42% of the Schedule 13D filings in Figure 1 were made after the tenth day 

following the trigger date. However, not all of these filings are considered late by the Commission. By rule, 
the Commission accepts as timely any filing that, if the calendar due date falls on a weekend or holiday, is 
received by the next business day. 17 CFR 240.0-3(a) (“[I]f the last day on which [a filing] can be accepted 
as timely filed falls on a Saturday, Sunday or holiday, such [filing] may be [made] on the first business day 
following.”). Therefore, after accounting for weekends and holidays, we preliminarily estimate that about 
29% of the filings (represented by the light grey bars) were late. 

696  This statistic includes the 20.7% of initial Schedule 13D filings made on the 10th day after the trigger date 
(i.e., the dark gray bar for day 10 in Figure 1) as well as those filings made after the 10th day but still 
considered timely due to holidays or weekends (i.e., the dark gray portion of the bar for days 11-14 in 
Figure 1). See supra note 695. 



179 

ii. Types of Filings 

An initial Schedule 13D filing obligation is triggered by the acquisition of beneficial 

ownership of more than five percent of a covered class, which can be achieved through various 

means, including via the purchase of shares on the open market as well as the receipt of shares 

through events involving off-market transactions. Initial Schedule 13D filings are required in a 

number of different circumstances, only some of which reflect shareholder activism, as noted by 

commenters.697 As discussed further below, filings involving the acquisition of shares as a result 

of certain corporate actions and other off-market transactions (e.g., compensatory equity grants 

to executives) are less likely to be characterized as announcements of activist campaigns.  

Based on staff review of over a decade of Schedule 13D filings,698 we believe that the 

nature of transaction history disclosures, which are required pursuant to Item 5(c) of Schedule 

13D,699 provide a reasonable means of distinguishing, in a large sample, those filings that are 

likely to reflect the acquisition of beneficial ownership through corporate actions or other off-

market transactions as opposed to those that are more likely to represent activist campaigns.700 In 

 
697  See, e.g., letter from STB (stating that “the Commission should recognize that the investors who file on 

Schedule 13D are by no means all activist investors engaging in the types of activities the Williams Act 
seeks to regulate”). 

698  Staff analyzed initial Schedule 13D filings from EDGAR from calendar years 2011 to 2021 through 
programmatic text analysis and manual review. In particular, programmatic search terms were designed to 
identify text or data associated with transactions or with beneficial ownership obtained through various 
kinds of events (such as initial public offerings (“IPOs”) and equity-based compensation awards). 
Programmatic text analysis was also used to extract transaction history data reported in tabular form. 
Manual review of the extracted text and data and of the filings was used to better understand the nature of 
different filings and to what extent the extracted text and data were systematically related to the different 
types of underlying filings. 

699  See 17 CFR 240.13d-101, Item 5(c) (requiring reporting persons to “[d]escribe any transactions in the class 
of securities reported on that were effected during the past sixty days or since the most recent filing of 
Schedule 13D”). 

700  We also note that the nature of transaction history disclosures affects staff’s ability, in practice, to include 
filings in certain analyses. In particular, data on the share accumulation patterns of the filer could only be 
systematically extracted from filings when it was presented in tabular form, and such data is required for 
the analyses presented in Tables 5 and 6 below (in sections C.1.a.iii and C.1.b.i). 



180 

particular, for those filings for which we could not extract a history of transactions in tabular 

form, we found that most reported only one or two transactions, representing off-market transfers 

of shares.701 We found that these filings are typically associated with beneficial ownership 

acquired in events such as the consummation of negotiated mergers and acquisitions, IPOs, other 

restructurings, private placements, or compensation awards.702 We therefore categorize these 

filings as “corporate action filings.”703 In contrast, we found that filings that report a transaction 

history pursuant to Item 5(c) in tabular form are typically associated with the accumulation of 

shares in open-market trading through a series of multiple transactions and are more likely to 

discuss potential plans and proposals that are commonly viewed as characteristic of activist 

campaigns.704 We therefore categorize the filings for which we are able to extract a transaction 

 
701  This observation is based on staff review of initial Schedule 13D filings from EDGAR from calendar years 

2011 to 2021 through programmatic text analysis and manual review. In particular, staff used 
programmatic text analysis to extract potential transaction dates outside of any tabular disclosure by 
searching for any text in the format of a date that seemed to be accompanied by a price and/or a quantity of 
shares. Among the filings for which a tabular history of transactions was not extracted, no more than two 
potential transaction dates were extracted for about 70% of the filings. Upon manual review of the 
remaining 30% of the filings for which a tabular history of transactions was not extracted, staff found that a 
large number of the additional potential transaction dates that were programmatically extracted do not 
actually reflect transactions. We therefore believe that a significant fraction of these remaining filings also 
reflect no more than two transactions. 

702  This observation is based on staff review of initial Schedule 13D filings from EDGAR from calendar years 
2011 to 2021 through programmatic text analysis and manual review, including significant manual review 
of the disclosures pursuant to Item 3 of the Schedule 13D filings to confirm the source of the shares 
acquired. See supra note 698 for more detail on the analysis and review undertaken. 

703  While we label all of these filings as “corporate action filings” for simplicity, we acknowledge that some of 
these filings represent transfers that are not strictly related to corporate actions, such as bequests of shares, 
and that our classification methodology is subject to some possible error. For example, 3% of these filings 
reflected in Table 2 below are made by Prominent Activists, as described supra note 692, (representing 
28% of all of the filings by Prominent Activists in Table 1 above) and it is possible that such filings may 
represent activist campaigns incorrectly classified as corporate action filings. 

704  This observation is based on staff review of initial Schedule 13D filings from EDGAR from calendar years 
2011 to 2021 through programmatic text analysis and manual review, including significant manual review 
of the disclosures pursuant to Item 4 of the Schedule 13D filings regarding the purpose of the transaction. 
See supra note 731 for more detail on the analysis and review undertaken. Examples of plans and proposals 
that were considered characteristic of activist campaigns include potential discussions or recommendations 
with respect to board composition, other governance matters, business strategy, capital structure and 
dividend policies, and a potential sale process for the issuer or a segment of the issuer.181 

history in tabular form as “non-corporate-action filings,” which we view as more likely to 

involve activist campaigns, acknowledging that we may be somewhat over-inclusive in our 

application of the term “activist campaign.”705 We present a breakdown of the percentages of 

initial Schedule 13D filings in calendar years 2011 through 2021 that we characterize as “non-

corporate-action filings” or “corporate action filings” based on the nature of transaction histories 

extracted from the filings in Table 2.706 

Table 2 

Types of Initial Schedule 13D Filings in 2011-2021 

  Percentage 
of All 

Filings 

Breakdown by Filer Type 

 
Number 
of Filings 

Prominent 
Activists 

Other 
Institutions 

Other 
Individuals 

Non-Corporate-Action 
Filings* 

3,067 20% 28% 65% 7% 

Corporate Action 
Filings** 

12,657 80% 3% 67% 30% 

*  Filings for which tabular trading histories were extracted are categorized as “Non-Corporate-Action Filings” due 
to the results of our staff’s programmatic and manual review of such filings. See note 705 regarding some of the 
limitations of this approach. About 11% of these filings were filed late relative to the current deadline (see note 
706). 

** Filings for which tabular trading histories were not extracted are categorized as “Corporate Action Filings” due to 
the results of our staff’s programmatic and manual review of such filings. See note 703 regarding some of the 
limitations of this approach. About 34% of filings in this category were filed late relative to the current deadline 
(see note 706). 

The categorization of filings presented in Table 2 was also included by staff in the DERA 

Memorandum. One comment letter addressing the DERA Memorandum indicated that the 

 
705  In a manual review of these filings, our staff did observe many instances of beneficial ownership held for 

investment purposes, with no stated plans or proposals, which are nonetheless included in our category of 
non-corporate-action filings by virtue of their filing on Schedule 13D (rather than Schedule 13G) and their 
inclusion of a tabular transaction history. In general, our classification methodology is subject to some 
possible error. Further, a filer might not consider itself an “activist investor” or be viewed as such even if it 
is involved in what we label as a non-corporate-action filing and characterize as a potential activist 
campaign for purposes of this memorandum. 

706  These estimates are based on staff analysis of EDGAR filings, including programmatic text analysis to 
extract tabular trading histories. See supra note 692 regarding the filer type classifications. The 
classification of filings as late (in the notes accompanying the table) accounts for the effect of weekends 
and holidays. See supra note 695. 



182 

analysis presented in that memorandum (which is similar to analysis included in this economic 

analysis) was not replicable because it is “not based on publicly available information,” citing 

staff’s references to programmatic text analysis and manual review.707 To clarify, the analyses in 

the DERA Memorandum and this economic analysis are based on publicly available filings and 

datasets. The reliance of the staff’s analysis on programmatic text analysis is limited primarily to 

the extraction of trigger dates, the reported level of beneficial ownership, and the tabular trading 

histories (as discussed in this section) from public initial Schedule 13D filings from EDGAR. 

This data or other data that would allow us to understand the share accumulation patterns of 

filers is not available from any third-party sources that we are aware of, and our extraction of this 

data is not novel; other researchers have extracted similar transaction history data from public 

Schedule 13D filings for the purpose of academic studies.708 Further, the manual review (as well 

as certain additional programmatic text analysis) discussed in this section and elsewhere in this 

economic analysis is used to validate our methodologies and not to generate the results of the 

analyses. 

Another commenter addressing the DERA Memorandum raised concerns about potential 

errors in the classification of filings as “non-corporate-action filings” category, as acknowledged 

by staff in the DERA Memorandum, and questioned why the magnitude of any overstatement of 

this category is not quantified.709 In the discussion above, we acknowledge that some filings 

 
707  See letter from Profs. Bishop and Partnoy III. 
708  See, e.g., Pierre Collin-Dufresne & Vyacheslav Fos, Do Prices Reveal the Presence of Informed Trading?, 

70 J. FIN. 1555 (2015) (“Collin-Dufresne & Fos 2015 Study”); Yu Ting Forester Wong, Wolves at the 
Door: A Closer Look at Hedge Fund Activism, 66 MGMT. SCI. 2347 (2020) (“Wong 2020 Study”). 

709  See letter from EIM IV. That commenter also stated that the categorization of filings presented in the 
DERA Memorandum would, in some cases, result in “potential double counting” whereby “Schedule 13D 
filings with respect to a single M&A transaction would likely end up in both categories.” Id. We do not 

 
 



183 

classified as non-corporate-action filings do not state plans and proposals typical of activist 

campaigns. That said, these filings are still due consideration. That is, to the extent the share 

accumulation patterns reported in these filings would be affected by a shortened deadline, and to 

the extent these filings are associated with abnormal stock returns, they may still be important to 

consider in evaluating the costs and benefits quantitatively analyzed in this economic analysis. 

We also acknowledge above that some non-corporate-action filings may be incorrectly 

categorized as corporate action filings.710 While we acknowledge the potential noise in our data, 

we believe that any large dataset or classification approach applied to a large dataset would be 

subject to some degree of error. Another commenter suggested that we consider using an 

alternative database, stating that it “includes a more comprehensive dataset on non-corporate 

action filings and activist campaigns than that created by DERA.”711 Our initial dataset includes 

all Schedule 13D filings on EDGAR, so we expect it to be fully comprehensive. As discussed 

above, the subset of these filings that are categorized as non-corporate-action filings may not 

include every filing that some may consider to represent an “activist campaign.” However, it is 

not practical to extend the key analyses conducted later in this economic analysis to additional 

 
believe there is a risk of double-counting in this sample given that it is limited to initial Schedule 13D 
filings and each filing appears only in a single category. If a person that is a potential acquiror in an M&A 
transaction files an initial Schedule 13D while assembling an initial position, and then files a Schedule 13D 
amendment upon consummation of the acquisition of the issuer, only the initial Schedule 13D would 
appear (in a single category) in our analysis.  

710  One commenter suggested that staff “could have alternately analyzed a set of Schedule 13D filed by 
prominent activists to avoid assignment errors.” See Craig Lewis, Review of the Supplemental Data and 
Analysis on Certain Economic Effects of Proposed Amendments Regarding the Reporting of Beneficial 
Ownership, exhibit to letter from EIM IV (“Lewis Study II (exhibit to letter from EIM IV)”). We note that 
prominent activists are responsible for a minority of non-corporate-action filings (per Table 2) and that we 
do not believe it would be appropriate to limit our assessment of costs and benefits to this subgroup of filers 
given that filings by less prominent activist investors and filers that do not consider themselves to be 
“activist” investors are also due consideration and may be associated with similar types of costs and 
benefits. Further, it is not necessarily the case that filings by prominent activists are misclassified as 
corporate action filings, as many of these filers engage in a variety of activities which could include 
involvement in corporate actions of the types listed above.  

711  See letter from CIRCA IV (recommending the use of the 13D Monitor database). 



184 

filings because staff was, by definition, unable to systematically extract transaction history data 

for the filings classified as corporate action filings, and data on the share accumulation patterns 

of the filer are required for these analyses.712 We do not believe that potential misclassifications 

have a meaningful impact on the results or interpretation of the analyses in this economic 

analysis.713 

iii. Timing of Share Accumulation 

Because the final amendments will shorten the window between the trigger date and 

filing deadline for an initial Schedule 13D filing, we also consider current practices under the 

baseline with respect to the timing of the filer’s accumulation of shares during the filing window.  

As discussed above, for those initial Schedule 13D filings that we classify as “corporate 

action filings,” which represent about 80 percent of initial Schedule 13D filings (per the second 

row of Table 2), we found that most reported only one or two transactions representing off-

market transfers of shares.714 These transfers typically took place on or very close to the trigger 

date.715 We found that very few of these transfers occur following the fifth day after the filer716 

crosses the five percent threshold.717 

 
712  See Tables 5 and 6 below (in sections C.1.a.iii and C.1.b.i). 
713  For example, staff found that many filings by prominent activists that were categorized as “corporate action 

filings” did not involve the accumulation of shares on the open market during the filing window, which is 
why staff could not extract a tabular transaction history. This finding also means that the risk that the filer’s 
acquisition of its beneficial ownership interest could be affected by the shortened filing deadline is limited. 

714  See supra note 701. 
715  This observation is based on staff review of initial Schedule 13D filings from EDGAR from calendar years 

2011 to 2021 through programmatic text analysis (to extract potential transaction dates, as discussed supra 
note 701, and to extract trigger dates) and manual review. 

716  References to the term “filer” in this economic analysis are inclusive of the beneficial owner before the 
person actually made a Schedule 13D filing. 

717  References to a filer “crossing the five percent threshold” in this economic analysis mean that the filer just 
completed acquiring beneficial ownership totaling more than five percent of a covered class or otherwise 

 
 



185 

For initial Schedule 13D filings that we classify as “non-corporate-action filings,” we use 

data extracted from the filings to examine filers’ current patterns of share accumulation. We 

extracted such data from the 3,067 non-corporate-action filings from 2011 through 2021 

reflected in the first row of Table 2. We further refined the sample of filings to exclude late filers 

and filers with no beneficial ownership reported as of the filing date and to adjust for multiple 

filings on the same date.718 Our refinements resulted in a sample size of 2,370 non-corporate-

action filings, which we use for Figures 2, 3a, 3b, and Table 3 below. Figure 2 displays the 

percentage of non-corporate-action filings for which filers completed acquiring the total 

beneficial ownership reported in their initial Schedule 13D filing by the specified day after the 

trigger date.719   

 
triggered a responsibility to file an initial Schedule 13D. Based on staff analysis of EDGAR filings through 
programmatic text analysis (to extract potential transaction dates, as discussed supra note 701, and to 
extract trigger dates), we estimate that about 2% of the potential transaction dates extracted from the text of 
corporate action filings between 2011 and 2021 occurred between the fifth day after the filer crosses the 5% 
threshold and the subsequent filing date. However, upon manual review, we found that many of these dates 
do not actually reflect transactions (i.e., the dates were extracted because they seemed to relate to a number 
of shares and/or a price, but they reflect information other than specific transactions, as in the case of a 
summary of holdings as of the filing date that appears in the body of the filing). 

718  When multiple filings were made on the same date and pertain to the same issuer, only the filing reporting 
the largest stake is included in the analysis. 

719  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis (to 
extract trigger dates, the reported levels of beneficial ownership, and transaction histories, which were all 
used to determine share accumulation patterns; and to categorize filings, as discussed in the previous 
section). See supra section IV.B.3.a.ii. 



186 

Figure 2. Percentage of non-corporate-action filings from 2011-2021 for which filers 
complete share accumulation as of a given day by calendar days after trigger date 

 

The dark grey bars in Figure 2 represent filers that completed acquiring their total 

reported stake by the amended deadline, i.e., five business days after their trigger date.720 

Summing the dark grey bars of the figure,721 we find that about 80 percent of the filers 

completed acquiring their reported stake by the amended deadline. The remaining approximately 

20 percent of filers (represented in the light grey bars) continued accumulating shares after the 

amended deadline. 

We next explore the significance of additional accumulations of shares after the amended 

deadline. Figures 3a and 3b display, for the same sample of filings as in Figure 2, the percentage 

 
720  See supra note 695. 
721  Typically, five business days translates to seven calendar days after weekends are accounted for. 

Occasionally, five business days includes more than seven calendar days because of federal holidays. For 
instance, if an investor crosses the 5% threshold on a Friday and the following Monday is a federal holiday, 
then five business days will equate to 10 calendar days.  



187 

of filers that complete acquiring 90 percent and 75 percent, respectively, of their stake on the 

indicated day after the trigger date.722 

Figure 3a. Percentage of non-corporate-action filings from 2011-2021 for which filers 
achieve 90% of their total reported share accumulation as of a given day by calendar days 
after trigger date 

 

 
722  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis (to 

extract trigger dates, the reported levels of beneficial ownership, and transaction histories, which were all 
used to determine share accumulation patterns; and to categorize filings, as discussed in the previous 
section). See section IV.B.3.a.ii. As discussed above, we use the maximum ownership separately reported 
in a filing as our measure of the total reported ownership, and, in some cases (approximately 7% of all of 
the Schedule 13D filings in Table 2 above), this approach may understate the aggregate ownership of a 
group of co-filers. See supra note 692. Because this measure of total reported ownership is used as the 
denominator to determine the percentage accumulation by a given day in these figures, our estimate of the 
percentage of reported ownership that is accumulated after the fifth business day following the trigger date 
may be overestimated in some cases. For example, we manually reviewed all filings categorized in the light 
grey bars of Figure 3b (those with 25% or more of their reported ownership accumulated after the amended 
deadline) and determined that 1 out of 16 filings in the light grey bars, or 6% of these filings, would not 
have been categorized in this group if our algorithm to extract total reported ownership from the filing was 
as precise as our manual review of the documents. 



188 

Figure 3b. Percentage of non-corporate-action filings from 2011-2021 for which filers 
achieve 75% of their total reported share accumulation as of a given day by calendar days 
after trigger date 

 

The dark grey bars in Figures 3a and 3b represent filers that completed acquiring 90 

percent or 75 percent, respectively, of their reported stake by the amended deadline. Summing 

the dark grey bars of Figure 3a, we find that about 97 percent of the filers completed acquiring 

90 percent of their reported stake by the amended deadline, while the remaining three percent of 

filers (represented in the light grey bars) continued to accumulate shares constituting 10 percent 

or more of their reported stake after the amended deadline. Similarly, summing the dark grey 

bars of Figure 3b, we find that about 99 percent of the filers completed acquiring 75 percent of 

their reported stake by the amended deadline, while the remaining one percent of filers continued 

to accumulate shares representing 25 percent or more of their reported stake after that date. 

The number and percentage of non-corporate action filings with different degrees of 

accumulation from Figures 2, 3a, and 3b are summarized in Table 3.723 

 
723  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis. See 

supra notes 719 and 722. 



189 

Table 3 
Degree of Accumulation by Amended Deadline 

Non-Corporate-Action Filings of Initial Schedule 13D (2011-2021) 
 Percent of Stake Accumulated by Amended 

Deadline 
 (1) 

100% 
(full stake) 

(2) 
<100% 

 

(3) 
<90% 

subset of (2) 

(4) 
<75% 

subset of (3) 

Number of campaigns in sample 1,907 463 78 16 

Percent of campaigns in sample 80% 20% 3% 1% 

Average number of campaigns/year 173 42 7 1 

Column 1 of Table 3 (representing the same filings as those in the dark grey bars of 

Figure 2) presents information about campaigns in which the filer completed accumulating their 

shares by the amended deadline (five business days after crossing the five percent threshold). 

Column 2 (representing the same filings as those in the light grey bars of Figure 2) presents 

information about the remainder of the campaigns, in which the filer continued accumulating 

shares after the amended deadline. Columns 3 and 4 (representing the same filings as those in the 

light grey bars of Figure 3a and 3b respectively) present the subsets of the campaigns in Column 

2 in which the filer had accumulated less than 90 or 75 percent, respectively, of their stake by the 

amended deadline (i.e., 10 percent or 25 percent, respectively, or more of their stake was 

accumulated between the amended deadline and their actual filing date).724 

b. Schedule 13G Filings 

During calendar year 2022, the Commission received a total of 26,523 Schedule 13G 

 
724  The figures in Tables 3, 5, and 6 use the same methodology as in Table 2 and as discussed in section 

IV.B.3.a.ii for identifying non-corporate action filings. A different methodology, such as those proposed in 
some comment letters (see supra notes 710-711), would likely yield different campaign counts and 
percentages in Table 3.  



190 

filings, including 8,433 initial filings and 18,090 amendments.725 Overall, the initial filings and 

amendments involved 4,321 unique lead filers.726 Additional details specific to the initial filings, 

including their breakdown and characteristics by filer type, are presented in Table 4.727 

Table 4 

Initial Schedule 13G Filings in 2022 by Filer Type 

 
QII  

Exempt 
Investor  

Passive 
Investor  Total 

Number of unique lead filers* 567  1,340  793  2,633 

Number of initial filings* 4,660  1,508  2,222  8,433 

Median calendar days from trigger 
date** to filing date 40  45  10  39 

Median ownership reported in filing 6%  15%  6%  7% 

% filers also filing Form 13F 84%  10%  31%  30% 
*  The total numbers of unique lead filers and of initial filings reported in the table each differ from the sum across 

columns because the same filer may fall into multiple categories and filer type could not be determined for about 
0.5% of the filings. 

** For Passive Investors, the trigger date is the date on which the investor has acquired beneficial ownership of more 
than 5% of a covered class. QIIs and Exempt Investors each have different initial Schedule 13G filing trigger dates 
and filing deadlines. See section II.A.2 above for more detail. 

 
725  These estimates are based on staff analysis of EDGAR filings. The Proposing Release reported that the 

Commission received 44,059 Schedule 13G filings (12,838 initial filings and 31,221 amendments) in 
calendar year 2020. As noted in the DERA Memorandum, based on further staff review of these reported 
statistics, we believe they included duplicate records, and that the actual number of unique Schedule 13G 
filings received in 2020 was 22,080 filings (6,436 initial filings and 15,644 amendments), which are similar 
to the counts provided for 2022 above. 

726  This estimate is based on staff analysis of EDGAR filings. “Lead filer” indicates the filer that submits a 
filing to the Commission, though the same filing may include information about additional co-filers.  

727  These estimates are based on staff analysis of EDGAR filings. Information about the number of days from 
the trigger date to the filing date of the Schedule 13G and the beneficial ownership percentage reported in 
the Schedule 13G, respectively, are based on a subset of filings (about 95% of the filings) for which staff 
was able to extract the required information. We note that staff’s methodology for identifying the filer type 
associated with a given filing has been refined since the publication of similar statistics for 2021 in the 
DERA Memorandum. The Proposing Release reported that, at that time, it was impracticable to produce 
statistics on the median days to file for different types of filers. Our staff has since structured the underlying 
data into a more readily analyzable format and we have included these statistics in the table. See supra note 
692 for details on the extraction of percentage beneficial ownership data from filings. 



191 

Table 4 demonstrates that initial Schedule 13G filings are somewhat concentrated among 

QIIs, who represent about one fifth of the filers but are responsible for over half of the filings.728 

Per the second row of the table, QIIs are also more likely to report their ownership of securities on 

a quarterly basis on Form 13F, with 84 percent of QIIs filing a Form 13F (compared to 30 percent 

for all initial Schedule 13G filers).729 

C. Economic Effects of the Final Rules 

In this section, we discuss the anticipated benefits and costs of the final rules, some of 

which cannot be quantified for reasons discussed below. We considered all of these costs and 

benefits in their entirety. We have integrated our discussion of potential effects on efficiency, 

competition, and capital formation within our discussion of the other benefits and costs of the 

final amendments. Our analysis of the economic effects includes certain quantifiable elements 

based on historical data.730 These elements may provide insights into certain benefits and costs—

including with quantitative data and also with non-quantifiable benefits and costs—but those 

insights are conditional on, and constrained by, the reactions of market participants to the final 

amendments. Finally, we have indicated where quantitative data discussed in our analysis do not 

represent the Commission’s cost or benefit estimates of the final amendments. 

1. Shortened Initial Schedule 13D Filing Deadline 

The final amendment to Rule 13d-1(a) shortens the initial Schedule 13D filing deadline 

from 10 calendar days to five business days after the date of the acquisition that results in a 

 
728  Per the first row of the table, QIIs represent 567 out of 2,633 unique lead filers, or about 22% (567/2,633) 

of the unique lead filers. Per the third row of the table, QIIs are responsible for 4,660 out of 8,433 initial 
filings, or about 55% (4,660/8,433) of the initial filings. 

729  Institutional investment managers that use the United States mail (or other means or instrumentality of 
interstate commerce) in the course of their business and that exercise investment discretion over $100 
million or more in section 13(f) securities must file Form 13F. 

730  See infra section IV.C.1.a.iii, Table 5 and section IV.C.1.b.i, Table 6. 



192 

person’s beneficial ownership of a covered class exceeding five percent of that class. The final 

amendments to Rule 13d-1(e), (f), and (g) similarly shorten the initial Schedule 13D filing 

deadline for investors who are no longer eligible to file Schedule 13G in lieu of Schedule 13D. 

a. Benefits 

The disclosures required under Schedule 13D consist, among other matters, of 

information related to significant shareholders and potential changes of corporate control. An 

earlier filing deadline for Schedule 13D will allow information to be incorporated into securities 

prices sooner and allow market participants to make better-informed investment decisions. 

Shortened filing deadlines may lessen the opportunity for what we have termed “informed 

bystanders” to gain advantages over the average selling shareholder, as further discussed below, 

which could ultimately enhance trust in markets and thereby capital formation. Finally, we 

expect that shortening the deadline will reduce overall informational asymmetries in the market, 

thereby improving liquidity, which benefits all market participants, including activists. While we 

think the benefits to market participants arising from the final amendments will be significant, 

these benefits are not quantifiable.  

i.  Extent of Earlier Disclosure of Information  

This subsection provides some data about the extent of information that may be revealed 

to the market more quickly under the final amendments, as support for the discussion of benefits 

in the subsections that follow.731 As discussed in section IV.B.3 above, among initial Schedule 

13D filings that were timely filed in 2022 in accordance with the existing filing deadline, roughly 

 
731  See infra sections IV.C.1.a.ii through iv. 



193 

41 percent were already filed within the amended filing deadline.732 The final amendments may 

thus result in earlier filing for about 59 percent of timely Schedule 13D reports.  

For those initial Schedule 13D filings that would be filed earlier under the amended filing 

deadline, the amount of market-moving information that could be revealed more quickly under 

the final rules varies across filings. To better understand the extent of information that could be 

more quickly incorporated into market prices under a shortened filing deadline, we explore how 

the stock market reacts on and around Schedule 13D filing dates for different types of filings. 

Figure 4 presents the average pattern in abnormal returns733 for filings from 2011 through 2021 

that we classify as “non-corporate-action filings,” using the methodology described in section 

IV.B.3.ii.734 In order to align the trigger and filing dates across the filings reflected in the graph, 

we limit the filings included in the figure to those that used the full 10-day filing window to 

file.735  

 
732  About 71% of initial Schedule 13D filings are timely filed in accordance with the existing filing deadline. 

See section IV.B.3.a above. Our analyses of costs and benefits generally exclude the remaining roughly 
29% of filings, which are filed late based on the existing filing deadline, because it is difficult to predict 
how filers that are not in compliance with the current filing deadline will react to a change in this deadline. 

733  Throughout this subsection (and sections IV.C.1.a.iii and IV.C.1.b.i below, as well as statements in other 
sections referencing the results of the data analyses presented in these sections), an issuer’s “abnormal 
return” represents the difference between the issuer’s market stock return and the Center for Research in 
Security Prices (“CRSP”) value-weighted market index. We acknowledge that abnormal returns for a given 
issuer may be sensitive to the choice of benchmark and affected either positively or negatively by other 
market or issuer events during the horizon of the analysis, though the impact of such confounding effects 
may be reduced when looking at the average abnormal returns across many issuers. References in other 
subsections to “abnormal returns” in the context of academic studies reflect the definitions of this term in 
each individual study (which may use different models to compute benchmark or “normal” returns for the 
purpose of isolating the “abnormal” portion of the returns). 

734  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis as well 
as data from the CRSP database. 

735  Figure 4 reflects a total of 534 filings, in all of which filers used the full 10-day filing window to file. To 
arrive at this figure from the total 3,067 non-corporate-action filings in Table 2, we retained only one filing 
when multiple filings were made for the same issuer on the same day and limited the sample to filings for 
which stock return data is available. These restrictions led to a sample of 2,553 non-corporate-action 
filings. The additional requirement that the filer used the full 10-day filing window to file results in the 

 
 



194 

Figure 4. Cumulative abnormal return around filing date for “non-corporate-action 
filings” (from Table 2) from 2011-2021 that were filed 10 calendar days after trigger date 

 

Figure 4 demonstrates that the stocks of issuers that are the subject of these filings 

experience an abnormal return of roughly three percent from day seven—the approximate 

number of calendar days corresponding to five business days—following the trigger date to the 

day after the filing date.736 This pattern of returns suggests that, for this group of filings, there is 

market-moving information that is currently not fully incorporated into market prices as of the 

amended filing deadline, and which would be likely to be revealed earlier if similar filings were 

 
figure reflecting about 21% of this sample of 2,553 filings. If we instead consider the subset of the 2,553 
non-corporate-action filings that were filed after the amended filing deadline but not after the current filing 
deadline (i.e., the subsample that would be more likely to be affected by a change in the filing deadline), 
the figure reflects about 37% of this subsample of filings. Data on the abnormal returns between five 
business days after the trigger date to the actual filing date for additional subsets of non-corporate-action 
filings is presented in Table 5 below. 

736  The amended deadline corresponds to approximately 7.25 calendar days: (365.25 calendar days per year ÷ 
252 business days per year) × (5 business days). 



195 

made under the amended filing deadline.737 We estimate that about 43 percent of timely non-

corporate-action filings are currently filed by the amended filing deadline, such that the 

remaining 57 percent of timely non-corporate-action filings would be subject to earlier disclosure 

under the final amendments and are expected to generate the benefits discussed in the following 

subsections.738 

We next consider the filings that we classify as “corporate action filings.” The average 

pattern in abnormal returns for these filings from 2011 through 2021 is presented in Figure 5.739 

In order to align the trigger and filing dates across filings reflected in the graph, we again limit 

the filings included in the figure to those that used the full 10-day filing window to file.740 

 
737  One commenter stated that the DERA Memorandum included “no discussion of what may cause [the gains 

after the filing date in the figure], or, importantly, whether, if the filing period is shortened, the gains that 
the Commission labels as ‘abnormal’ in the five-day window prior to filing will simply shift to the period 
after the amended filing deadline.” See letter from EIM IV. We note that the pattern of some additional 
positive price movement, or price drift, after the filing date is consistent with what has been found in 
academic studies and that researchers generally use an event window including a period after the filing date 
(such as from 20 days prior to 20 days after a Schedule 13D filing date) to capture what is believed to be 
the full abnormal return associated with a Schedule 13D filing. See, e.g., Brav et al. 2022 Study. Such post-
disclosure abnormal return patterns have been found to be associated with a wide variety of types of 
corporate news. See, e.g., David Hirshleifer et al., Driven to Distraction: Extraneous Events and 
Underreaction to Earnings News, 64 J. FIN. 2289 (2009) (stating that “[i]n several kinds of tests, there is on 
average a delayed price reaction to news that has the same sign as the immediate response”). However, we 
continue to believe that it is reasonable to expect that, all else equal, an accelerated filing date would be 
likely to accelerate the returns between the amended filing date and the day after the current actual filing 
date (which, per Figure 4, is concentrated around the actual filing date itself) rather than the returns shifting 
to the period after the amended filing deadline because this abnormal return likely reflects the immediate 
market reaction to the filing. 

738  These estimates are based on staff analysis of EDGAR filings. The estimates are based on the same sample 
of non-corporate-action filings from 2011 through 2021 used in Figures 2, 3a, and 3b above (i.e., the 
sample refined to exclude late filers and filers with no beneficial ownership reported as of the filing date 
and to adjust for multiple filings on the same date). See supra note 718 and accompanying text. 

739  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis (to 
categorize filings, as discussed in section IV.B.3.a.ii above, and to extract the required dates) as well as 
data from the CRSP database. 

740  Figure 5 reflects a total of 1,492 filings, in all of which filers used the full 10-day filing window to file. To 
arrive at this figure from the total 12,657 corporate action filings in Table 2, as in the case of Figure 2, we 
retained only one filing in cases where multiple initial Schedule 13D filings were made on the same day for 
the same issuer. The figure is also limited to filings for which stock return data is available (generally, 

 
 



196 

Figure 5. Cumulative abnormal return around filing date for “corporate action filings” 
(from Table 2) from 2011-2021 that were filed 10 calendar days after trigger date 

 

Figure 5 demonstrates that, in contrast to the pattern observed for non-corporate-action 

filings, the vast majority of the market stock price reaction to corporate action filings occurred 

close to the day on which the filers crossed the five percent ownership threshold, triggering the 

requirement for a Schedule 13D filing. The limited market reaction between the amended 

deadline—five business days after the trigger date (or approximately seven calendar days)—and 

the day after the actual filing date implies that little market-moving information is revealed 

during this period. We did not conduct a systematic analysis to investigate potential explanations 

for this pattern of abnormal returns. However, it is possible that this pattern may reflect the 

existence of other disclosures about the associated events (outside of the Schedule 13D filing) 

 
issuers listed on the NYSE, NYSE American, NASDAQ, and NYSE Arca exchanges). These restrictions 
led to a sample of 6,125 corporate action filings. The additional requirement that the filer used the full 10-
day filing window to file resulted in the figure reflecting about 24% of this sample of 6,125 filings. If we 
instead consider the subset of the 6,125 corporate action filings that were filed after the amended filing 
deadline but not after the current filing deadline (i.e., the subsample that would be more likely to be 
affected by a change in the filing deadline), the figure reflects about 41% of this subsample of filings. 



197 

that are made public on or close to the trigger date.741 To the extent that the most value-critical 

information contained in the filing is already known to the market prior to the amended filing 

date (through legal means, such as other disclosures made outside the Schedule 13D), we do not 

expect the amended filing deadline to result in the earlier revelation of significant new 

information for corporate action filings. 

ii. Improved Information Content of Stock Prices  

The amended Schedule 13D initial filing deadline will get material information to 

investors faster. This will allow new information contained in Schedule 13D filings to be 

incorporated into market prices earlier,742 allowing investors and issuers to make better-informed 

decisions.  

Commenters agreed that the acceleration of filing deadlines would allow market prices to 

incorporate the information contained in a filing earlier,743 investors to make better-informed 

decisions,744 and issuers to make better-informed decisions in responding to the presence of a 

 
741  Staff reviewed a small number of individual filings and confirmed the existence of such disclosures, such 

as a Form 8-K disclosure on or within a day of the trigger date of a merger agreement or a bankruptcy, in 
the cases that were reviewed. However, we did not conduct more comprehensive or systematic analysis of 
such disclosures or other potential explanations for why the vast majority of the market stock price reaction 
for this group of filings occurred close to the trigger date and before the Schedule 13D was filed. 

742  One commenter stated that our use of the term “market efficiency” to describe the earlier incorporation of 
information in market prices were in fact references to “strong-form market efficiency wherein share prices 
fully reflect all public and private information” which is viewed “as an idealized and unobtainable 
standard” in contrast to semi-strong market efficiency (wherein prices reflect all public information). The 
commenter noted that “defining mispricing in terms of private information that is not currently reflected in 
share price is a misleading characterization of price formation that serves as an impractical basis for 
regulation.” See Lewis Study I (exhibit to letter from EIM I). Some commenters similarly questioned 
whether a delay in market prices reflecting a significant shareholder’s investment constituted a mispricing 
that warranted correction. See letters from AIMA; CIRCA I; Dodge & Cox; EIM I; Prof. Gordon; Profs. 
Schwartz and Shavell I. To avoid confusion, we no longer use the term “market efficiency” in this context, 
focusing instead on the earlier updating of market prices and resulting effects on decision-making (and 
thereby efficiency of resource allocation). We also no longer refer to prices that do not yet reflect the 
information in a Schedule 13D filing before it is filed as “mispricing.” 

743  See letters from AFREF; Nasdaq; TIAA. 
744  See letters from AFREF; HMA I; Hoak; Nasdaq; TIAA. 



198 

new significant shareholder.745 On the other hand, some commenters questioned whether a 

shortened filing deadline would enhance market efficiency or requested further evidence or 

analysis of the effects on market efficiency.746 

As suggested by a commenter,747 we have considered patterns in abnormal returns around 

Schedule 13D filings to better assess the potential effect of the accelerated filing deadline on 

market prices (and, thereby, on decision-making by market participants). We note that decision-

making and the efficiency of resource allocation are unlikely to materially improve with a 

shortened deadline for corporate action filings because, as discussed in the previous section, the 

vast majority of any market price reaction around the time of these filings seems, on average, to 

occur well before the amended deadline.748  

By contrast, we documented that for non-corporate-action filings there are, on average, 

meaningful abnormal returns between the amended filing deadline and the day after the filing 

date. 749 These abnormal returns patterns suggest that market-moving information is revealed 

during this period. A shortened deadline will accelerate the remaining market price reaction with 

respect to non-corporate-action filings, as investors incorporate the new information into their 

buying and selling decisions. Investors and issuers, with earlier access to the information and an 

updated stock price, may then be able to make better-informed investment and resource 

allocation decisions. At the level of the economy as a whole, better investment and resource 

 
745  See letters from NIRI; SCG. 
746  See letters from AIMA; Dodge & Cox; EIM I; Rice Management. 
747  See Lewis Study I (exhibit to letter from EIM I) (stating that “the Commission could have analyzed equity 

trading activity and abnormal returns around triggering and announcement dates to properly assess 
potential gains to market efficiency”). 

748  See supra section IV.C.1.a.i. 
749  See id. 



199 

allocation decisions by individual issuers and investors under the amended filing deadline may 

improve the efficiency of resource allocation overall.  

As discussed in the previous section, about 57 percent of timely non-corporate-action 

initial Schedule 13D filings, or about 122 filings of this type per year, are currently filed after the 

amended deadline.750 Based on this historical filing behavior, we expect the amended deadline 

may give rise to an earlier market reaction than would otherwise have been experienced for 

approximately this number of filings per year. Thus, investors, issuers, and other market 

participants may have access to updated stock prices and the information disclosed in a Schedule 

13D up to three days earlier for over 120 such events per year according to current estimates, 

allowing them to make better-informed decisions in each of those periods.   

Some commenters stated that the market cannot impound new information into a price if 

that information has not been developed, or more generally indicated that the benefits of a 

shortened deadline were predicated on investors not forgoing investments that may give rise to a 

Schedule 13D filing in response to the amended deadline.751 We continue to believe that, holding 

the content of the filings constant, amending the deadline will allow for more informed decision-

making and improve the information content of stock prices, with associated benefits for 

investors, issuers, and other market participants. We acknowledge that the improvement in the 

efficiency of resource allocation at the economy level could be mitigated to the extent that some 

of the research and/or investment activities giving rise to these filings are reduced or otherwise 

change after the adoption of the final amendments (see section IV.C.1.b).   

 
750  See supra section IV.C.1.a.i. 
751  See letters from CIRCA I; EIM I; Profs. Schwartz and Shavell I; Profs. Schwartz and Shavell II. 



200 

iii. Transfers from Selling Shareholders and Trust in 

Markets  

In the days between the trigger date for an initial Schedule 13D and the filing date of that 

Schedule 13D under the current 10-day deadline, various investors may buy and sell shares of 

the subject issuer. The resulting trading losses and gains (whether or not the trading is based on 

information from or about the Schedule 13D filer) generally represent wealth transfers752 among 

individual investors, not net costs to investors (and market makers) as a group. However, the 

possession of an informational advantage regarding the future control or potential strategic or 

operational changes at an issuer, together with the knowledge of the precise date of informational 

revelation, creates a near-arbitrage opportunity. The incentives to gain access to such 

information, and thus profit from it, can be strong. An extended window of time between the 

trigger date and the date on which the filer’s beneficial ownership and plans are made public on 

Schedule 13D may increase the likelihood of information leakage to “informed bystanders”753 

who may then buy shares during the window of time just before the filing of the Schedule 13D. 

Such informed bystanders can thus profit from access to this information rather than from their 

own fundamental research or effort to improve the issuer’s performance. We acknowledge, 

however, that some of these informed bystanders may be associated with shareholder value 

 
752  We use the term “transfer” to distinguish the trading losses and gains from costs and benefits that may 

result from rule. See Current Guidance on Economic Analysis in SEC Rulemakings (Mar. 16, 2012) 
(available at https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf) at n.32.  

753  In a similar analysis in the DERA Memorandum, staff used the term “opportunistic traders” to reference 
these parties. We have revised the term used in response to a comment that this term seemed pejorative as 
well as comment letters that appeared to presume that the term was inclusive of the filer. See, e.g., letters 
from CIRCA IV; EIM IV.201 

creation to the extent they may represent the entry of additional “activism-friendly” shareholders, 

which academic researchers have associated with greater returns to activism.754 

Investors may possess information regarding activism for a variety of reasons. Some may 

emerge from fundamental research. For example, some investors may use research to identify 

companies that are likely to be targeted by activists. These investors may be able to glean 

information about the likelihood of an activist campaign from, for example, unexpected increases 

in trade volume. However, information leakage that creates a near-arbitrage opportunity for some 

investors (who themselves have not performed fundamental research to generate the information) 

is likely to erode trust in markets, reducing participation and capital formation.755 We would 

expect that amending the filing deadline would increase perceptions of fairness in the markets, 

which could, in turn, lead to benefits in participation and liquidity. These benefits cannot be 

quantified but are nonetheless important.  

Academic research provides evidence consistent with informed bystanders buying shares 

just prior to Schedule 13D filings. For example, studies have identified unusual EDGAR search 

activity during the 10 days prior to a Schedule 13D filing756 and abnormally high trading volume 

on the same day the filer crosses the five percent threshold757 as evidence of certain traders other 

 
754  See, e.g., Simi Kedia et al., Institutional Investors and Hedge Fund Activism, 10 REV. CORP. FIN. STUD. 1 

(2021) (“Kedia et al. 2021 Study”) (finding that a one-standard-deviation increase in the pre-existing 
“activism-friendly” ownership is associated with an increase in the 36-month buy-and-hold returns of 7.8% 
to 15.5%); Wong 2020 Study (finding that a proxy for a dispersed group of investors aligned with the 
activist buying shares before the Schedule 13D filing, measured based on abnormal trading volume on the 
date the activist exceeds 5% ownership, is associated with an increase in the buy-and-hold return over the 
course of an activist campaign of 5.5% to 8.4%). 

755  See, e.g., Luigi Guiso et al., Trusting the Stock Market, 63 J. FIN. 2557 (2008).  
756  See Ryan Flugum et al., Shining a Light in a Dark Corner: Does EDGAR Search Activity Reveal the 

Strategically Leaked Plans of Activist Investors?, J. FIN. QUANT. ANALYS. (forthcoming 2023), available at 
https://ssrn.com/abstract=3612507 (“Flugum et al. 2023 Study”). 

757  See, e.g., Wong 2020 Study. 



202 

than the filer being aware of the filer’s intentions. While the researchers note that some of the 

trading behavior investigated in these studies may simply reflect the reaction of sophisticated 

investors to unusual, public market data (such as that associated with the filer’s purchases) in 

advance of a Schedule 13D filing, further evidence led them to suggest that at least some of the 

increased trading is by informed parties.758 

Other research identifies specific types of informed bystanders or more direct evidence of 

those traders’ source of information. For example, one study presented evidence suggesting that 

the broker of a filer may leak information about the filer’s trades to other traders before the 

Schedule 13D filing.759 Another study observed a correlation between purchases by insiders and 

by the filer before the Schedule 13D filing, and suggested this trading reflected inside 

information and insiders’ surveillance of trading volume and ownership data for the issuer’s 

stock.760 

Several commenters indicated that the economic analysis in the Proposing Release lacked 

evidence or quantitative analysis with respect to potential effects on selling shareholders under 

 
758  For example, the researchers found that institutions unusually accessing EDGAR filings for issuers prior to 

Schedule 13D filings each appeared to engage in this activity primarily for Schedule 13D filings pertaining 
to a particular filer, rather than predicting Schedule 13D filings in general. See Flugum et al. 2023 Study. 
Also, both this study and the abnormal volume study discussed above found evidence of abnormal trading 
activity even in the case of Schedule 13D filings made by previous Schedule 13G filers, which are less 
likely to be accompanied by unusual market activity associated with trades by the filer. See Flugum et al. 
2023 Study; Wong 2020 Study.  

759  See Marco Di Maggio et al., The Relevance of Broker Networks for Information Diffusion in the Stock 
Market, 134 J. FIN. ECON. 419 (2019) (finding that the “best clients” of the broker used by a filer, i.e., those 
generating a large share of the broker’s business, buy more of the target stock than other institutional 
investors in the 10 days prior to a Schedule 13D filing). 

760  See Georgy Chabakauri et al., Trading Ahead of Barbarians’ Arrival at the Gate: Insider Trading on Non-
Inside Information (Colum. Bus. Sch. Rsch. Paper, Jan. 2022), available at 
https://ssrn.com/abstract=4018057 (finding a significant concurrence between purchases of stock by 
insiders of the issuer and purchases by an activist in the 60 days, and particularly in the last 10 days, 
preceding a Schedule 13D filing). 



203 

the current Schedule 13D filing deadline.761 Others questioned the magnitude of any effects with 

respect to selling shareholders.762 To better understand the potential effects of a shortened 

deadline on the type of activity discussed in these studies, we designed a quantitative analysis 

intended to estimate the wealth transfers, under the current rules, from selling shareholders to 

potential informed bystanders between the amended filing deadline and the actual filing dates. 

Our analysis focuses on those initial Schedule 13D filings that we classify as “non-

corporate-action filings,” which represent about 20 percent of initial Schedule 13D filings (per 

the first row of Table 2).763 For filings that we classify as “corporate action filings,” we found 

that there was limited stock price movement, on average, between the amended deadline and the 

day after the actual filing date.764 We therefore expect that it is unlikely that there would have 

been material wealth transfers from selling shareholders to informed bystanders just prior to the 

actual filing date of these filings. 

 
761  See, e.g., Lewis Study I (exhibit to letter from EIM I) (stating that the Commission could have attempted to 

quantify the intended benefits of the rule change to selling shareholders by “[e]stimat[ing] losses to selling 
shareholders with one of the trading models used to estimate damages in shareholder 10b-5 actions,” 
wherein “[h]igh end estimates of costs could assume that all shares sold (after adjusting for estimates of 
dealer activity) during this period came from sales made by investors that would have benefited from 
having the information on Schedule 13D earlier”); letter from Profs. Swanson, Young, and Yust (discussing 
investors that sell prior to a Schedule 13D filing and related statistics and stating that “the forgone returns 
seem too small in of themselves to justify a change”); Profs. Bishop and Partnoy I (stating that “an intuitive 
concern about investors who might be disadvantaged by selling during the window before such filings” is 
unsupported by evidence).  

762  For example, some commenters stated that any cost borne by selling shareholders is minor relative to 
benefits to other shareholders of the Schedule 13D filer’s actions. See letters from AIMA; CIRCA I; EIM I; 
ICM; Profs. Schwartz and Shavell II; S. Lorne. We consider the potential benefits to shareholders from a 
filer’s actions in section IV.C.1.b.i below. 

763  We make the same exclusions from the full sample of non-corporate-action filings as in the case of Figures 
2, 3a, 3b, and Table 3 above (excluding late filers and filers with no beneficial ownership reported as of the 
filing date and retaining only one filing among multiple filings on the same date), resulting in a sample of 
non-corporate-action filings consisting of 2,370 filings from 2011 through 2021. See supra note 718 and 
accompanying text for more information on the sample restrictions in the analysis. 

764  See supra section IV.C.1.a.i. 



204 

For the sample of non-corporate-action filings, we first examine abnormal765 trading 

volumes in the days prior to an initial Schedule 13D filing to identify trading activity that could 

be curtailed by a shortened filing window. We focus on trading before the filing date to exclude 

trading in reaction to the information in the filing and use information on the filer’s trades from 

Schedule 13D to exclude their trading activity from this analysis. 

For non-corporate-action filings from 2011 to 2021, Figure 6 compares the average 

trading volume excluding the filer’s accumulations (“Total Non-Filer Trading Volume”) to the 

filers’ average pattern of accumulations (“Filer Trading Volume”).766 Both measures are scaled 

by the normal level of daily trading volume in the issuer’s stock such that a value of one for 

“Total Non-Filer Trading Volume” would mean there is zero abnormal trading volume outside of 

the filer’s trades while a value of two for “Total Non-Filer Trading Volume” would mean that 

trading volume is double the usual level (i.e., there is an amount of abnormal trading volume 

equal to the amount of normal trading volume). Because we exclude trading on or after the filing 

date, the graph ends before day 10. 

 
765  We focus on abnormal trading volume rather than total trading volume because it is likely that the trades 

comprising the normal amount of trading volume represent investors making an exchange based on the 
same information set, even though ex post it may appear that the buyer turned out to be “lucky” and the 
seller “unlucky,” as would be the case before the revelation of other positive news. 

766  The estimates in the figure are based on staff analysis of EDGAR filings through programmatic text 
analysis (to categorize filings, as discussed in section IV.B.3.a.ii above, and to extract the required dates) as 
well as data from the CRSP database. The figure reflects the 1,686 non-corporate-action filings out of the 
total 2,370 filings in our analysis that had trading volume data available (generally reflecting issuers listed 
on the NYSE, NYSE American, NASDAQ, and NYSE Arca exchanges). Abnormal trading volume is 
computed as the excess of trading volume over the average daily trading volume in the 60-day period 
beginning 120 days prior to the given date.  



205 

Figure 6. Trading volumes around trigger date for non-corporate-action filings from 2011-
2021, excluding trading volume on or after actual Schedule 13D filing date 

 

Abnormal trading volume in an issuer’s stock by traders other than the filer peaks on the 

same day the filer’s trading peaks (i.e., on the trigger date, when the filer crosses the five percent 

threshold). However, abnormal trading volumes continue to remain elevated for the rest of the 

10-day filing window, including after the amended filing deadline, which occurs at 

approximately day seven after the trigger date, which may represent purchases by informed 

bystanders that were aware of the impending campaign. We note that there is also abnormal 

trading well in advance of the trigger date, and that this and other abnormal trading volume in the 

graph could reflect trading by informed bystanders, but could also reflect other traders simply 

reacting to the same news, market conditions, or trends in issuer performance that may have 

attracted the filer to engage in its transactions. 

To understand the potential transfers from selling shareholders to informed bystanders 

that may be prevented or reduced by a shortened deadline, we focus on abnormal trading volume 

by traders other than the filer in the days between the fifth business day after the filer crosses the 

five percent threshold and the actual filing date. As in the case of Figure 6, we exclude trading on 



206 

the actual filing date because there is typically significant trading volume in reaction to the filing 

on that date. While it is possible that there is additional trading by informed bystanders on the 

actual filing date but before the actual time that the filing becomes public, we are unable to 

distinguish any such trading from trading in reaction to the filing. For this reason, we exclude 

this trading, and our analysis will not include the transfers between informed bystanders and 

selling shareholders on the filing date.767 

In order to estimate potential transfers from selling shareholders to informed bystanders, 

we also collected information on abnormal returns to understand the amount of appreciation 

obtained by potential informed bystanders by trading prior to the filing becoming public 

information. The pattern of abnormal returns768 varies across scenarios in which the filer 

completed accumulating their reported stake by five business days after the trigger date but 

submitted their Schedule 13D filing later, and those in which the filer was still accumulating 

shares after five business days. Figures 7a and 7b present the average pattern of abnormal returns 

for these two scenarios separately. In order to align the trigger and filing dates across filings in 

the graph, we limit the filings in the figure to those that used the full 10-day filing window to 

file.769 

 
767  Given that the measured abnormal trading volume trends down over the filing window, as demonstrated in 

Figure 6, we expect that the effect of excluding this potential intra-day abnormal trading volume is 
relatively small. 

768  As discussed above, throughout this section (as well as section IV.C.1.a.i above and section IV.C.1.b.i 
below), an “abnormal return” represents the difference between an issuer’s market stock return and the 
CRSP value-weighted market index. See supra note 733. 

769  Besides the sample restrictions described supra note 763, Figures 7a and 7b are also limited to filings for 
which stock return data is available (generally, issuers listed on the NYSE, NYSE American, NASDAQ, 
and NYSE Arca exchanges). This restriction leads to a sample of 2,097 non-corporate-action filings. Filers 
of 1,669 of these filings completed acquiring their reported stake by the amended deadline, while the filers 
of the remaining 428 filings continued to accumulate part of their reported stake afterwards. The additional 
requirement in Figure 7a that the filer used the full 10-day filing window to file results in Figure 7a 

 
 



207 

Figure 7a. Cumulative abnormal return around filing date for non-corporate-action filings 
from 2011-2021 filed 10 days after trigger date, and without filer purchases after amended 
filing deadline 

 

 
reflecting 294 non-corporate-action filings, or 18% of the subsample that completed acquiring their stake 
by the amended deadline. The similar requirement in Figure 7b results in this figure reflecting 205 non-
corporate-action filings, or 48% of the subsample that continued to accumulate part of their reported stake 
after the amended deadline.  



208 

Figure 7b. Cumulative abnormal return around filing date for non-corporate-action filings 
from 2011-2021 filed 10 days after trigger date, and with filer purchases after amended 
filing deadline 
 

 

The transfers from a selling shareholder to a potential informed bystander between the 

amended filing deadline and the current filing date would consist of the stock return between the 

day that they sell and the day after the filing date, when the information previously known to 

their trading counterparty is known to the whole market. Based on Figures 7a and 7b, there are 

meaningful abnormal returns between the amended filing deadline (which occurs around day −3 

in the figure, as five business days generally corresponds to seven calendar days) and the day 

after the actual filing date for both subsamples of the filers in our analysis, with a greater 

abnormal return when the filer is still accumulating shares after five business days (i.e., Figure 

7b). 

To estimate transfers from selling shareholders to informed bystanders that may be 

occurring between the amended filing deadline and actual filing dates, and thus might be avoided 

under the final rules, we used the data discussed above to conduct the analysis presented in Table 



209 

5.770 As discussed in detail in section IV.C.1.b below, the extent of filer share accumulation after 

the amended deadline may be associated with the likelihood that filers may modify or forgo 

these types of campaigns after the effective date of the final amendments. We therefore estimate 

the transfers separately for filings with the different patterns of filer share accumulation from 

Table 3.771  

 
770  The estimates in the table are based on staff analysis of EDGAR filings through programmatic text analysis 

(to categorize filings, as discussed in section IV.B.3.a.ii above, to extract the data necessary to determine 
share accumulation patterns, as discussed supra note 719, and to extract the required dates) as well as data 
from the CRSP database. Estimates of abnormal returns and abnormal trading volumes (Rows 2 and 3) are 
based on the campaigns for which the required data was available. The estimate of transfers assumes trades 
on a given day are executed at the average of the closing price on that day and the closing price on the 
previous day and that the wealth transfer per share traded is the abnormal return experienced based on that 
starting price until one day after the filing date. For the aggregate estimate of the transfers from selling 
shareholders, the estimated average transfers from selling shareholders per campaign (in Row 5) is used as 
a proxy for the transfers from selling shareholders in campaigns for which the data required to produce this 
estimate was unavailable (about 19% to 49% of campaigns in any given category). Abnormal trading 
volume is computed as the excess of trading volume over the average daily trade volume in the 60-day 
period beginning 120 days prior to the given date. We note that one commenter stated that, based on the 
description of the estimate of transfers in the DERA Memorandum, a more accurate estimate would 
“account for abnormal price changes by adjusting for overall stock market variations.” See Lewis Study II 
(exhibit to letter from EIM IV). The description in the DERA Memorandum was imprecise on this point. 
The estimates of transfers in the memorandum as well as the estimates presented here are based on 
abnormal returns that do in fact adjust for market variations. See supra notes 733 and 768. Another 
commenter stated that “CRSP volume is known to be inaccurate for NYSE-listed stocks because the CRSP 
data source rounds volume to the nearest hundred.” See letter from Profs. Bishop and Partnoy III. We 
acknowledge this potential issue in CRSP volume data but note that the average and aggregate statistics 
that we present in the table should not be meaningfully affected by such rounding error. 

771  The columns of Table 5 reflect the same subsamples of filings as the corresponding columns of Table 3 
with the additional restriction that filings are only included if there would have been an opportunity to trade 
on a day between the amended deadline and the actual filing date.   



210 

Table 5 
Analysis of Potential Transfers from Selling Shareholders to Informed Bystanders 

by Degree of Filer Accumulation by Amended Filing Deadline, Annualized (2011-2021) 

 Percent of Stake Accumulated by Filer 
by Amended Deadline 

 (1) 
100% 

(full stake) 

(2) 
<100% 

 

(3) 
<90% 

subset of (2) 

(4) 
<75% 

subset of (3) 

(1) Average number of campaigns / 
year with potential transfers 
between amended deadline and 
filing date* 

54 41 7 1 

Filer/Campaign Characteristics:     

(2) Median abnormal return from 
amended deadline to day after 
filing 

.5% 1.9% 3.1% 6.9% 

Analysis of Transfers:      

(3) Average total abnormal trading 
volume other than filer’s trades 
between amended deadline and 
filing date (% shares outstanding) 

.8% .7% 1.5% 2.6% 

(4) Average transfers from selling 
shareholders, per campaign** $425K $640K $1.8M $5.1M 

(5) Aggregate transfers from selling 
shareholders for this category $23M/year $26M/year $13M/year $7M/year 

*   These campaigns represent the subset of the filings in Table 3 for which there are trading days between the fifth 
day after the trigger date and the filing date. 

** Transfers are computed as the sum across days of the abnormal trading volume (less the filer’s trades) in shares 
on a given day between the amended and actual filing date times the abnormal return from that day to the day 
after the filing date. See note 770 for additional details.  

Rows 2 and 3 of Table 5 present information on the abnormal returns and abnormal 

trading volume between five business days after the trigger date (the amended deadline) and the 

filing date in each subset of campaigns. Both the abnormal returns (which would drive the extent 

of wealth transferred by trading with an informed bystander in this timeframe) and the abnormal 

volume (which characterizes the potential number of such trades) are higher for campaigns in 



211 

which the filer is still accumulating a significant portion of their stake after five business days 

following the trigger date.  

The estimates in Row 5 of Table 5 represent potential transfers from selling shareholders 

to informed bystanders after five business days following the trigger date for each subset of 

campaigns based on a day-by-day analysis of the abnormal volume and the potential forgone 

return for each underlying campaign.772 For example, the aggregate estimate of potential 

transfers to informed bystanders that could be avoided by shortening the filing deadline to five 

business days if no filers forgo campaigns (and filers do not adapt in such a way that these 

transfers may still occur) is about $49 million per year ($23 million from Column 1 plus $26 

million from Column 2). Alternatively, if we assume that filers accumulating 25 percent or more 

of their stake after five business days forgo such campaigns, the aggregate estimate of potential 

transfers to informed bystanders that could be avoided would be about $42 million per year ($49 

million, as computed above, minus $7 million from Column 4).773 We note that the wealth 

transfer estimates in Table 5 do not represent estimates of the benefit of the final rule 

amendments. Rather, the estimates provide insight into an informational disparity that could 

weaken trust in the market and consequently market participation and capital formation. 

The estimates in Table 5 assume that abnormal trading volume on the days between the 

amended deadline and the actual filing date, other than that representing the filer’s own trades, 

represents trades by informed bystanders. It is possible that the abnormal trading volume 

represents other traders’ reactions to similar news, market conditions, and trends as those to 

 
772  We acknowledge that the estimates in Row 5 of Table 5 are approximate and may be sensitive to the 

methodology for estimating abnormal returns. See supra note 733. 
773  Similarly, if we assume that filers accumulating 10 percent or more of their stake after five business days 

forgo such campaigns, the aggregate estimate of potential wealth transfers that could be avoided would be 
about $36 million per year ($49 million, as computed above, minus $13 million from Column 3). 



212 

which the filer was reacting.774 For example, researchers have found that filers time their 

accumulations to coincide with significant selling by institutions, so it is possible that some of 

this abnormal volume may represent the extent of the institutional selling pressure.775 We also 

acknowledge that informed bystanders, like filers,776 may adapt to the final amendments by 

condensing their trades to five business days following the trigger date. 

Staff presented a similar quantitative analysis with respect to potential transfers from 

selling shareholders to informed bystanders under the current rule in the DERA Memorandum. 

Some commenters stated that the analysis in the DERA Memorandum demonstrated that a 

shortened filing window would reduce “harms” or “costs” to selling shareholders.777 Others 

 
774  One commenter addressing a similar analysis in the DERA Memorandum stated that “there is no attempt to 

exclude from this analysis any returns that accrued because the Schedule 13D filer publicly disclosed its 
intent after the trigger date but before filing the Schedule 13D – which is not an uncommon occurrence.” 
See letter from EIM IV; see also Lewis Study II (exhibit to letter from EIM IV). We acknowledge that a 
press release by a filer disclosing a campaign in advance of a Schedule 13D filing could provide an 
alternate explanation for abnormal trading volume (and/or abnormal returns) between the trigger date and 
filing date of an initial Schedule 13D. However, staff reviewed one year of filings and concluded that such 
disclosures are relatively rare and are thus not likely to meaningfully affect the estimates presented in Table 
5. In particular, staff used EDGAR’s full text search function to identify initial Schedule 13D filings made 
in 2021 that included the term “press release,” and then reviewed the resulting filings to determine whether 
the filer disclosed its plans or proposals between the trigger date and filing date of the initial Schedule 13D. 
(The instructions to Item 7 of Schedule 13D specify that the filer shall file as exhibits to the Schedule 13D, 
among other things, “copies of all written . . . plans or proposals relating to . . . the acquisition of issuer 
control, liquidation, sale of assets, merger, or change in business or corporate structure, or any other matter 
as disclosed in Item 4 [of Schedule 13D].”) Staff identified three initial Schedule 13D filings in 2021 for 
which the filer disclosed the campaign in a press release between the trigger date and filing date (all of 
which involved a press release made by the filer on the trigger date). None of these filings was included in 
the sample of Schedule 13D filings analyzed in Table 5 (which includes 101 filings from 2021) based on 
the sample restrictions that apply to this analysis. Specifically, in two cases, the filings were made on or 
before the first business day after the amended filing deadline, and in one case the requisite financial 
information to be included in the analysis was not available for the filing. Overall, given the limited number 
of filings for which earlier disclosure was identified, we do not believe that identifying and removing such 
filings from the full eleven-year sample would meaningfully affect the results. 

775  See, e.g., Nickolay Gantchev & Chotibhak Jotikasthira, Institutional Trading and Hedge Fund Activism, 64 
MGMT. SCI. 2930 (2018) (“Gantchev & Jotikasthira 2018 Study”) (finding that the timing of Schedule 13D 
share accumulations is closely tied to institutional liquidity shocks, in that activist purchases closely track 
institutional sales at the daily frequency). 

776  See section IV.C.1.b.i below for a discussion of how filers may adapt to the amended deadline. 
777  See letters from AFREF II; Better Markets II; SCG & NIRI. 



213 

stated that the DERA Memorandum’s characterization of selling shareholders as “harmed” was 

inappropriate and did not account for the benefits these selling shareholders experienced in terms 

of, for example, price improvement and improved liquidity as a result of the impending activist 

campaign.778   

We acknowledge, as mentioned by commenters, that most investors selling shares during 

the filing window seem to benefit from the impending activist campaign. In particular, as 

demonstrated in Figures 7a and 7b, we observe a meaningful amount of stock price appreciation 

during the filing window for non-corporate-action filings, some of which would accrue to selling 

shareholders. Despite the assertions of a commenter,779 the analysis in the DERA Memorandum 

and the similar analysis in this economic analysis do not characterize the trading between the 

Schedule 13D filer and a selling shareholder as harmful; in both cases, the analyses focus only 

on trading between informed bystanders (who are not the filer) and selling shareholders. We also 

acknowledge concerns that it may be inappropriate to construe the failure to benefit from future 

stock appreciation when selling shares to the filer as a harm to the selling shareholders, given 

that the stock appreciation in question results from the actions of the filer and, if there is a more 

limited opportunity to receive some of the economic benefits resulting from their actions, the 

filer may have a more limited incentive to initiate a campaign. We do not include sales to the 

 
778  See letters from CIRCA IV; EIM IV; Profs. Bishop and Partnoy III. In the economic analysis of the 

Proposing Release, the Commission made somewhat broader statements about effects on selling 
shareholders, suggesting that all investors who sell their shares during the 10-day window may be harmed. 
Commenters addressing the Proposing Release made similar statements regarding the characterization of 
“harm” being inappropriate and selling shareholders benefiting from the activity underlying the filing. See 
letters from AIMA; CIRCA I; EIM I; ICM; Pershing Square; Profs. Schwartz and Shavell I; Profs. 
Schwartz and Shavell II; Profs. Swanson, Young, and Yust; S. Lorne; TRP. Further, some commenters 
asserted that the notion that these selling shareholders should be able to sell at prices that reflect 
information in the Schedule 13D filings would entail an unjustified windfall to those selling shareholders, 
and a transfer of valuable information from the Schedule 13D filer, who expended the effort to research and 
develop that information. See letters from Dodge & Cox; EIM I; ICM; Prof. Gordon.  

779  See letter from CIRCA IV. 



214 

filer in this analysis. Our analysis quantifies the transfer between selling shareholders and 

informed bystanders that results from the price change between the day of the sale and the day 

after the filing date. That is, an earlier deadline would potentially benefit these selling 

shareholders to the detriment of the informed bystanders.  

Some commenters addressing the DERA Memorandum indicated that staff provided 

insufficient evidence of the existence of informed bystanders.780 One of these commenters added 

that activists have significant incentives to maintain the confidentiality of their strategies until 

they are ready to make a public disclosure.781 We believe the academic studies discussed above 

support the conclusion that informed bystanders purchase shares in issuers shortly before the 

filing of Schedule 13D reports pertaining to such issuers. Some of the researchers suggest that 

filers themselves, in some cases, may leak information about their impending filing; others 

specifically identify other channels for information leakage unbeknownst to the activist.782 

However, the methodologies used in these studies to identify informed bystanders in specific 

cases cannot be expanded to reliably identify trades by all informed bystanders in a broad 

sample. One comment letter suggested that we use Consolidated Audit Trail (“CAT”) data in the 

analysis of “informed” trading but did not specify what methodology we should use.783 We do 

not believe this data would allow us to identify which trades may involve a counterparty that 

 
780  See letters from EIM IV (stating that the presence of harmful conduct is assumed, not demonstrated); Profs. 

Bishop and Partnoy III (stating that the memorandum provides no support “for the assertion that purchasers 
other than the 13D filer are more informed than sellers during the relevant period”). 

781  See letter from EIM IV; see also Lewis Study II (exhibit to letter from EIM IV) (stating that the analysis 
“assumes that the activist has informed select investors about the upcoming campaign before its public 
announcement”). 

782  See supra notes 756-760 and accompanying text. 
783  See Lewis Study II (exhibit to letter from EIM IV) (stating that “DERA could have used consolidated audit 

trail (‘CAT’) data that contains information on which traders were participating in the market to estimate a 
precise measure of the impact but did not do so” and that “the analysis of ‘informed’ trading is an obvious 
setting to utilize CAT data”); letter from EIM IV. 



215 

benefited from information leakage. We recognize that our own analysis does not directly 

identify informed bystanders, and may, for example, represent buyers who have learned of the 

probability of activism through fundamental research. However, we acknowledge those 

limitations and are unaware of approaches that would allow us to obtain a better estimate of 

trades by informed bystanders. 

Some commenters criticized the DERA Memorandum for failing to describe the likely 

characteristics or nature of the selling shareholders and their reasons for selling.784 Some 

commenters responding to the Proposing Release indicated that it was likely that the selling 

shareholders were not retail investors but rather sophisticated institutions who could 

appropriately weigh the possibility that an activist investor may be buying up shares,785 with one 

providing an analysis supporting this assertion.786 We acknowledge that the potential effects of 

reducing transfers from selling shareholders may be tempered somewhat to the extent the 

counterparties of the potential informed bystanders are, for example, institutions with liquidity 

needs, and that there is some evidence that this may be common.787 However, gains by informed 

 
784  See letters from CIRCA IV (stating that “it is possible that any such shareholder is selling because it needs 

cash and thus may be helped and not harmed by the availability of activist buyers”); Profs. Bishop and 
Partnoy III; see also Lewis Study II (exhibit to letter from EIM IV) (stating that the analysis “overlook[s] 
market makers and day traders (trading participants who open and close their position between the 
proposed deadline and the filing date)” and that such traders “would not be impacted”). 

785  See letters from Profs. Bishop and Partnoy I; CIRCA III; see also letter from 65 Professors (suggesting that 
the Commission could examine whether particular categories of investors are net sellers, and therefore are 
not harmed in aggregate, during the period prior to the filing of Schedule 13Ds). 

786  See letter from Profs. Bishop and Partnoy I; see also Ekkehart Boehmer et al., Tracking Retail Investor 
Activity, 76 J. FIN. 2249 (2021) (introducing the algorithm for identifying retail order flow used in the cited 
comment letter). We note that questions have recently been raised as to the reliability of this algorithm for 
producing an unbiased estimate of retail order flow. See, e.g., Yashar Barardehi et al., Uncovering the 
Liquidity Premium in Stock Returns Using Retail Liquidity Provision (Working Paper, 2023), available at 
https://ssrn.com/abstract=4057713. 

787  Studies have found that Schedule 13D filer accumulations are timed, on average, coincident with 
institutional selling pressure. See, e.g., Gantchev & Jotikasthira 2018 Study. 



216 

bystanders may be viewed by some market participants as unfair regardless of the counterparties 

bearing the other side of these transfers.  

Some commenters raised concerns related to the statement in the DERA Memorandum 

that lessening an informational advantage that some market participants may perceive to be 

unfair could enhance trust in the securities markets and promote capital formation.788 In 

particular, one commenter indicated a lack of evidence that activism is contributing to an erosion 

of trust in the markets,789 while another requested evidence that the acceleration of filing 

deadlines in other contexts changed the investors’ behavior or enhanced their level of trust in the 

market.790 This commenter did not suggest how we might gather such evidence, however, and 

trust has been shown to be an important determinant of participation.791   

One comment letter presented an alternative analysis of the effects on selling 

shareholders based on the computation of abnormal net selling activity, which they state better 

“separates any allegedly ‘harmed’ selling . . . from other trading” than the analysis in the DERA 

Memorandum.792 In particular, these commenters categorize trades as either seller-initiated or 

buyer-initiated in order to compute abnormal net selling. The commenters concluded that there is 

 
788  See letters from CIRCA IV; EIM IV. 
789  See letter from EIM IV. 
790  See letter from CIRCA IV. 
791  See L. Guiso, P. Sapienza, and L. Zingales, Trusting the Stock Market, J. OF FIN., 63 (6) (Dec. 2008), at 

2557-2600. 
792  These commenters used an algorithm from academic studies to categorize trades in the New York Stock 

Exchange Trade and Quote (“NYSE TAQ”) dataset as either seller-initiated or buyer-initiated. They then 
computed abnormal net selling (seller-initiated volume minus buyer-initiated volume, scaled by total 
trading volume and converted into a percentage by adjusting for lagged net selling volume and the 
logarithm of market capitalization) for the days around Schedule 13D filing for a sample of activist events 
from 2011 to 2021. See letter from Profs. Bishop and Partnoy III (further explaining that “if, for every 
seller-initiated trade, there is an equal and opposite sized buyer-initiated trade, then we cannot 
meaningfully infer that any alleged ‘harm’ has occurred. However, if there is a net order imbalance, with 
more selling activity than buying activity, then we may be able to infer alleged ‘harm.’”). 



217 

no statistically significant evidence of systematic net selling during the five days preceding the 

filing793 such that they “cannot meaningfully infer that any alleged ‘harm’ has occurred.”  

We note that signing trades as seller- and buyer-initiated is generally intended to reflect 

which side of the trade is demanding liquidity, as opposed to providing liquidity. Net order 

imbalances therefore provide information about which type of traders (sellers or buyers) are 

demanding liquidity on a given day, while the opposite side of any order imbalance is borne by 

liquidity providers (historically, these would be market makers, but today other investors 

including high-frequency traders typically play this role). An analysis of net order imbalances in 

the days around Schedule 13D filings can therefore provide information about wealth transfers 

on these days between those investors that are demanding liquidity versus those providing 

liquidity.794 However, we do not believe that trades that are signed as seller-initiated versus 

buyer-initiated provides sufficient information about which trades are more likely to involve a 

buyer that has a one-sided informational advantage because of their knowledge of another 

investor’s share accumulations, which is the focus of our analysis. 

In summary, informed bystanders may profit, as a result of information leakages rather 

than from their own fundamental research or effort to improve the issuer’s performance, from a 

 
793  This analysis in the comment letter focused on the proposed amendment to the filing deadline—five 

calendar days—rather than five business days. We note that this analysis appears to focus on the five days 
before a Schedule 13D filing date regardless of the number of days that have elapsed since the trigger date. 
As such, the window analyzed varies relative to the trigger date rather than consistently representing the 
sixth to tenth days after the trigger date. 

794  That is, we would interpret a lack of systematic net selling in the days before a Schedule 13D filing to 
indicate that there are no significant transfers between investors demanding liquidity and those providing 
liquidity as a result of trades during this period and the subsequent price changes. The commenters describe 
the analysis as identifying the effect on “natural buyers” as opposed to market makers. See letter from 
Profs. Bishop and Partnoy III. We note that the positive but statistically insignificant abnormal net selling 
these commenters identified on nine out of the 10 days preceding a filing is consistent with academic 
research cited above finding that Schedule 13D filers time their accumulations coincident with institutional 
selling pressure. See supra note 775. 



218 

near-arbitrage opportunity during the window of time between the trigger date and the date on 

which the filer’s beneficial ownership and plans are made public on a Schedule 13D. In this 

section, we have presented a quantitative analysis based on historical data that, subject to certain 

assumptions and limitations, provides a reasonable basis to believe that wealth transfers from 

selling shareholders to potential informed bystanders can be significant under the current rules.  

iv. Information Asymmetries and Liquidity 

Shortening the Schedule 13D filing deadline and thereby more quickly resolving an 

information asymmetry between some market participants and the rest of the market is likely to 

enhance liquidity.  

Some commenters to the Proposing Release agreed that a shortened filing deadline would 

reduce information asymmetries.795 Others stated that the academic paper cited in the Proposing 

Release to support the relation between information asymmetry and liquidity is not applicable to 

the setting at hand,796 or more generally questioned the basis of statements in the economic 

analysis of the Proposing Release indicating that the shortened deadline would result in increased 

liquidity.797 In response to these comments, we have expanded the literature that we review. We 

continue to believe that the amendments will reduce information asymmetries and improve 

liquidity.   

 
795  See letters from ABA; AFREF; Better Markets I; FreeportMcMoRan; NIRI. 
796  See letters from Profs. Bishop and Partnoy; Profs. Schwartz and Shavell II (referring to Lawrence Glosten 

and Paul Milgrom, Bid, Ask, and Transaction Prices in a Specialist Market with Heterogeneously Informed 
Investors, 14 J. FIN. ECON. 71-100 (1985)). 

797  See Lewis Study I (exhibit to letter from EIM I); letters from 65 Professors; AIMA; Profs. Bishop and 
Partnoy. 



219 

Specifically, empirical and theoretical work point to a linkage between information 

asymmetry and measures of liquidity such as bid-ask spreads and price impact.798 Generally, a 

greater proportion of strategic information-based trading (i.e., trading based on private, or non-

public, information) in contrast to “noise trading” (i.e., trading based on, for example, liquidity 

needs rather than private information) lowers liquidity in an issuer’s securities, as other market 

participants adjust their behavior in light of the risk of adverse selection (i.e., a situation in which 

the buyer of an issuer’s security has more information than the seller, or vice versa, about the 

true value of the security).799 In contrast, liquidity should generally increase when there is a 

lower proportion of information-based trading to noise trading. For example, a reduced risk of 

trading with the informed bystanders discussed in the previous section may lead liquidity 

providers to charge lower bid-ask spreads, resulting in higher liquidity.800 

We would expect the amended deadline to improve liquidity by lowering information 

asymmetry. While one study finds theoretically mixed results of shortening the filing deadline 

with respect to liquidity and efficiency during the period prior to the filing, this study does not 

address the period subsequent to the now-earlier date.801 Another study shows that empirical 

 
798  See, e.g., Albert S. Kyle, Continuous Auctions and Insider Trading, 53 ECONOMETRICA 1315 (1985) 

(theoretically modeling a market with informed trading to investigate, among other things, the liquidity 
characteristics of a speculative market); David Easley et al., Liquidity, Information, and Infrequently 
Traded Stocks, 51 J. FIN. 1405 (1996) (investigating, empirically, the economic importance of information-
based trading on bid-ask spreads); see also Order Competition Rule, Release No. 34-96495 (Dec. 14, 2022) 
[88 FR 128 (Jan. 3, 2023)] (for further discussion and analysis on the relationship between adverse 
selection risk and bid-ask spreads). 

799  Id. 
800  See supra section IV.C.1.a.iii. 
801  See Kerry Back et al., Activism, Strategic Trading, and Liquidity, 86 ECONOMETRICA 1431 (2018) 

(presenting a model of a specialist market with an activist trader and finding that the association between 
liquidity and a reduced number of days for the activist to trade based on their asymmetric information—
which in their model is equivalent to reducing the rate of “noise trading” or uniformed trading during the 
same trading window—may be indeterminate during the filing window because of competing effects 

 
 



220 

proxies for liquidity are higher than otherwise on days that the activist is accumulating shares, 

concluding that this is so both because activists submit limit orders and because activists 

strategically trade when liquidity is higher.802 This study also does not address the period 

subsequent to the now-earlier filing date. Reducing the number of days prior to the filing should 

reduce information asymmetry in the period after the filing (through the date the disclosure 

would otherwise have been made) because after the filing is made the information about a filer’s 

holdings and intentions is public. Thus, liquidity should improve in this period.803 

We expect that liquidity benefits are more likely to be associated with the types of filings 

that we classify as “non-corporate-action filings,” and not with “corporate action filings.” 

Indeed, the abnormal stock return patterns presented in Figures 4 and 5 above demonstrate that 

the latter are, on average, not associated with a meaningful stock price reaction between the 

amended deadline and the day after the actual filing date. Because only the non-corporate-action 

filings seem to be associated with significant new information that is not already incorporated in 

market prices earlier in the filing window, these are the filings that are likely to be associated 

with meaningful information asymmetries whose duration could be reduced by the shortened 

filing deadline. As noted above, about 68 percent of timely non-corporate-action filings, or about 

152 initial Schedule 13D filings of this type per year, are currently filed after the amended 

deadline. Based on this historical filing behavior, we expect that the amended filing deadline to 

result in earlier public disclosure, and thus an earlier stock price reaction and resolution of the 

 
related to, for example, the potentially increased proportion of informed to uninformed trades in a shorter 
filing window versus the decreased information asymmetry regarding the activist’s shareholding resulting 
from less noise trading). 

802  See Collin-Dufresne & Fos 2015 Study (finding that illiquidity and measures of adverse selection are lower 
on days that the activist trades, due to market timing and the use of limit orders—i.e., liquidity provision—
by activists). 

803  See supra note 798.221 

related asymmetric information than would otherwise have been experienced, for approximately 

this number of filings per year, thus enhancing liquidity. 

Some commenters stated that an information asymmetry between the filer and the market 

should not be viewed as problematic,804 with some referring to such information asymmetries as 

simply a feature of a functioning market.805 Some commenters responding to the DERA 

Memorandum raised similar concerns about the usage of “information asymmetries” in that 

document and a potential implication that these information asymmetries were problematic. 

We acknowledge that benefits may stem from the information asymmetry between a 

Schedule 13D filer and the market. The informational advantage of Schedule 13D filers results, 

in general, from their own expenditures on research and analysis or from their efforts and 

expenditures to pursue changes at the issuers in which they accumulate these shareholdings. 

With a reduced ability to receive some of the economic benefits of their actions, the filer may 

have reduced incentives to initiate a campaign.806 Consistent with this view, we have expanded 

our analysis of the potential costs with respect to reduced activism in section IV.C.1.b below. We 

have also narrowed the consideration of selling shareholders in the previous section vis-à-vis the 

Proposing Release to focus on those trading with informed bystanders who are not the filer and 

yet may profit from the advance knowledge or suspicion of a filer’s potential actions, rather than 

from their own fundamental research or effort to improve the issuer’s performance. 807 We have 

also expanded our consideration of the literature regarding liquidity beyond what was considered 

 
804  See letters from AIMA; CIRCA I; Dodge & Cox; EIM I; ICM; Prof. Gordon; Profs. Schwartz and Shavell 

I; Profs. Schwartz and Shavell II; S. Lorne. 
805  See letters from EIM I; Profs. Schwartz and Shavell I. 
806  See, e.g., Sanford Grossman & Oliver Hart, Takeover Bids, the Free-Rider Problem, and the Theory of the 

Corporation, 11 BELL J. ECON 42 (1980)  
807  See supra section IV.C.1.a.iii. 



222 

in the Proposing Release to reflect additional findings pertinent to the setting of activist 

campaigns.808 We believe that the literature cited in the Proposing Release still has relevance in 

considering, for example, the potential impacts of trading by informed bystanders.809 

b. Costs 

An earlier filing deadline for Schedule 13D may affect significant shareholders seeking to 

affect control of an issuer. There may be indirect effects as well, as we describe below. We also 

expect the final amendments to impose relatively minor compliance costs on all Schedule 13D 

filers.  

i.  Potential Effects on Activism 

By shortening the initial Schedule 13D filing deadline, the final amendments may 

increase costs of activist campaigns. Commenters expressed mixed views as to whether a 

shortened filing deadline would reduce activism. Some commenters stated that a shortened filing 

deadline would not significantly impair activism.810 Others, however, stated that a shortened 

filing deadline was likely to reduce the number of activist campaigns,811 and expressed 

disagreement with statements in the Proposing Release as to why such a reduction or the impact 

 
808  See supra note 801 and accompanying text. 
809  See Lawrence Glosten & Paul Milgrom, Bid, Ask, and Transaction Prices in a Specialist Market with 

Heterogeneously Informed Investors, 14 J. FIN. ECON. 71 (1985) (presenting a theoretical model of a 
specialist market with trading by insiders, and describing generally how a specialist must recoup the losses 
suffered in trades with the well informed by gains in trades with noise traders, and that these gains are 
achieved by setting a spread). 

810  See letters from ABA; AFL-CIO; Better Markets I; Labor Unions; SCG; Sen. Baldwin, et al.; see also infra 
note 818 and accompanying text. 

811  See letters from AIMA; C. Penner and Prof. Eccles; CIRCA I; Dodge & Cox; EIM I; ICM; M. Frampton; 
MFA; Prof. Gordon; Profs. Schwartz and Shavell II; Profs. Swanson, Young, and Yust; Profs. Eccles and 
Rajgopal; Rep. Torres, et al.; Rice Management; S. Lorne; STB; TRP. 



223 

of any reduction would be limited.812 Some commenters indicated that the economic analysis in 

the Proposing Release could have been enhanced by further consideration of the potential effects 

on activist campaigns, including a quantitative analysis.813 

A Quantitative Analysis of Historical Activist Campaigns: Assumptions, Findings, and 

Limitations 

We use the data presented in section IV.B.3.a.iii above on filers’ current patterns of share 

purchases to provide some insight into the number and type of filings that have historically 

involved trading between the amended deadline and their actual filing date.814 

Our analysis focuses on those 3,067 Schedule 13D filings from 2011 through 2021 that 

we classify as “non-corporate-action filings” (as opposed to “corporate action filings”),815 which 

 
812  See, e.g., letter from AIMA (stating that the fact that some filers already file within five days “does not 

justify accelerating the reporting timeline” because it may merely reflect variation in when filers happen to 
satisfy their “aggregate purchasing goal”). 

813  See letters from 65 Professors; AIMA; B. Sharfman; EIM I; ICM; MFA; Profs. Bishop and Partnoy I; Prof. 
Hu; Prof. Webber; Rep. Torres, et al.; SIFMA; SIFMA AMG; STB.  

814  We also considered investigating the effects of alternate deadlines for reporting the acquisition of 
meaningful ownership stakes in other countries, as suggested by several commenters. See, e.g., Lewis 
Study I (exhibit to letter from EIM I); and letters from Sen. Baldwin, et al.; WLRK II. However, we 
concluded that significant differences in rules and practices in other countries as compared to the United 
States limit our ability to draw direct inferences from the experience of these other countries. Further, we 
found that confounding events would limit our ability to draw conclusions about the effects of rule changes 
in these other countries. For example, revisions to Japan’s substantial shareholding reporting rules took 
effect in 2006 and 2007, coincident with the rise of poison pills and the emergence of bear market 
conditions in Japan. Thus, while activist engagements in Japan declined after 2007, it is difficult to identify 
the specific role any one of these factors played in this decline. See, e.g., Yasushi Hamao & Pedro Matos, 
U.S.-Style Investor Activism in Japan: The First Ten Years?, 48 J. JPN. INT. ECON. 29 (2018). 

815  As discussed in section IV.B.3.a.iii above, we found that corporate action filings typically reflect one or 
two off-market transfers of share ownership, very few of which currently occur after the fifth day following 
the trigger date. We also anticipate that the terms of these transfers are likely agreed upon in advance. We 
therefore believe that a shortened filing deadline would not significantly impact the investment activities of 
the filers of corporate action filings. As discussed in section IV.C.1.viii below, we acknowledge that 
adjusting to an accelerated deadline could somewhat increase the compliance costs for such filers under the 
final amendments. As discussed in section IV.C.1.a, the benefits of a shortened initial Schedule 13D filing 
deadline are expected to be relatively limited for corporate action filings. 



224 

represent about 20 percent of initial Schedule 13D filings during the sample period, per the first 

row of Table 2. 

As in Figures 2, 3a, and 3b and Table 3 above, we further refine the sample of non-

corporate-action filings to exclude late filers and filers with no beneficial ownership reported as 

of the filing date and to adjust for multiple filings on the same date, resulting in a sample size of 

2,370 non-corporate-action filings.816 Our analysis, presented in Table 6, provides information 

about the characteristics of current campaigns delineated by filers’ degree of accumulation of 

shares as of the amended deadline.817 

 
816  We exclude late filers from this analysis because it is difficult to predict how filers that are not in 

compliance with the current filing deadline will react to a change in this deadline. See supra note 718 and 
accompanying text for more detail on the sample refinements. 

817  These estimates are based on staff analysis of EDGAR filings through programmatic text analysis (to 
categorize filings, as discussed in section IV.B.3.a.ii above, to extract the data necessary to determine share 
accumulation patterns, as discussed supra note 719, and to extract the required dates) as well as data from 
the Audit Analytics, CRSP, and Compustat databases. Estimates of average issuer characteristics (Rows 2 
through 5) and campaign-level profit and value measures (Rows 9 through 11) are based on the campaigns 
for which the required data was available. While data availability varies by row and column of the table, 
every statistic in the table reflects data for at least 81% of the respective sample of filings. The Amihud 
illiquidity ratio (in Row 4) is computed as in the Gantchev & Jotikasthira 2018 Study. See supra note 692 
regarding how we identify the “Prominent Activists” category (for the purpose of computing Row 6). A 
filer’s unrealized gains on the reported equity stake (used to compute the percentages in Row 9) are based 
on information on their actual purchases and purchase prices for the 60 days prior to the filing as reported 
in the Schedule 13D filing, as well as the remainder of ownership acquired before those 60 days, which is 
assumed to be acquired at the average purchase price reported in the Schedule 13D filing excluding any 
purchases after the trigger date. Unrealized gains are estimated by comparing these purchase prices to the 
share price the day after the filing from the CRSP database. Abnormal returns (in Row 10) are computed as 
the difference between an issuer’s stock market return and the CRSP value-weighted market index and are 
presented for the period extending from 20 business days prior to 20 business days after the filing date. 
Basing the horizon over which the abnormal returns are computed on business days, rather than calendar 
days, is consistent with existing studies but differs from the graphs presented in Figures 7a and 7b, which 
present returns based on calendar days around the filing date (and which thus reflect slightly different 
estimates). For the aggregate estimate of the increase in shareholder value (in Row 12), the estimated 
average increase in shareholder value per campaign (in Row 11) is used as a proxy for the shareholder 
value impact of campaigns for which the data required to produce this estimate was unavailable (about 10% 
to 19% of campaigns in any given category). We may slightly overestimate the number of campaigns 
falling in Columns 3 and 4 due to the algorithm by which total reported ownership is extracted from filings. 
See supra note 722. As discussed above, we reviewed all of the filings categorized in Column 4 (i.e., in the 
light grey bars of Figure 3b) manually and determined that 6% of the filings in this column would not have 
been categorized in this group if our algorithm to extract total reported ownership from the filing was as 
precise as our manual review of the documents. However, because the average increase in shareholder 
value for these filings was relatively low, excluding these filings from Column 4 would not have a 
meaningful impact on our estimate of the aggregate increase in shareholder value for this category. 



225 

Table 6 
Campaign Characteristics by Degree of Accumulation by Amended Filing Deadline, 

Annualized (2011-2021) 
 Percent of Stake Accumulated by Amended Deadline 
 (1) 

100% 
(full stake) 

(2) 
<100% 

 

(3) 
<90% 

subset of (2) 

(4) 
<75% 

subset of (3) 

(1) Average number of campaigns / 
year 173 42 7 1 

Targeted Issuer Characteristics:     

(2) Average issuer size (market cap.) $916M $1.5B $1.8B $1.8B 
(3) Average issuer liquidity 

(turnover)* 1.2% 1.2% 1.5% 1.5% 

(4) Average issuer illiquidity 
(Amihud illiquidity ratio)** 0.13 0.11 0.09 0.08 

(5) Percent issuers in S&P 1500 9.7% 14.3% 15.6% 12.5% 

Filer/Campaign Characteristics:     

(6) Percent by a Prominent Activist 29.8% 36.3% 43.6% 56.3% 

(7) Average beneficial ownership 
reported in filing 9.1% 7.3% 8.7% 9.5% 

(8) Average percentage of reported 
ownership stake accumulated 
after amended deadline 

0% 5.9% 19.2% 35.3% 

(9) Average percentage of filer’s 
unrealized gains on reported 
equity stake, as of day after filing 
date, attributable to shares 
accumulated after amended 
deadline*** 

0% 4.1% 9.1% 22.6% 

  



226 

Table 6 (continued) 
Campaign Characteristics by Degree of Accumulation by Amended Filing Deadline, 

Annualized (2011-2021) 
 Percent of Stake Accumulated by Amended Deadline 
 (1) 

100% 
(full stake) 

(2) 
<100% 

 

(3) 
<90% 

subset of (2) 

(4) 
<75% 

subset of (3) 

Campaign Value Implications:      

(10) Average return around filing 
date (cumulative abnormal return, 
day -20 to 20) 

5.7% 8.1% 17.2% 14.4% 

(11) Average increase in shareholder 
value per campaign $36M $151M $222M $208M 

(12) Average aggregate increase in 
shareholder value across all 
campaigns combined (based on 
average number of campaigns per 
year) 

$6.3B/yr $6.3B/yr $1.6B/yr $302M/yr 

*  Turnover is the average daily trading volume as a percentage of the issuer’s shares outstanding, computed over 
the six-month period before the trigger date. 

**The Amihud illiquidity ratio is intended to capture the stock price impact of trading and is computed over the six-
month period before the trigger date. See note 817 for more details. 

***Unrealized gains estimated for this purpose reflect estimated gains only on the equity stake reported in the 
Schedule 13D filing (i.e., excludes unrealized gains from any cash-settled derivative instruments, including 
swaps, to the extent such instruments did not result in beneficial ownership) and are computed as of the day after 
the filing (i.e., excludes any impact of changes in stock price or additional stock purchases thereafter). See note 
817 for more details. 

The columns of Table 6 reflect the same subsamples of filings as the corresponding 

columns of Table 3 above. A similar analysis with respect to the potential effects of a shortened 

initial Schedule 13D filing deadline on activism was presented in the DERA Memorandum. 

Whereas the analysis in the DERA Memorandum was based on the proposed five-calendar day 

deadline, the analysis summarized in Table 6 is based on the five-business day deadline. One 

commenter stated that the analysis demonstrated that “shortening the deadline should not 

significantly impede activist campaigns” because “[t]he overwhelming majority of past filers 



227 

have acquired at least 75% of their reported stake” by the amended deadline.818 Another 

commenter questioned whether the data supporting the findings with respect to the percentage of 

past filers that completed their share accumulations by the amended deadline is “representative 

of the broader market.”819 This commenter recommended that the analysis be expanded to focus 

on campaigns where the activist filer continued its purchases throughout the 10-day window and 

reported initial beneficial ownership of 10 percent or more.820 

We acknowledge that the campaigns in our non-corporate-action sample are 

heterogeneous, and that the percentage of filers that continued to accumulate shares after the 

amended deadline would vary across subsamples. For example, Row 6 of Table 6 demonstrates 

that “prominent activists” were somewhat more likely than others to continue to accumulate a 

significant fraction of their reported beneficial ownership after the amended deadline. Per the 

commenter’s suggestion to focus on filers reporting beneficial ownership of 10 percent or more, 

we note that Row 7 of Table 6 indicates that the reported initial beneficial ownership was not 

systematically higher for filers that continue to accumulate shares after the amended deadline in 

comparison to those that do not. Per the commenter’s other suggestion, we note that both Table 6 

and Table 5 above do isolate (in Column 2 of each table) the results for those filings that 

continue to accumulate shares after the amended deadline. 

Other commenters, referencing the dollar estimates in the DERA Memorandum, asserted 

that the analyses demonstrated that the costs of the proposed Schedule 13D filing deadline 

amendments related to effects on activist campaigns exceed the benefits of the proposed 

 
818  See letter from Better Markets II. 
819  See letter from CIRCA IV. 
820  Id. 



228 

amendments.821 One commenter stated that the DERA Memorandum “fail[ed] to adequately 

quantify the benefits to long-term shareholders of the target issuer in the form of substantially 

higher share prices.”822 In response to these commenters, we note that the dollar campaign values 

in rows 11 and 12 of Table 6 do not represent cost estimates of the final amendments. Rather, the 

values reflect the value creation from the historical campaigns.823 Interpreting these figures as a 

cost would require assuming all of these campaigns would have been abandoned under a five-

business day filing deadline. Instead, we expect that a five-business day deadline would not have 

deterred the vast majority of campaigns. Accordingly, we believe that the costs of the final 

amendments would be significantly less than any of the figures in Table 6 or identified by 

commenters because we expect that activists will adapt to the amended deadline rather than 

forgo campaigns. We acknowledge that some activist investors have indicated that the proposed 

amendments would make them less likely to carry out activist campaigns.824 Nonetheless, we 

expect that the vast majority of the value creation reflected in the table above would continue 

unabated. Results in Row 1 show that 80 percent of campaigns (173 out of 215 campaigns per 

year) over the period from 2011 to 2021 would not have been affected by a five-business day 

filing deadline. While the remaining 20 percent (42 out of 215 campaigns per year) could have 

been affected to some degree, we expect most of these campaigns would still have occurred, as 

there are several ways activists can adapt to the amended deadline.825 In particular, as we discuss 

 
821  See Lewis Study II, at 8 (exhibit to letter from EIM IV observing that, historically, “the average rise in 

shareholder value for a campaign that requires more than five days to develop a position is $128 million”); 
letters from CIRCA IV; EIM IV. 

822  See letter from CIRCA IV. 
823  The values also do not account for the costs activists incur to conduct the campaigns.  
824  See, e.g., letters from CIRCA IV; EIM IV. 
825  See supra note 724. 



229 

below in this section, activists can adapt to a shorter deadline using strategies such as (a) 

accumulating a smaller stake in the issuer’s shares; (b) accumulating shares more quickly; or (c) 

accumulating an economic stake using other instruments, such as cash-settled swaps or other 

derivatives. We expect that in most if not all cases, they will do so.   

A Literature Review 

In considering the implications of a potential reduction in activist campaigns, we have 

expanded our consideration of the existing literature on activist campaigns, as suggested by 

commenters.826 There is a large body of literature finding that activist campaigns are, on average, 

associated with an economically significant increase in shareholder value (i.e., positive abnormal 

stock returns) around the Schedule 13D filing or other announcement date.827 As noted in the 

 
826  See letters from 65 Professors; MFA; Rep. Torres, et al. 
827  Measurement windows in most studies range from five to 40 days around the announcement date, with 

many also considering longer horizons to address concerns about a potential reversal of the returns. See, 
e.g., Lucian Bebchuk et al., The Long-Term Effects of Hedge Fund Activism, 115 COLUM. L. REV. 1085 
(2015) (“Bebchuk et al. 2015 Study”) (estimating an announcement return of about 6% to initial Schedule 
13D filings by activist hedge funds from 1994 through 2007, with, on average, no reversal in returns over 
the following five years); Kedia et al. 2021 Study (demonstrating, in Table IA2 of the Internet Appendix, 
no reversal over five years of the positive one-year buy-and-hold returns for different subsamples of initial 
Schedule 13D filings by activist hedge funds from 2004 through 2012, based on a variety of models of 
benchmark returns); Boyson & Pichler 2019 Study (estimating a buy-and-hold return of about 12% over a 
holding period averaging 2.7 years to campaigns by hedge fund activists from 2001 through 2012); Martijn 
Cremers et al., Hedge Fund Activism and Long-Term Firm Value (Working Paper, Dec. 13, 2018), 
available at https://ssrn.com/abstract=2693231 (“Cremers et al. 2018 Study”) (estimating a return of about 
6% around the start of activist hedge fund campaigns from 1995 through 2011, with, on average, no 
reversal in returns over the following five years); Edward Swanson et al., Are All Activists Created Equal? 
The Effect of Interventions by Hedge Funds and Other Private Activists on Long-Term Shareholder Value, 
72 J. CORP. FIN. 102144 (2022) (“Swanson et al. 2022 Study”) (estimating returns of 5% to initial Schedule 
13D filings in 1994 through 2014, with, on average, no reversal in returns over the following three years); 
Ed deHaan et al., Long-Term Economic Consequences of Hedge Fund Activist Interventions, 24 REV. ACC. 
STUD. 536 (2019) (“deHaan et al. 2019 Study”) (estimating, on an equally weighted basis, returns of 5% to 
initial Schedule 13D filings by activist hedge funds from 1994 through 2011, with, on average, no reversal 
in returns over the following two years); Brav et al. 2022 Study (estimating an announcement return of 
about 5% to blockholdings by hedge fund activists from 1994 to 2018, with, on average, no reversal in 
returns over the following three years). While much of the academic research has focused on blockholdings 
by activist hedge funds, other studies have found similar stock returns related to Schedule 13D filings by 
other types of investors. See, e.g., Ulf von Lilienfeld-Toal & Jan Schnitzler, The Anatomy of Block 
Accumulations by Activist Shareholders, 62 J. CORP. FIN. 101620 (2020) (“Lilienfeld-Toal & Schnitzler 

 
 



230 

Proposing Release, the literature does not find that these returns reverse in the long term, though 

the determination of long-term returns is inherently more complicated than measuring short-term 

returns.828 Researchers have also found that the degree of impact that these activities have on 

shareholder value varies significantly with an issuer’s market capitalization, with smaller-cap 

issuers experiencing significantly larger returns (expressed as a percentage) around the 

disclosure of an activist campaign than larger-cap issuers.829 Researchers have debated whether 

 
2020 Study”) (estimating returns of 7% to 8% around initial Schedule 13D filings by external shareholders 
in 2001 through 2016, irrespective of filer type); Swanson et al. 2022 Study (estimating returns of 5% 
around initial Schedule 13D filings in 1994 through 2014, with no statistically significant difference in the 
returns around filings by hedge funds versus those by other private activists).  

828  See Proposing Release at 13885 and supra note 827. Several commenters cited a different study than those 
cited above, with one stating that it “shows the stock price increase is temporary and in fact the company is 
often in a weaker economic position post-activist intervention.” See letter from Sen. Baldwin, et al; see also 
letter from Labor Unions. The cited study presents results showing that a measure of firm valuation 
increases for firms targeted by hedge fund activists relative to a matched sample of similar, non-targeted 
firms in the year after activists report their ownership, but that there is no statistically significant difference 
in this metric across the targeted and matched firms over a longer horizon. However, this study does not 
investigate stock price or stock returns, but instead measures firm valuation as Tobin’s Q, which the 
authors define as ratio of a firm's market value of assets to the replacement value of assets. This metric may 
therefore reflect changes in a number of factors beyond stock returns, such as changes in debt values and 
changes in book assets, and cannot be interpreted equivalently to the studies cited above. Further, the 
results of the matched sample analysis demonstrate that the differential in Tobin’s Q diminishes over longer 
horizons, but not that the improvement among targeted firms is necessarily temporary; it is possible that the 
gap narrows due to a similar but delayed improvement in the matched control firms. It is also unclear how 
the study treats targets that are later acquired, which is a common outcome for targeted firms and could bias 
the long horizon results. Finally, the longer-horizon tests use a different baseline than the shorter-horizon 
tests (Tobin’s Q one year after activists report their ownership is compared to the same metric one year 
before activists report their ownership, while Tobin’s Q five years after activists report their ownership is 
compared to the same metric five years before activists report their ownership), which may affect the 
interpretation of the results. See Mark DesJardine & Rodolphe Durand, Disentangling the Effects of Hedge 
Fund Activism on Firm Financial and Social Performance, 41 STRATEG. MGMT. J. 1054 (2020) 
(“DesJardine and Durand 2020 Study”) (with matched sample results presented in Table 7). One 
commenter noted additional concerns with this study. See letter from Profs. Bishop and Partnoy II. A 
different study using a larger sample of hedge fund activist campaigns finds differing results under multiple 
matched-sample approaches, with a statistically significant increase in Tobin’s Q for targeted firms, 
including over a five-year horizon. See Brav et al. 2022 Study (at Table 9, Panel A). 

829  See, e.g., deHaan et al. 2019 Study (finding that the average long-term returns around hedge fund activism 
on an equally weighted basis are driven by the smallest 20% of targets by market capitalization); Brav et al. 
2022 Study (documenting a roughly 2-3% announcement return for the largest two terciles of targets of 
activist hedge funds, compared to a roughly 9% announcement return for the smallest tercile of targets, 
based on market capitalization). We note that a smaller percentage return for an issuer with a larger market 
capitalization may imply a larger total dollar impact on shareholder value than that associated with a larger 
percentage return for a smaller issuer. 



231 

the activists’ actions are responsible for any of this increase in value. Some researchers argue 

that any stock price reaction may instead reflect activists’ ability to select issuers that are likely 

to be taken over or to recover from underperformance for other reasons.830 However, broader 

evidence supports the hypothesis that activists’ actions are responsible for the vast majority of 

the increase in value.831  

There is also academic research on the effect of activist campaigns on investors other 

than shareholders of the targeted issuers. Studies have associated activist campaigns with a 

positive effect on the operational and financial performance, as well as shareholder value, of 

issuers other than the targeted issuers, based on the perceived likelihood of a potential activist 

 
830  See, e.g., Cremers et al. 2018 Study; deHaan et al. 2019 Study; Yvan Allaire & François Dauphin, The 

Game of ‘Activist’ Hedge Funds: Cui Bono?, 31 INT. J. DISCL. GOV. 279 (2016). 
831  See, e.g., Brav et al. 2022 Study (finding that the outperformance of issuers targeted by activists persists 

even when benchmarked against a variety of matched control samples, including a control sample of non-
targeted issuers that are closely matched to the targeted issuers based on their condition at the time of 
targeting as well as changes in performance prior to that time); Rui Albuquerque et al., Value Creation in 
Shareholder Activism, 145 J. FIN. ECON. 153 (2022) (“Albuquerque et al. 2022 Study”) (estimating that 
only 13% of the total returns associated with activist campaigns could be attributed to stock-picking ability 
as opposed to the campaigns themselves); Robin Greenwood & Michael Schor, Investor Activism and 
Takeovers, 92 J. FIN. ECON. 362 (2009) (finding that returns associated with Schedule 13D filings are 
driven by activists’ success at getting target firms acquired, and not just selecting targets that are likely to 
get acquired); Nicole Boyson et al., Activism Mergers, 126 J. FIN. ECON. 54 (2017) (finding that even 
Schedule 13D targets with failed acquisition bids experience improvements in operating performance, 
financial policy, and positive long-term abnormal returns); Swanson et al. 2022 Study (finding significant 
abnormal returns associated with the subsets of Schedule 13D filings presenting a variety of non-sale 
demands, such as demands associated with corporate strategy, and not just for those presenting demands for 
a sale of all, or part, of the company). Various studies have also associated activist campaigns with 
operational improvements. See, e.g., Nicole M. Boyson & Robert Mooradian, Corporate Governance and 
Hedge Fund Activism, 14 REV. DERIVATIVES RES. (2011) (finding an increase in return on assets for issuers 
that are the subject of hedge fund activist campaigns, relative to similar non-targeted issuers); Alon Brav et 
al., The Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Labor Outcomes, 28 REV. 
FIN. STUD. 2723 (2015) (“Brav et al. 2015 Study”) (finding an increase in productivity at the plant level for 
issuers that are the subject of hedge fund activist campaigns, but not for similar plants at non-targeted 
issuers); Nickolay Gantchev et al., Activism and Empire Building, 138 J. FIN. ECON. 526 (2020) (finding 
that issuers that are the subject of hedge fund activist campaigns reduce value-destructive acquisition 
activity relative to similar, non-targeted issuers). 



232 

campaign targeting these other issuers.832 Other research has found that issuers that are the 

suppliers or close competitors of the targeted issuers, in certain circumstances, experience 

decreases in shareholder value around an activist campaign, which researchers have associated 

with cost-cutting and increased efficiency at the target issuer.833 These effects on suppliers and 

competitors of targeted issuers are consistent with activism having beneficial competitive effects 

related to improvements in operational efficiency, as noted by a commenter.834 Other academic 

studies have found that activist campaigns have a mixed impact on debtholders of the targeted 

 
832  See, e.g., Nikolay Gantchev et al., Governance Under the Gun: Spillover Effects of Hedge Fund Activism, 

23 REV. FIN. 1031 (2019) (“Gantchev et al. 2019 Study”) (finding that an interquartile increase in the 
“threat” of an activist campaign is associated with operational and financial improvements and a 2.4% 
positive stock return at the issuers with a high perceived “threat” of being targeted); Caroline Heqing Zhu, 
The Preventative Effect of Hedge Fund Activism: Investment, CEO Compensation, and Payout Policies, 17 
INT. J. MAN. FIN. 401 (2021) (finding that an increase in the likelihood of an activist campaign is associated 
with proactive corporate policy changes and improved operating performance in the form of an increase in 
return on assets). 

833  See, e.g., Hadiye Aslan, Shareholders Versus Stakeholders in Investor Activism: Value for Whom?, 60 J. 
CORP. FIN. 101548 (2020) (finding reduced profit margins and stock prices reflecting a negative 
announcement return of about -1.5% for the suppliers of an issuer targeted by an activist hedge fund 
relative to suppliers of other issuers and finding that the economic effects on suppliers are stronger for the 
suppliers of target firms with high cost efficiency or operating margin improvements after the activist 
campaign); Hadiye Aslan & Praveen Kumar, The Product Market Effects of Hedge Fund Activism, 119 J. 
FIN. ECON. 226 (2016) (finding a negative announcement return for those close competitors of an issuer 
targeted by an activist hedge fund that do not themselves face the “threat” of activist hedge fund campaign, 
while those close competitors that do face such a “threat” experience positive announcement returns; and 
finding that the impact on competing firm performance is stronger for targets with, among other things, a 
greater improvement in productivity). 

834  See Lewis Study II (exhibit to letter from EIM IV). Several other commenters also questioned the DERA 
Memorandum’s inclusion of a discussion of shareholders of a target’s suppliers and competitors. See letters 
from EIM IV; CIRCA IV. We acknowledge that effects on these shareholders represent transfers rather 
than market-level economic benefits or costs of activism (e.g., costs to these shareholders may result even 
when the market benefits as a whole from enhanced operational efficiency and competition). As noted, we 
refer to the impact on entities other than the target issuer here as evidence that activism can have beneficial 
competitive effects, rather than to place a primary emphasis on consideration of shareholders of issuers 
other than the target issuers in determining appropriate disclosure deadlines and related amendments. 



233 

issuer, depending on the nature of the campaign’s goals and how pursuing those goals would 

impact both performance and also the level of financial risk of the issuer.835 

Considerations 

Commenters noted that if there are fewer activist campaigns under the amended deadline, 

there will be reduced shareholder value creation.836 Commenters also noted that a reduction in 

activist campaigns would result in decreased corporate accountability and, on average, a 

reduction in operational efficiency, both because of the reduced direct beneficial effect of 

activists (on average) on the operations of targeted issuers837 and because of the reduced indirect 

beneficial effect of the possibility of becoming a future activist target (or of competition with 

targeted issuers) on the operational performance of non-targeted issuers.838 Some commenters 

 
835  See, e.g., April Klein & Emanuel Zur, The Impact of Hedge Fund Activism on the Target Firm’s Existing 

Bondholders, 24 REV. FIN. STUD. 1735 (2011) (estimating that bonds of targeted issuers experience, on 
average, a negative announcement return of about -4% to activist hedge fund campaigns); Hadiye Aslan & 
Hilda Maraachlian, Wealth Effects of Hedge Fund Activism (Working Paper, 2018), available at 
https://ssrn.com/abstract=993170 (estimating that bonds of targeted issuers experience, on average, a 
positive announcement return of about 2% to activist hedge fund campaigns, but with variation based on 
the type of campaign: bondholders benefit the most for those with governance-related goals, while those 
calling for restructuring the issuer lead to bondholder losses); Jayanthi Sunder et al., Debtholder Responses 
to Shareholder Activism: Evidence from Hedge Fund Interventions, 27 REV. FIN. STUD. 3318 (2014) 
(examining changes in bank loan spreads upon activist hedge fund campaigns and finding that spreads 
increase in response to merger-related or restructuring campaigns but decrease in response to those that 
seek to address governance-related issues). 

836  See letters from 65 Professors; AIMA; C. Penner and Prof. Eccles; CIRCA I; EIM I; M. Frampton; MFA; 
Profs. Swanson, Young, and Yust; PSCM; Profs. Eccles and Rajgopal; Rice Management; S. Lorne. One 
comment letter provided an analysis in which the commenters concluded that “net investors benefit 
significantly during the relevant time period,” estimating a $12 million benefit to net investors per 
campaign based on their computation of the net order imbalance and stock returns from each day through 
30 days after the Schedule 13D filing dates. See letter from Profs. Bishop and Partnoy III. 

837  See supra note 831 for detail on studies that have associated activist campaigns with operational 
improvements. 

838  See supra note 832. Reductions in operational efficiency and the associated weakening of competition 
could result in greater shareholder value at some supplier and competitor firms of potential targets, per the 
academic research cited above, but this would not represent a market-level benefit. See supra note 834. See 
also letters from 65 Professors; AIMA; C. Penner and Prof. Eccles; CIRCA I; CIRCA IV; Dodge & Cox; 
EIM I; ICM; M. Frampton; MFA; Prof. Gordon; Profs. Schwartz and Shavell I; Prof. Webber; PSCM; 
Profs. Eccles and Rajgopal; Rep. Torres, et al. 



234 

indicated that activist investors would continue their activities despite reduced profitability.839 

Others indicated that such reduced profitability and the acceleration of potential defensive 

responses by the target issuer would impede activism.840 Some commenters indicated that a 

reduction in the pursuit of activist campaigns and in the disciplining effect on corporate 

accountability of the possibility of such campaigns would result in reduced market efficiency,841 

a less optimal allocation of resources,842 reduced liquidity,843 and reduced trust in markets 

because managers are not held accountable.844  

We acknowledge that a reduction in investment research and in significant shareholdings 

by investors who undertake such campaigns could reduce market efficiency (and thereby the 

efficient allocation of resources) because of the role that investments based on such research and 

analysis play in moving stock prices closer to their fundamental values. A reduction in such 

activities could also reduce liquidity, as noted by commenters,845 by lessening liquidity provision 

in the securities market by these investors (through, e.g., limit orders) as they build their stakes. 

We acknowledge the beneficial effects of activism to the market. However, our analysis of 

historical data indicates that 80 percent of campaigns were completed by the amended deadline, 

with 97 percent of campaigns having completed 90 percent of their stakes by the amended 

 
839  See letters from AFREF; Better Markets I; HMA II; SCG; WLRK I. 
840  See letters from AIMA; CIRCA I; Dodge & Cox; EIM I; ICM; M. Frampton; MFA; Prof. Gordon; Profs. 

Schwartz and Shavell I; Profs. Swanson, Young, and Yust; Profs. Eccles and Rajgopal; Rep. Torres, et al.; 
S. Lorne; STB; TRP. 

841  See letters from AIMA; Dodge & Cox; EIM I; MFA; Profs. Swanson, Young, and Yust; Profs. Eccles and 
Rajgopal; Rice Management; STB. 

842  See letters from 65 Professors; EIM I; Rep. Torres, et al.; TRP. 
843  See letters from AIMA; EIM I. 
844  See letters from C. Penner and Prof. Eccles; Dodge & Cox; EIM I. 
845  See supra note 843. 



235 

deadline.846 We therefore expect the majority of campaigns will be largely unaffected by the 

deadline. In addition, for those campaigns that would be affected by the deadline, we expect the 

activists will adapt to the shortened deadline and continue to pursue the campaigns, thereby 

preserving the beneficial effects of their activism.847  

Some commenters indicated that activist campaigns are not uniformly beneficial, and that 

the short-term price reaction to such campaigns may not translate into positive shareholder value 

impacts in the long-term.848 Some commenters stated that a reduction in such campaigns and the 

threat of such campaigns could be beneficial because it would reduce the pressure on issuers to 

make changes in governance, payouts, or investments that are not in the interest of long-term 

shareholders.849 One commenter stated that activist campaigns are a deterrent to going public,850 

implying that a reduction in such activities could encourage more companies to enter the public 

markets. We acknowledge that activist campaigns are heterogeneous. While the average impact 

of activist campaigns on shareholder value is likely to be positive in the long-term as well as the 

short-term,851 some campaigns may have a negative impact on shareholder value either in the 

short- or long-term. It is possible that some of the activist campaigns that are less likely to occur 

 
846  See supra section IV.B.3.a.iii, Table 3.  
847  Although we believe that activists whose campaigns are impacted by the shortened deadline are likely to 

adapt and continue with their campaigns, we note that there are costs likely associated with those 
adaptations, as discussed below. Thus, although the market is likely to benefit from an activist campaign 
that continues as a result of such adaptations, the costs associated with those adaptations may reduce the 
extent of such benefits. Nevertheless, because those campaigns would still proceed, the potential reduction 
in benefits resulting from the costs associated with an adaptation likely would be significantly less than the 
elimination of all the potential benefits if the campaign were abandoned outright. 

848  See letters from AFREF; Better Markets I; Labor Unions; NIRI; R. Steel and Prof. Goshen; SCG; Sen. 
Baldwin, et al.; WLRK I. 

849  See letters from AFREF; NIRI; SCG; Sen. Baldwin, et al. 
850  See letter from SCG. 
851  See, e.g., Bebchuk et al. 2015 Study; Kedia et al. 2021 Study; Boyson & Pichler 2019 Study; Cremers et al. 

2018 Study; Swanson et al. 2022 Study; deHaan et al. 2019 Study; Brav et al. 2022 Study; Lilienfeld-Toal 
& Schnitzler 2020 Study; Swanson et al. 2022 Study.  



236 

after the adoption of the final rules would have decreased shareholder value, such that activists 

forgoing those campaigns could benefit shareholders. A lower risk of facing an activist campaign 

could, per the commenter cited above, also be a positive factor in the decision of additional 

companies to enter the public markets. That said, the final amendments are not intended to 

discourage activism. Instead, they reflect our attempt to ensure investors receive material 

information in a timely manner while, at the same time, maintaining the balance between issuers 

of securities and the shareholders who seek to exert influence or control over issuers that 

Congress sought when enacting section 13(d).  

Some commenters stated that certain types of activist campaigns were more likely to be 

forgone as a result of a shortened deadline. For example, some commenters stated that a 

reduction in campaigns was more likely among those campaigns targeting smaller issuers with 

lower trading volumes852 or for certain types of activist campaigns (e.g., those pursuing changes 

at an issuer rather than a potential sale of the issuer).853 Some commenters noted that the final 

amendments may reduce competition among investors who pursue activist campaigns,854 as 

more sophisticated and experienced investors may be better able to adapt to the final 

amendments. We acknowledge that the final amendments may have differential impacts on 

different types of activist campaigns. For instance, it may be more costly for a filer to accelerate 

the completion of its stake under a shortened filing window for smaller, less liquid issuers. 

However, in Table 6 above, we find that the targets of filers who currently continue to 

accumulate a significant fraction of their stake after the five-business day deadline are, on 

 
852  See letters from CIRCA I; ICM; Prof. Gordon. 
853  See letter from Profs. Swanson, Young, and Yust. 
854  See Lewis Study I (Exhibit to letter from EIM I); letter from MFA. 



237 

average, slightly larger and more liquid than other targets. Further, studies cited earlier in this 

section find that the abnormal stock returns around the announcement of activist campaigns are 

lower for larger issuers. These lower expected gains from campaigns at larger issuers could make 

investors less likely to bear additional costs to conduct such a campaign by one of the adaptation 

strategies discussed (rather than forgoing the campaign) relative to potential campaigns at 

smaller issuers even if these costs of doing so are lower than they would be at smaller, less liquid 

issuers, as noted above.  

To summarize, while the amended filing deadline may make a minority of campaigns less 

profitable and, as a result, could potentially reduce shareholder value creation, we do not expect 

a substantial reduction in the extent of activism as most historical campaigns would not have 

been impacted by the amended filing deadline and since activists may adapt to accommodate the 

amended deadline and we expect that in most if not all cases, they will do so.   

Implications of Changes to Activist Campaigns 

As referenced above, filers have various ways to adapt to the amended filing deadlines 

and we expect that many filers will likely use these methods of adaption to the amended filing 

deadline where they remain incentivized to pursue their campaigns. For example, some filers 

may proceed with smaller stakes, other filers may accumulate shares more quickly during the 

amended filing window (or add to their stake after the filing date), while others may acquire an 

economic interest in the issuer, such as by using cash-settled swaps or other derivatives. We 

expect that such adaptations are most likely to arise in the context of non-corporate-action filings 

in which filers would otherwise have continued to accumulate shares on the open market after 

the amended filing deadline (i.e., campaigns like those represented in Columns 2, 3, and 4 of 



238 

Table 6).855 Some commenters stated that investors have a target share accumulation that would 

be required to make a campaign worthwhile and that in some cases this target would not be 

achievable under the amended deadline.856 One of these commenters noted that investors may 

file early if they reach their target ownership before the filing deadline, but implied that one 

should not assume from observing these filings that they can reach their target ownership with 

the same speed in all instances.857 We note also that some commenters stated that the proposed 

five-calendar day filing window would provide activist investors ample time to accrue a 

significant stake,858 implying that filers would be able to adapt to the revised deadline. While a 

filer’s adaptation strategy will ultimately be based on its assessment of the benefits and costs of 

various available strategies, which will likely vary across filers and specific situations, we expect 

that most of the profitable campaigns will continue to be profitable notwithstanding the five-

business day filing deadline. In these cases, we expect activists to use adaptation strategies rather 

than forgo the campaigns. And, we expect that most campaigns will not be constrained by the 

amended filing deadline as, historically, 97 percent of campaigns achieved 90 percent of their 

position by the amended deadline.859  

The degree to which the benefits associated with earlier disclosure under a shortened 

filing deadline would be achieved also depends on how the filers respond to the shortened 

deadline. As an adaptation strategy, some filers may simply proceed with acquiring a smaller 

stake in an issuer, notwithstanding the reduced potential profits.  

 
855  As discussed in section IV.C.1.b.i above, we believe that the process of acquiring shares is unlikely to be 

significantly impacted in most other cases. 
856  See letters from AIMA; CIRCA I; ICM; Prof. Gordon. 
857  See letter from AIMA. 
858  See letters from ABA; Better Markets I; NASDAQ; SCG; WLRK I. 
859  See Table 3 and supra note 724. 



239 

Alternatively, filers could adapt to the amended filing deadline by accumulating shares 

more quickly during the modified filing window or adding to their stake after the filing date. 

Such approaches are likely to preserve more fully both the current shareholder value impact of 

the campaigns and the benefits of earlier disclosure. We acknowledge that these adaptations 

would entail greater costs to filers because the additional shares would likely be purchased at 

higher prices than under the current accumulation pattern.860 Further, in some cases post-filing 

purchases may be precluded because issuers could react to the disclosure by adopting low-

threshold poison pills or other defensive measures. While some commenters suggest that 

adaptations that rely on accumulating shares more quickly could further reduce market efficiency 

should volatility increase as a result of aggressive purchasing,861 we do not believe that a 

temporary increase in volatility would be disruptive enough to override the benefits to price 

informativeness mentioned above.  

Filers could also adapt by instead acquiring an economic interest in the issuer, such as by 

using cash-settled swaps or other derivatives.862 Although these instruments would not replace 

the ownership of shares in the issuer, and generally do not provide voting rights, they may have 

the effect of providing economic exposure to the issuer without triggering the section 13(d) 

 
860  In the case of stock purchases after an earlier filing date, these shares would be purchased at the higher 

stock price that prevails after the filing date (i.e., the price reflecting the market’s knowledge of the filer’s 
intentions). Accumulating shares more quickly would generally entail purchases at higher prices because, 
all else equal, larger order sizes or more aggressive trading has greater price impact. See, e.g., Albert S. 
Kyle, Continuous Auctions and Insider Trading, 53 ECONOMETRICA 1315 (1985). 

861  See letters from AIMA; EIM I; Rice Management; STB. 
862  Staff have noted that some Schedule 13D filers already make use of cash-settled derivatives referencing the 

issuer in which they report beneficial ownership. See, e.g., Memorandum of the Staff of the Division of 
Economic and Risk Analysis, Supplemental Data and Analysis Regarding the Proposed Reporting 
Thresholds in the Equity Security-Based Swap Market (June 20, 2023), available at 
https://www.sec.gov/comments/s7-32-10/s73210-207819-419422.pdf. Thus, it is plausible that at least 
some filers could adapt to the amendments by making greater use of these instruments. See Security-Based 
Swaps Release for a discussion of the circumstances in which a holder of a SBS currently may be deemed 
the beneficial owner of the class of equity securities referenced by the swap. 



240 

beneficial ownership reporting obligation. Such economic exposure would allow filers to remain 

financially incentivized to pursue campaigns that create shareholder value, as opposed to 

forgoing such campaigns solely due to the shortened filing deadline.  

Some commenters indicated that such a heavier reliance by activist investors on 

derivatives may be an unintended consequence of a shortened Schedule 13D filing window.863 

Adaptations involving the use of derivatives would generally entail some incremental costs to 

these investors because of the premiums charged by counterparties for these products, and, as 

noted, would not provide the investors with voting rights beyond those associated with any 

shares they otherwise beneficially own. That said, such approaches may often be the most cost-

effective alternative for activist investors and may preserve the shareholder benefits associated 

with the campaigns.  

An increased reliance on these products may, in certain situations, reduce the overall 

benefits associated with a shortened filing deadline by reducing the likelihood that disclosure of 

economic interests would occur any earlier than under the status quo. In particular, cash-settled 

swaps and related derivatives do not generally give rise to beneficial ownership as they do not 

generally provide voting or disposition rights over the reference securities.864 They therefore 

generally fall outside the scope of the primary purpose of the Schedule 13D filings and the 

section 13(d) beneficial ownership reporting system, which are focused on disclosure of a filer’s 

accumulation of equity securities that provide rights that could allow the filer to control or 

influence control over an issuer. Nevertheless, it is possible that some market participants may 

look to Schedule 13D filings (in particular, Item 6 of Schedule 13D) for information about a 

 
863  See letter from Profs. Swanson, Young, and Yust. 
864  See supra section II.B.3.241 

filer’s accumulation of economic interests, such as cash-settled swaps and derivatives without 

voting or disposition rights. Acquisition of these instruments could allow a filer to obtain more 

than five percent of economic interest in an issuer’s covered class and then, at a later point, cross 

the five percent beneficial ownership threshold through holding or acquiring equity securities of 

the covered class—triggering the requirement for a Schedule 13D filing in five business days—

at a later date. In this scenario, there is no delay in the disclosure of the information that 

Schedule 13D filings and section 13(d) are intended to provide—the beneficial ownership of the 

equity securities that provide voting and disposition rights. However, the filer does delay 

disclosure relative to obtaining the purely economic exposure of more than five percent of the 

issuer represented by the cash-settled swaps or derivatives. As such, an investor’s pattern of 

accumulation of economic interest, relative to when their campaign is revealed to the market, 

may not differ from that under the status quo. In fact, depending on the degree of reliance on 

cash-settled derivative securities, complete disclosure of an investor’s total economic interest in 

an issuer may, under the final rules, be reduced or further delayed than under the baseline, such 

as in cases where, notwithstanding acquisition of these instruments, the investor beneficially 

owns five percent or less of a covered class and no Schedule 13D filing obligation is triggered. 

Still, we cannot predict the extent to which investors will adapt by accumulating cash-settled 

swaps or derivatives in lieu of equity securities, including because cash-settled swaps and 

derivatives generally represent only an economic interest in the issuer, with no voting rights or 

disposition rights with respect to the reference securities, and therefore cannot be presumed to be 

equivalents to equity securities that do provide such rights.  

Initial Schedule 13D filings signal to the market that an investor may intend to influence 

an issuer, often through activism. For market participants that value such signals, regardless of 



242 

beneficial ownership, an increased reliance by activist investors on financial instruments that 

generally do not trigger the section 13(d) beneficial ownership reporting obligations, such as 

cash-settled swaps or derivatives, may reduce the overall benefits associated with a shortened 

filing deadline by reducing the likelihood that disclosure of such information would occur any 

earlier than under the status quo.   

We note that one commenter stated that potential adaptations presented in the DERA 

Memorandum are “neither cost-free nor viable,”865 and we recognize that the amended filing 

deadline may make a minority of campaigns more costly, including as a result of the adaptations. 

Similarly, we acknowledge that there would be costs, and reduced benefits, to the extent activism 

is reduced as a result of the final rules. However, we do not expect a substantial reduction in the 

extent of activism as historical evidence suggests most campaigns would not be impacted by the 

amended filing deadline.  

ii. Compliance Costs 

A shortened initial Schedule 13D filing deadline may increase compliance costs for 

beneficial owners who have an obligation to file an initial Schedule 13D under the final rules. 

For example, beneficial owners who regularly make significant stock investments could incur a 

one-time cost to update their information technology systems to monitor securities transactions 

and generate alerts and reports in time to accommodate the rule change. They may also need to 

allocate more resources on an ongoing basis to monitor their holdings in accordance with the 

amended deadline so that they can meet their obligation to file an initial Schedule 13D. In 

addition, external service providers and advisers may charge higher fees for expedited processing 

 
865  See letter from EIM IV (also stating that potential adaptations “would fundamentally alter how an activist 

assembles its exposure to a given company in ways that would impair the ability of an activist to pursue a 
particular campaign”). 



243 

and/or for weekend services, which may be more frequently required under the final 

amendments. Compliance costs may increase both in the context of non-corporate-action filings 

and corporate action filings. The compliance costs could be more significant for some filers (e.g., 

those with more complex affiliate structures or investment strategies) than others. 

Commenters identified additional compliance challenges that may arise as a result of the 

shortened initial Schedule 13D deadline. For example, some commenters noted aspects of the 

initial Schedule 13D filing process that have not become simplified as a result of technological 

advancements, including nuanced legal analysis, drafting of narratives, and certain data 

collection, determinations, and computations that are accomplished manually or with reliance on 

external resources.866 Others noted issues for first-time filers that may be hard to resolve within 

five business days, such as the processing time (including delays) for receiving EDGAR filing 

codes,867 or stated that compliance burdens would be greater for non-institutional filers or 

smaller institutional filers lacking certain infrastructure or personnel,868 and that the accelerated 

filing deadline may require an increased reliance on third parties.869 

We acknowledge that not all aspects of preparing and submitting an initial Schedule 13D 

have been simplified by technology, and that the amended filing deadline may increase certain 

compliance costs given the need to complete these tasks in a shorter timeframe. We also 

acknowledge that the incremental compliance burdens may be greater for smaller, less 

experienced filers than for other filers due to their more limited internal resources and expertise 

in preparing filings. In particular, these filers are less likely to have operational systems and 

 
866  See letters from ABA; Dodge & Cox; IAA; MSBA; STB. 
867  See letters from MSBA; STB. 
868  See letters from A. Day; E. Fraser; Perkins Coie. 
869  See letter from E. Fraser. 



244 

processes in place to facilitate compliance with the revised filing deadline. They are also likely to 

be more reliant on external advisers and service providers, who may charge higher fees for 

expedited processing and/or for weekend services.  

2. Shortened Schedule 13G Filing Deadlines 

The final amendments to Rules 13d-1(b), (c), and (d) and 13d-2(b), (c), and (d) shorten 

the filing deadlines for both initial and amended Schedule 13G filings as well as, in certain cases, 

increasing their frequency.870 As discussed in more detail in section II.A.2 above, under the final 

amendments, QIIs and Exempt Investors will be required to file an initial Schedule 13G within 

45 days after calendar quarter-end if, as of the end of that quarter, their beneficial ownership 

exceeds five percent (rather than the current deadline of 45 days after the calendar year-end at 

which beneficial ownership exceeds five percent). The filing obligation for QIIs will be 

accelerated from 10 days to five business days after month-end if, as of such month-end, their 

beneficial ownership exceeds 10 percent. Passive Investors will be required to file an initial 

Schedule 13G within five business days (rather than the current deadline of 10 days) after 

crossing the five percent beneficial ownership threshold. All three filer types will be required to 

file a Schedule 13G amendment within 45 calendar days after any calendar quarter-end at which 

there is a material change in the information previously reported in a Schedule 13G (rather than 

the current deadline of 45 days after any calendar year-end at which there are “any changes” in 

the information previously reported). For QIIs and Passive Investors, the requirement to file a 

Schedule 13G amendment upon exceeding 10 percent beneficial ownership or an increase or 

 
870  For the purpose of this economic analysis, we refer to an “increased frequency” of Schedule 13G filings 

under the final amendments because the frequency of Schedule 13G filings is generally expected to 
increase overall. However, the frequency of filings will not necessarily increase in all cases. If there is only 
one material change (or no such change) in the information reported in a Schedule 13G filing over the 
course of a year, then the reporting frequency generally will be the same as under the current regime. 



245 

decrease in beneficial ownership thereafter of more than five percent will be accelerated. 

Specifically, QIIs will be required to file an amendment five business days (rather than the 

current deadline of 10 days) after any month-end at which beneficial ownership meets one of 

these thresholds, while Passive Investors will be required to file an amendment within two 

business days (rather than the current deadline of “promptly”) after beneficial ownership meets 

one of these thresholds. 

A. Benefits 

Academic research has provided evidence that at least some Schedule 13G filings contain 

value-relevant information that is not already incorporated in market prices, as discussed in more 

detail below.871 The acceleration of such Schedule 13G filings under the final rules may thus 

benefit market participants. Specifically, investors and issuers, with earlier access to the 

information and an updated stock price, may be able to make better-informed investment and 

resource allocation decisions. At an economy level, this better-informed decision-making may 

improve the efficiency of resource allocation overall. 

Some commenters agreed that the proposed acceleration of beneficial ownership 

reporting as a whole, including the proposed revisions to Schedule 13G filing deadlines, would 

make material information available to all investors in a more timely manner.872 Some 

commenters also specified reasons that the information in Schedule 13G filings in particular is 

important to investors and issuers.873 For example, one commenter stated that there are 

“significant risks and impacts of large holdings on investors irrespective of the stated intentions 

 
871  See infra notes 883-885 and accompanying text. 
872  See letters from ABA; AFREF; EEI; FedEx; Freeport-McMoRan; Nasdaq. 
873  See letters from AFREF; HMA I; Nasdaq; SCG. 



246 

of a large position holder,” such as the risk of stock price volatility if a large shareholding were 

to be sold.874 Another commenter stated that the disclosure of beneficial owners in Schedule 13G 

filings, together with Schedule 13D filings, “help inform the education and advocacy efforts of 

those with a stake in . . . important votes.”875 Other commenters indicated that information about 

all large shareholders facilitates issuer efforts to identify and engage with these shareholders in 

order to elicit their views and ideas.876 

On the other hand, some commenters stated that they do not believe there is a “harmful” 

information asymmetry or other problem that justifies an acceleration of the Schedule 13G 

deadlines,877 or indicated that the earlier disclosure of the information in Schedule 13G filings 

would be of limited, if any, benefit.878 For example, some indicated that the concerns that could 

justify accelerating Schedule 13D filings would not equally apply to Schedule 13G filings.879 

Some commenters stated that the information in Schedule 13G filings is unlikely to be material 

because of the passive intent of the filers880 or because of existing disclosures (such as Schedule 

13F or Form N-PORT881 for some QIIs, or registration statements for some Exempt Investors) 

that provide similar information.882 

 
874  See letter from HMA I. 
875  See letter from AFREF. 
876  See letters from Nasdaq; SCG. 
877  See letters from ICI I; MFA; MSBA; SIFMA; SIFMA AMG; SSC; TIAA; TRP. 
878  See letters from ABA; MFA; TRP. 
879  See letters from ICI I; MSBA; SIFMA; TIAA. 
880  See letters from ABA; MFA; MSBA; STB. 
881  Though a commenter referenced Form N-Q, we note that this form has been rescinded and similar 

information is now disclosed in Form N-PORT. 
882  See letters from ABA; MFA; SIFMA AMG. 



247 

Given commenters’ statements regarding a lack of material information in Schedule 13G 

filings and limited benefits from the acceleration of these filings, we reconsidered the evidence 

on the market impact of these filings. Initial Schedule 13G filings by hedge funds in particular 

have consistently been associated by multiple academic studies with, on average, a statistically 

significant positive stock price reaction around the filing date.883 Similarly, one study found that 

all initial Schedule 13G filings that are not submitted 45 days after the end of the calendar year 

(i.e., generally Schedule 13G filings by Passive Investors, including some hedge funds, which 

are required to be made within 10 days of the trigger date) are associated, on average, with a 

statistically significant stock market reaction.884 This study also finds that initial Schedule 13G 

filings submitted 45 days after the end of the calendar year (i.e., generally Schedule 13G filings 

by QIIs and Exempt Investors, which include some hedge funds) are not associated with a 

 
883  See, e.g., Albuquerque et al. 2022 Study (finding that Schedule 13G filings by hedge funds are associated 

with an average cumulative abnormal return of about 1.2% over the period from 30 days before to 10 days 
after the filing date); Alex Edmans et al., The Effect of Liquidity on Governance, 26 REV. FIN. STUD. 1443 
(2013) (“Edmans et al. 2013 Study”) (finding that Schedule 13G filings by hedge funds are associated with 
an average cumulative abnormal return of 0.8% over the period from one day before to one day after the 
filing date); and Christopher Clifford, Value Creation or Destruction? Hedge Funds as Shareholder 
Activists, 14 J. CORP. FIN. 323 (2008) (“Clifford 2008 Study”) (finding that Schedule 13G filings by hedge 
funds are associated with an average cumulative abnormal return of 1.6% over the period from two days 
before to two days after the filing date, and that there are similar positive cumulative abnormal returns 
around the filing date for filings submitted within 10 days of the trigger date and for all Schedule 13G 
filings by hedge funds regardless of the timing of the filing). These researchers vary in their interpretation 
of these results, with some attributing the positive returns to a governance role of the filers (i.e., a 
contribution to the promotion of corporate accountability) and others asserting that the positive return may 
be a reflection of the market’s view of the filers’ stock-picking ability. There may be further potential 
explanations for the market reaction. For example, the presence of certain significant shareholders (e.g., an 
investor known to pursue activist strategies at some of the issuers in which they invest, or an institutional 
investor known to have voted in the past in favor of changes proposed by activists) could provide 
information about the likelihood of a future activist campaign or the likelihood of success of such a 
campaign. See, e.g., Kedia et al. 2021 Study (finding that the composition of institutional ownership of an 
issuer is associated with both the likelihood of being targeted by an activist campaign and the outcomes of 
such campaigns). 

884  See Albuquerque et al. 2022 Study (finding, in a sample of all Schedule 13G filings from 1996 to 2016, that 
Schedule 13G filings that are not made 45 days after calendar year-end, but are instead made on any other 
day, experience a statistically significant cumulative abnormal return of 0.59% around the filing date). 



248 

meaningful stock market reaction on average.885 It is unclear whether this finding with respect to 

post-year-end filings, in contrast to the findings with respect to other Schedule 13G filings, is 

attributable to the different types of persons filing on a calendar-year-end filing schedule or by 

an effect of the year-end filing schedule itself on the significance of the information to the 

market by the time it is reported on Schedule 13G. Overall, this and other studies provide support 

for commenters’ assertions that at least some Schedule 13G filings contain market-moving 

information.   

Some commenters stated that any benefits of the proposed filing deadlines would be 

limited due to an increase in inaccurate filings as a result of the accelerated preparation of filings 

or due to a risk of information overload from the increased number of filings.886 The filing 

deadlines we are adopting in the final amendments for Schedule 13G require, in many cases, less 

frequent filing, and provide longer windows prior to filing, than the proposed filing deadlines. 

Accordingly, the adopted filing deadlines, as compared to the proposed filing deadlines, may 

mitigate the risk of inaccurate filings or information overload suggested by commenters. 

One commenter stated that the Commission did not address “which investors stand to 

benefit” from the proposed accelerated filing deadlines, and indicated that, while retail and long-

term investors would not benefit, “sophisticated short-term professional investors” would profit 

at the expense of the investors filing Schedule 13G.887 While we are unable to predict with a 

reasonable degree of confidence which specific investors or categories of investors are likely to 

benefit most from the acceleration of disclosures, we note that the revisions to the final deadlines 

 
885  See Albuquerque et al. 2022 Study (finding, in sample of all Schedule 13G filings from 1996 to 2016, that 

the cumulative abnormal return around the filing date for all such filings made 45 days after calendar year-
end is not distinguishable from zero). 

886  See letters from MFA; NVCA; STB. 
887  See letter from TRP. 



249 

relative to the proposed amendments in many cases should mitigate the commenter’s concern 

that the benefits would accrue primarily to short-term traders at the expense of Schedule 13G 

filers.888 In particular, as discussed below, the lower frequency of disclosure and increased filing 

windows being adopted, relative to the proposed amendments, should reduce the risk that parties 

(including short-term professional investors) profit by anticipating and “front-running” the trades 

of the filer.889 We also acknowledge that the benefits are likely to vary across filings, across filer 

types, and across issuers. For example, there may be lower benefits in cases where alternate, 

existing disclosures provide similar information on a similar timeframe, such as with respect to 

QIIs that also file Form 13F. 

The economic analysis in the Proposing Release also indicated that the proposed 

frequency of Schedule 13G filings could have particular informational benefits resolving a 

concern whereby, currently, QIIs and Exempt Investors may avoid beneficial ownership 

reporting by selling down their positions by the end of the calendar year.890 Some commenters 

indicated that statements in the Proposing Release that investors may currently avoid beneficial 

ownership reporting in this way were unsubstantiated or inconsistent with their experience.891 

We acknowledge that it is unclear whether and to what extent investors sell down securities 

holdings before calendar year-end to avoid beneficial ownership reporting, as well as what 

motives would be likely to drive such behavior, particularly given that many filers would likely 

be required to disclose such holdings before year-end on other forms and schedules in any event. 

We are unable to undertake a systematic quantitative analysis of such behavior because we can 

 
888  See letter from TRP. 
889  See section IV.C.2.b below for further discussion of “front-running” risks. 
890  See Proposing Release at 13882. 
891  See letters from ICI I; SIFMA; TIAA. 



250 

only observe holdings that are sold before year-end when they are reported on Form 13F or 

through other disclosures, which are precisely the situations that present less of a concern with 

respect to the lack of a Schedule 13G filing during that period. We also acknowledge that it is 

unclear how material any information about the filers’ beneficial ownership may be in these 

cases in light of the short-term or transient nature of this ownership and the academic research 

discussed above.892 That said, by requiring disclosure at the end of a quarter, the final 

amendments may reduce the opportunities to avoid a Schedule 13G filing, which could elicit 

incremental value-relevant information to the benefit of market participants as more filings are 

disclosed. 

b. Costs 

All Schedule 13G filers may incur one-time compliance costs to update their systems and 

processes to comply with the revised filing deadlines, such as updating any information 

technology systems used to monitor beneficial ownership and generate associated alerts and 

reports. All such filers are also likely to incur incremental ongoing compliance costs to review 

beneficial ownership on a more frequent basis and potentially (to the extent that there are 

material changes in the information previously reported) prepare more frequent Schedule 13G 

filings. These ongoing costs may include costs associated with gathering information from 

multiple sources, determining whether changes are material, and, if changes are deemed to be 

material, drafting a filing, validating its content, obtaining signatures, processing the filing into 

the required format (via internal personnel or an external EDGAR filing agent), and submitting 

 
892  See supra note 885 regarding research finding no significant stock market return, on average, around year-

end filings of Schedule 13G. See also supra note 883 regarding potential reasons for a significant stock 
market reaction around some Schedule 13G filings, all of which would be weakened in the case of a short-
term or transient holding. 



251 

it. In addition, filing agents (and potentially other external advisers) may charge higher fees for 

expedited processing and/or for weekend services, which may be more frequently required 

(particularly for Passive Investors) under the accelerated deadlines. 

Some commenters, although not expressly distinguishing between the Schedule 13D and 

Schedule 13G requirements, stated that they did not expect the proposed accelerated deadlines to 

be overly burdensome on filers,893 with one stating that filers are “highly likely to be 

sophisticated and experienced investors with the proper resources to file promptly.”894 

Other commenters stated that they expected significant increases in compliance burdens 

from the proposed Schedule 13G filing deadlines which were not sufficiently accounted for in 

the Proposing Release, citing, for example, the significant increase in the required frequency of 

reporting and of monitoring holdings;895 that many investors must file Schedule 13G for many 

different issuers;896 and that filers may not already have the required systems in place or have 

access to the required infrastructure and personnel to comply.897  

Some commenters also noted various practical challenges that would make it difficult to 

complete all of the required steps to submit an accurate Schedule 13G within the proposed filing 

windows (i.e., five business days, five calendar days, or one business day), such as steps that 

require manual work or cannot be expedited through the use of technology;898 constraints with 

respect to the availability and system capacity of any outside staff or services that are used;899 

 
893  See letters from Anonymous 10; Freeport-McMoRan; J. Soucie. 
894  See letter from Freeport-McMoRan. 
895  See letters from ABA; ICI I; MFA; SIFMA AMG. 
896  See letters from IAA; ICI I; MFA. 
897  See letters from ICI I; SIFMA; SIFMA AMG. 
898  See letters from E. Fraser; IAA; MSBA; STB; TIAA. 
899  See letters from MSBA; STB. 



252 

issues related to the necessary involvement of multiple parties, entities, or signatories;900 and a 

lack of sufficient time to validate the content of the filing.901 Some commenters noted that first-

time, non-institutional, or smaller filers may face particular challenges in complying with the 

proposed filing deadlines.902  

In response to the concerns about compliance costs and challenges related to the 

proposed amendments, we note that, for QIIs and Exempt Investors, the final amendments 

require a lower frequency of initial and amended filings (generally quarterly as opposed to 

monthly) and allow more time to prepare filings (45 calendar days as opposed to five business 

days) as compared to the proposed amendments. Many of these filers (about 84 percent of QIIs 

and 10 percent of Exempt Investors in 2022, per Table 4 above) already file Form 13F on a 

similar schedule. As indicated by some commenters,903 filers may thus be better equipped to 

assess their holdings and (potentially) prepare Schedule 13G filings on a quarterly schedule. 

Further, under the final amendments, QIIs should be able to monitor beneficial ownership that 

could exceed 10 percent of a covered class (or, thereafter, change by more than five percent) on a 

monthly basis, as they do now, rather than daily, as may have been required under the proposed 

amendments. Passive Investors will also be permitted to submit most Schedule 13G amendments 

on a quarterly cadence (rather than monthly, as proposed), with 45 calendar days (rather than 

five business days, as proposed) after the end of the period to submit the filings, though their 

initial filings will be required within five business days after the trigger date (rather than five 

calendar days, as proposed). They will also be permitted to file a Schedule 13G amendment 

 
900  See letters from MSBA; SSC; STB. 
901  See letters from ABA; MFA; SSC; STB. 
902  See letters from E. Fraser; ICI I; MFA; MSBA; STB. 
903  See letters from IAA; ICI I; SIFMA; SIFMA AMG; SSC; TRP. 



253 

within two business days of their holdings exceeding 10 percent of a covered class (or, 

thereafter, for changes of five percent or more), rather than one business day, as proposed. 

Finally, to provide time to implement the new Schedule 13G filing deadlines, compliance is not 

required until September 30, 2024.  

We acknowledge that the incremental compliance burdens of the revised deadlines may 

be greater for smaller, less experienced filers than for other filers due to their more limited 

internal resources and expertise in preparing filings. In particular, these filers are less likely to 

have operational systems and processes in place that would facilitate compliance with the revised 

filing deadlines. The compliance burdens may be greatest for smaller, less experienced Passive 

Investors when filing an initial Schedule 13G, as these investors may, for example, be most 

likely to incur fees for expedited processing and/or for weekend services given the revised 

deadline for their filings (five business days after the trigger date) and their likely reliance on 

external advisors and service providers. That said, all of the changes relative to the proposed 

amendments should at least partially mitigate commenters’ concerns about compliance costs and 

challenges discussed above, including for first-time, non-institutional, or smaller filers. For 

example, under the Proposed Amendments, Schedule 13G filers could have been required to file 

as many as 12 amendments per year under the month-end filing deadline in Rule 13d-2(b). Under 

the final amendments, however, Schedule 13G filers’ burdens may be significantly lower, as the 

quarter-end filing deadline in amended Rule 13d-2(b) results in a maximum of four amendments 

per year pursuant to that rule.  

We also acknowledge that the accelerated Schedule 13G filing deadlines may give rise to 

incremental free-riding and front-running risks. That is, there is a risk that more frequent filings 

with a shorter filing window may reveal a filer’s proprietary information or trading strategies to 



254 

other market participants, thus allowing those participants to “free ride” by copying the filer’s 

strategies without incurring the same cost as the fund to research, identify and devise profitable 

strategies.904 Further, more frequent filings with a shorter filing window could also allow other 

investors to better anticipate trades of the filers. These other investors may attempt to “front run” 

or trade ahead of filers to capture any impact on the prices of traded securities.905 Any increase in 

free-riding and front-running may ultimately diminish a filer’s investment returns and thus harm 

the filer and any clients or investors of the filer. Such risks may also reduce incentives to engage 

in research and analysis about potential shareholdings or to pursue some investment 

opportunities, which may reduce market efficiency and the efficient allocation of capital to its 

most productive uses. Any related reduction in the number of significant shareholders of issuers 

may also reduce the operational efficiency of affected issuers, due to the role large shareholders 

may play in the promoting of corporate accountability either through direct monitoring of 

management or the threat of exiting an investment.906  

Some commenters disagreed with the Commission’s statement in the Proposing Release 

that the risks of front-running and free-riding associated with the proposed Schedule 13G filing 

 
904  See, e.g., Marno Verbeek & Yu Wang, Better than the Original? The Relative Success of Copycat Funds, 

37 J. BANK. FIN. 3454 (2013) (studying potential free-riding behavior and finding that some funds duplicate 
the disclosed asset holdings of actively managed mutual funds, and that free-riding on the portfolios 
disclosed by “past winning funds” generates significantly better performance net of trading costs and 
expenses than the vast majority of mutual funds). 

905  See, e.g., Sophie Shive & Hayong Yun, Are Mutual Funds Sitting Ducks? 107 J. FIN. ECON. 220 (2013) 
(studying potential front-running behavior and finding that hedge funds trade on expected mutual fund 
flows, and that this type of anticipatory trading is stronger after 2004 when quarterly portfolio disclosure 
was required of mutual funds). 

906  See, e.g., Edmans et al. 2013 Study (finding that initial Schedule 13G filings are followed by improvements 
in operating performance and associating this relation with the role of significant shareholders); see also 
Alex Edmans & Clifford Holderness, Blockholders: A Survey of Theory and Evidence, 1 HANDB. ECON. 
CORP. Gov. 541 (2017); Andrei Shleifer & Robert Vishny, Large Shareholders and Corporate Control, 94 
J. POL. ECON. 461 (1986). 



255 

deadlines were likely to be low,907 raising concerns that both the proposed frequency of reporting 

and the proposed filing windows (i.e., five business days, five calendar days, or one business 

day) would lead to significant risks of revealing proprietary trading strategies and, because 

disclosure may be required while trades or trading strategies are still in progress, of facilitating 

predatory trading.908 We believe that the revised deadlines in the final amendments relative to 

the proposed amendments should reduce these risks, particularly for filers that are already 

reporting holdings on a similar timeframe on Form 13F. That said, confidential treatment 

requests for Form 13F filings that may allow some filers to defer disclosing some or all of their 

holdings on that form909 are not available for Schedule 13G filings, so even Form 13F filers and 

their clients may bear some additional risk of free-riding and front-running when filing Schedule 

13G. 

There could also be negative effects on competition in the market for investment 

management services from accelerated Schedule 13G filing deadlines, as noted by some 

commenters.910 In particular, the free-riding and front-running risks discussed above could 

reduce incentives for investment managers to construct proprietary investment strategies, and 

 
907  See Proposing Release at 13886. 
908  For comments regarding the proposed frequency of reporting, see letters from Dodge & Cox; IAA; ICI I; 

SSC; TIAA; TRP. For comments regarding the proposed filing windows, see letters from Dodge & Cox; 
IAA; TRP. 

909  For example, information about holdings in reportable securities that would reveal a filer’s ongoing 
program of acquisition or disposition of a reportable security, open risk arbitrage positions, and investment 
strategies that utilize block positioning may be eligible for confidential treatment with respect to Form 13F 
for the period of time necessary to effectuate the filer’s strategy. See Section 13(f) Confidential Treatment 
Requests, letter from staff of Division of Investment Management (June 17, 1998), available at 
https://www.sec.gov/investment/divisionsinvestmentguidance13fpt2htm. 

910  See letters from MFA (stating that the proposed Schedule 13G filing requirements would “create more 
substantial barriers to entry, thereby discouraging new potential entrants to the investment management 
market”); TIAA (stating that the proposed Schedule 13G filing requirements would put “investment 
advisers – particularly active advisers – at a real competitive disadvantage” due to “competitors attempting 
to copy or trade ahead of QIIs’ investment strategies and engage in other manipulative trading practices”). 



256 

any increased compliance burdens may increase barriers to entry. However, for the reasons 

discussed above, we expect such risks and burdens, and therefore any resulting effect on 

competition, to be mitigated under the revised filing deadlines as compared to the proposed filing 

deadlines. 

3. Other Amendments 

a. Revised Filing Deadline for Schedule 13D Amendments 

The final amendment to Rule 13d-2(a) revises the filing deadline for amendments to 

Schedule 13D to two business days after the date on which a material change occurs, as 

compared to the baseline requirement that amendments be filed “promptly” after such date. 

We believe that replacing the “promptly” requirement with a bright-line, two-business 

day requirement will provide greater clarity as to when material changes are to be disclosed, 

which could reduce any current filer confusion. In addition, to the extent that the revised 

deadline results in earlier disclosure of some Schedule 13D amendments than under the baseline, 

this deadline may allow the information to be incorporated into market prices earlier, allow 

market participants to make better-informed investment decisions, and enhance the efficiency of 

resource allocation at the economy level. For those filers that would not otherwise have filed 

their amendments within two business days after a material change, the revised deadline for 

Schedule 13D amendments may somewhat increase compliance costs. 

In particular, these filers may bear greater costs due to the need to complete the necessary 

tasks (including gathering information from multiple sources, determining whether changes are 

material, drafting and validating the content of the filing, obtaining signatures, processing the 

filing into the required format via internal personnel or an external EDGAR filing agent, and 

submitting the filing) more quickly. In addition, filing agents (and potentially other external 



257 

advisers) may charge higher fees for expedited processing and/or for weekend services, which 

may be more frequently required under the revised deadline. There may also be compliance 

challenges involved in accessing external advisers or coordinating among multiple signatories or 

parties in a short timeframe. Any such costs and challenges are likely to be more burdensome for 

small, non-institutional, and less experienced filers with fewer in-house resources. In particular, 

these filers are less likely to have operational systems and processes in place that would facilitate 

compliance with the revised filing deadline and are likely to be more reliant on external advisers 

and service providers. The compliance costs and challenges are also likely to be greater for 

institutional filers with more complex business organizations, including those with sub-advisory 

relationships common in the investment management industry. 

One commenter asserted that the “promptly” standard under Rule 13d-2(a) has “generally 

been understood” to mean within two business days.911 Accordingly both the benefits and costs 

of the revised deadline for Schedule 13D amendments will likely be limited in the case of 

Schedule 13D amendments that would have been made within two business days even in the 

absence of the final amendments. Some commenters questioned whether a revised deadline for 

Schedule 13D amendments would materially improve the information available to investors and 

other market participants,912 with two commenters questioning the benefits with respect to 

specific subsets of filers913 and one stating that “there have been very few, if any, abuses 

 
911  See letter from EIM I. 
912  See letters from AIMA; NVCA; STB. One of these commenters specified that, in the context of venture 

capital funds making distributions of shares to their limited partners, a one-business day filing deadline 
would risk “erroneously signaling a sell-off to the market,” harming liquidity and market efficiency, 
particularly for thinly traded companies that are more likely to be dominated by retail investors. See letter 
from NVCA. 

913  See letters from NVCA; STB. 



258 

associated with the current ‘promptly’ regime and . . . it has worked well and effectively.”914 We 

acknowledge that the extent of any benefits of the revised deadline are likely to vary across 

filers, types of filings, and issuers, with greater benefits associated with those Schedule 13D 

amendments that have more of a market impact (e.g., because they report a more significant 

change in holdings or plans) and that also would otherwise have been filed a greater number of 

days after the material change. 

The proposed amendments would have required amendments to Schedule 13D to be filed 

one business day after the date on which a material change occurs. Many commenters raised 

concerns about compliance challenges and costs associated with the limited time that would be 

available to consider the need for, prepare, and submit a filing under this proposed deadline.915 

While some of the commenters raising such concerns indicated that more than two days may be 

required to complete the required tasks,916 some identified a two business day deadline as a more 

practicable period for compliance.917 We agree with these commenters and therefore expect that 

the revision of this filing deadline to two business days, rather than one business day, after the 

date on which a material change occurs will mitigate some concerns about difficulties in 

complying with the amended deadline.  

b. Amendments to Item 6 of Schedule 13D 

The final amendment to Item 6 of Schedule 13D makes explicit that cash-settled 

derivative securities (including cash-settled SBS) that use the issuer’s securities as a reference 

security are included among the types of contracts, arrangements, understandings, and 

 
914  See letter from AIMA. 
915  See letters from ABA; AIMA; IAA; ICI I; EEI; EIM I; Hoak; MFA; MSBA; NVCA; Perkins Coie; STB. 
916  See letters from AIMA; ICI I; STB. 
917  See letters from IAA; EIM I; Hoak; NVCA; Perkins Coie. 



259 

relationships that must be disclosed under that Item. This final amendment will not change the 

treatment of derivative securities for the purpose of determining beneficial ownership. To the 

extent that this final amendment elicits additional disclosure that may not otherwise have been 

provided, investors and the market may benefit from a more complete understanding of all of a 

filer’s interests in an issuer. In particular, this final amendment may provide more information 

about the overall economic exposure of the filer to the issuer, which may be associated with the 

actions the filer may be expected to take and thus the shareholder value impact associated with 

the filing.918 However, filers could incur additional compliance costs to the extent that they have 

not already been providing such disclosure. In particular, filers may need to expend additional 

internal resources and/or consult external advisors to draft the required disclosures and to 

monitor interests in cash-settled derivative securities in order to report any material changes. In 

section V.C below we estimate for purposes of the Paperwork Reduction Act of 1995 (“PRA”) 

that this final amendment will impose, on average, an additional 0.1 burden hour per filing. 

One commenter indicated that the inclusion of SBS in Item 6 would not provide 

incremental benefits beyond other disclosures, including disclosures that are under consideration 

in a different proposed rulemaking.919 We continue to believe that, given current disclosure 

requirements, the final amendment to Item 6 may elicit additional disclosure that may not 

otherwise have been provided. Further, to the extent some of this information may be made 

public in other documents, investors may benefit from being able to review all of a filer’s 

interests in an issuer in a single location.  

 
918  See, e.g., Lilienfeld-Toal & Schnitzler 2020 Study (suggesting that the percentage of beneficial ownership 

reported in Schedule 13D is an indicator of the types of actions the filer may be expected to take and 
finding that this percentage is a statistically significant predictor of the announcement returns around the 
filing date).  

919  See letter from IAA; see also Schedule 10B Proposal. 



260 

c. Structured Data Requirement for Schedules 13D and 13G 

The final rules require all disclosures reported on Schedules 13D and 13G other than the 

exhibits to be submitted using 13D/G-specific XML. We continue to believe, as discussed in the 

Proposing Release, that requiring the disclosures in a structured, machine-readable data language 

will improve the public dissemination and accessibility of the information in these disclosures by 

facilitating its extraction and analysis. Some commenters agreed that a structured data 

requirement would enhance the benefits of the disclosures by making the information easier to 

access and analyze.920  

We expect that the structured data requirement will impose some incremental compliance 

costs on filers. In section V.C below we estimate for purposes of the PRA that these 

requirements will impose, on average, an additional 0.5 burden hour per filing. One commenter 

expressed concern that structured data requirement would be unduly burdensome for small 

beneficial owners.921 Filers will have the option of using a fillable web form that converts 

inputted disclosures into 13D/G-specific XML, which should limit the incremental burden on 

filers that elect to use this approach. In particular, we expect that the availability of a fillable web 

form should, due to its ease of use, mitigate the concern raised by a commenter that the 

structured data requirement would be unduly burdensome for small beneficial owners. Filers 

who instead choose to submit filings directly in 13D/G-specific XML may bear implementation 

costs of establishing related compliance processes and expertise and/or, as one commenter 

indicated, ongoing costs of working with third-party vendors.922 Making submissions directly in 

 
920  See, e.g., letters from ICI I; M. Slavens. 
921  See letter from A. Day. 
922  See letter from ICI I.261 

13D/G-specific XML is an approach that may be more likely to be taken by filers expecting to 

submit larger numbers of Schedule 13D and Schedule 13G filings, such as QIIs. We expect the 

costs of submitting Schedule 13D/G directly in 13D/G-specific XML will vary based on prior 

experience with encoding and transmitting structured disclosures. Per Table 4 in section IV.B.3.b 

above, 84 percent of the QIIs filing initial Schedule 13Gs in 2022 were also Schedule 13F filers, 

and thus have such experience.  

One commenter, while supporting the proposed structured data requirement, raised 

concerns about the additional time necessary to comply with the structured data requirement 

within the shortened filing windows that were proposed.923 We acknowledge that the structured 

data requirement will increase the amount of time needed to submit filings. We believe the 

extended time permitted to file Schedule 13D and Schedule 13G amendments, and, for QIIs and 

Exempt Investors, to file initial Schedule 13G filings under the final rules as compared to the 

proposed deadlines should mitigate some of the concerns raised by this commenter about the 

time required to comply with the structured data requirement. 

d. Amendments to Regulation S-T 

The final amendments to Regulation S-T revise the time by which Schedule 13D and 13G 

filings must be submitted in order to be deemed to have been filed on a given business day from 

5:30 p.m. to 10 p.m. Eastern Standard Time or Eastern Daylight Saving Time, whichever is 

currently in effect, on that day. This change may, on the margin, mitigate the incremental 

compliance challenges and costs associated with the revised filing deadlines, particularly for 

filers located in a different time zone than the Commission’s principal office or those operating 

 
923  Id. 



262 

in multiple time zones. Some commenters agreed that these extended filing hours would benefit 

filers in light of the shortened filing deadlines.924 

The final amendments to Regulation S-T also make temporary hardship exemptions 

under Rule 201 of Regulation S-T unavailable with respect to Schedule 13D and 13G filings. We 

expect this change to have no meaningful economic effects as filers will be able to request a 

filing date adjustment under existing Rule 13(b) of Regulation S-T under similar circumstances 

as a temporary hardship exemption.925 

D. Reasonable Alternatives to the Final Rules 

We considered many alternatives to the final rules. Some of these are discussed earlier in 

this release. In this section, we present certain significant alternatives and a discussion of their 

benefits and costs relative to the final rules.  

1. Alternative Filing Deadlines 

We considered both earlier and later (and more and less frequent) filing deadlines relative 

to those that we are adopting. In general, earlier (or more frequent) filing deadlines may have 

increased the benefits, but also the costs, of the amendments, while later (or less frequent) 

deadlines would have decreased the costs but also the benefits of the amendments. The economic 

implications of some alternative filing deadlines (namely, those that were proposed but not 

adopted) are discussed in more detail above. 

With respect to the initial Schedule 13D filing deadline, which will be five business days 

after the trigger date, we also considered a deadline of greater or fewer days after the trigger 

date. Additionally, we considered deadlines stated in calendar days as opposed to business days, 

 
924  See letters from IAA; ICI I. 
925  Commission staff may grant the request if it appears that the adjustment is appropriate and consistent with 

the public interest and the protection of investors. See Rule 13(b) of Regulation S-T. 



263 

which, when applied to the same number of days (i.e., five calendar days), would have the effect 

of decreasing the number of days a person would have to file an initial Schedule 13D in cases 

where weekends or holidays fall in the middle of the filing window. In general, a shorter 

deadline and the resulting earlier disclosures may have increased the benefits discussed above for 

those non-corporate-action filings that would not already be considered timely with respect to 

such shorter deadline. A shorter deadline may also have further reduced the risk discussed above 

of shareholders selling to informed bystanders prior to a Schedule 13D filing (as demonstrated in 

Figure 6 above), which may have further enhanced trust in markets and capital formation. 

However, a shorter deadline may also have increased the number of activist campaigns 

forgone compared to the amended filing deadlines, due to two effects. First, a shorter deadline 

would mean that, given current share accumulation patterns, there would be a greater number of 

potential campaigns for which filers would have to consider whether or not to proceed and if so, 

how.926 Second, the likelihood of adapting may decrease if it is more difficult for filers to adapt 

to an even shorter deadline than that which we are adopting. An increase in forgone activist 

campaigns may have further reduced shareholder value creation. A reduction in the pursuit of 

activism may also have related negative effects on operational efficiency, market efficiency, 

liquidity, and capital formation, as discussed in the context of the adopted deadline above. 

In the case of a longer deadline, the implications for the incremental benefits and costs 

would have been the reverse of those for a shorter deadline. We note that there is no clear 

breakpoint in either the accumulation pattern of filers or in the abnormal trading volume prior to 

 
926  See supra Figures 2, 3a, and 3b for the percentage of filers that have completed accumulating all, 90%, or 

75% respectively of their reported stake by each calendar day after the trigger date. 



264 

Schedule 13D filings that could help to support a particular filing deadline, including five-

business day deadline we are adopting. 

A deadline expressed in calendar days would also have incremental effects beyond a 

direct effect on the length of the filing window. In particular, such a deadline would decrease the 

consistency in the total number of business hours that persons would have to continue 

accumulating shares and to draft and submit a filing after their trigger date.927 For example, a 

five-calendar day deadline may represent anywhere from two to five business days depending on 

the occurrence of weekends and holidays after the trigger date. This inconsistency may distort 

the campaigns that are pursued by activists or the timing of these campaigns. For example, an 

activist who crosses the five percent threshold on a Monday would generally have five trading 

days from the trigger date to accumulate further shares and potentially increase their profits prior 

to filing and informing the market of their activity. In contrast, an activist who reaches the same 

threshold on a Friday prior to a Federal holiday on the following Monday would only have two 

trading days after the trigger date to accumulate shares before making a Schedule 13D filing. 

Because investors who reach the threshold near a weekend or holiday would thus be at a relative 

disadvantage, activists may be relatively more incentivized to pursue campaigns at issuers where 

liquidity conditions (i.e., availability and ease of share purchase transactions) facilitate crossing 

the five percent threshold early in a week at a lower cost.928 Any effect of this kind, in turn, 

would have a detrimental effect on operational efficiency at the market level by influencing 

which campaigns are more likely to be pursued. 

 
927  See, e.g., letter from Profs. Bishop and Partnoy III (recommending a five-business day deadline because it 

would be “consistent with other regulatory and trading practices,” and noting that “the unit of analysis in 
examining trading should be trading days”). 

928  See Gantchev & Jotikasthira 2018 Study regarding the role of institutional selling demand on the timing of 
Schedule 13D trigger dates. 



265 

A deadline expressed in calendar days could also increase compliance costs, given that 

external service providers and advisers may charge higher fees for weekend or holiday services, 

which may be more frequently required under a deadline expressed in calendar days. However, a 

deadline expressed in calendar days would increase the consistency in the total number of 

calendar days that persons would have to submit a filing. For example, five business days may 

represent anywhere from seven to 10 calendar days. If a significant amount of investment, 

advisory, drafting, or other activities in preparation of a Schedule 13D filing takes place on 

weekends and holidays, it is possible that this inconsistency in calendar days would advantage 

some filers over others (i.e., those who are better positioned to work over weekends and holidays 

versus those who are not). 

With respect to the initial Schedule 13G filing deadline for Passive Investors, which will 

be five business days after the trigger date, we also considered longer and shorter deadlines (and 

the use of deadlines expressed in business as opposed to calendar days, which would have had 

the effect of lengthening the deadline for the same number of stated days). A longer deadline 

would have eased commenters’ concerns about the compliance costs and complications for 

Passive Investors.929 However, researchers have found that those Schedule 13G filings that are 

not made 45 days after year-end (i.e., generally Schedule 13G filings by Passive Investors) are 

associated, on average, with a statistically significant positive abnormal stock return,930 albeit 

smaller than that generally found for Schedule 13D filings.931 This result may imply that at least 

some of these disclosures contain material information whose earlier disclosure could benefit 

 
929  See, e.g., letters from IAA; MSBA. 
930  See supra note 884. 
931  See supra note 827. 



266 

investors (and which may have enhanced the efficiency of resource allocation at the economy 

level). A longer deadline would have reduced any such benefits. In the case of a shorter deadline, 

the implications for the incremental benefits and costs would have been the reverse of those for a 

longer deadline. 

2. Tiered Approaches 

We considered “tiered” approaches to the initial Schedule 13D filing deadline, in contrast 

to the uniform approach to the filing deadline being adopted. We considered, for example, 

maintaining the current 10-day deadline for acquisitions of more than five percent but no more 

than 10 percent of a covered class while instituting an amended, shorter deadline in cases where 

beneficial ownership exceeds 10 percent. We also considered whether the deadline for the initial 

Schedule 13D filing should vary based on a specified characteristic of the issuer of the covered 

class, such as its market capitalization or trading volume. Finally, we considered maintaining the 

10-day deadline for those filers that elect to “stand still” by not acquiring additional beneficial 

ownership of the covered class once the five percent threshold has been crossed until the 

corresponding Schedule 13D is filed. 

One commenter stated that a tiered approach that would maintain a 10-day deadline for 

filing a Schedule 13D pertaining to beneficial ownership in micro-, small-, and mid-

capitalization issuers “may serve to limit the impact that reforms to Rule 13d-1(a) have on 

shareholder engagement and monitoring,” particularly at micro-, small-, and mid-capitalization 

issuers where, in the commenter’s view, “such effective engagement and monitoring is most 

necessary.”932 Another commenter suggested requiring persons who cross certain higher 

thresholds (e.g., a 10 percent beneficial ownership threshold) or who accumulate certain amounts 

 
932  See letter from ICM. 



267 

after crossing the five percent threshold (e.g., an additional three percent) file their initial 

Schedule 13D on the proposed accelerated timeline, but “allowing investors who trigger 

Schedule 13D filings for more technical reasons and who are not accumulating stock in 

connection with a potential activist engagement (e.g., proxy contests or intended take-private 

activity) to continue filing under the current regime.” 933 This commenter also supported 

maintaining the 10-day deadline for “an investor who crosses the 5% threshold but acquires no 

additional stock after the initial crossing transaction,” stating that “there is no informational 

disadvantage for existing investors in such circumstances” and that in some cases there is “earlier 

disclosure by the issuer relating to the [crossing] transaction” and therefore “little purpose [is] 

served by accelerating the timeline for the investor to prepare its disclosure.”934 

We acknowledge that there is significant heterogeneity in the benefits and costs of the 

amended filing deadline across different types of filers and issuers. For example, as discussed 

above, these benefits and costs are likely to vary across “corporate action” as compared to “non-

corporate-action” filings,935 across issuers of different sizes,936 and by the identity of the filer.937 

 
933  See letter from STB. 
934  Id. 
935  See section IV.B.3.a.ii above for definitions of these terms and section IV.C.1 above for discussions in 

which we conclude that both the benefits and costs of the shortened initial Schedule 13D filing deadline are 
likely to be limited for corporate action filings. 

936  Academic research has associated smaller issuer market capitalization with a higher positive abnormal 
stock return around the filing of an initial Schedule 13D. See supra note 829. A higher positive abnormal 
stock return may imply higher costs if there is less such activism under an accelerated filing timeline but 
also higher benefits to investors from accelerating disclosure due to the greater importance of the 
information to the market. 

937  Academic research has associated Schedule 13D filers’ reputations (based on their financial clout, 
expertise, or aggressive style of engagement) with the size of the positive abnormal stock return around the 
filing. See, e.g., C. N. V. Krishnan et al., The Second Wave of Hedge Fund Activism: The Importance of 
Reputation, Clout, and Expertise, 40 J. CORP. FIN. 296 (2016); and Travis Johnson & Nathan Swem, 
Reputation and Investor Activism: A Structural Approach, 139 J. FIN. ECON. 29 (2021). As discussed supra 
note 936, a higher positive abnormal stock return may imply both higher costs and higher benefits of 
accelerating the filing deadline. 



268 

Ideally, a tiered approach would be used to accelerate disclosure specifically in circumstances 

where the benefits of accelerated disclosure are greater and the costs of accelerated disclosure are 

lower. However, there are many important dimensions across which the benefits and costs are 

likely to vary, complicating the task of designing a tiered approach. Further, the subgroups of 

filings that are associated with the greatest costs under an accelerated filing deadline (and where 

there thus could be significant advantages of maintaining the 10-day deadline) are also the same 

subgroups associated with the greatest benefits under an accelerated deadline, while those 

associated with lower costs are associated with lower benefits.938 This pattern mitigates our 

ability to improve the costs of the amendments by implementing a tiered approach. 

3. Modify Structured Data Requirement 

We considered modifying the proposed structured data requirement for Schedules 13D 

and 13G. We considered, for example, requiring only the quantitative disclosures reported on 

Schedules 13D and 13G to be provided in a structured data language. Narrowing the scope of the 

structuring requirement in this way could simplify the resulting dataset to include only the 

information that might be used most widely by market participants, analysts, and Commission 

staff for aggregation, comparison, and analysis, which may better suit those users who wish to 

focus their analysis on such information and forgo the additional step of filtering out other data. 

However, the non-quantitative disclosures on Schedules 13D and 13G, such as textual narratives 

and identification checkboxes, are also likely to be valuable for many data users, including 

market participants, analysts, and Commission staff, to access and analyze in an efficient and 

automated manner. In addition, we expect that the incremental cost savings to filers of requiring 

only the quantitative disclosures to be structured would be low, because filers would only be 

 
938  See supra notes 936-937 for examples of some such subgroups. 



269 

forgoing the costs of inputting their textual and checkbox disclosures into fillable web forms (or 

of tagging those disclosures directly or by means of a filing agent) rather than broader costs 

associated with structured data implementation more generally. For these reasons, we have 

determined not to modify the scope of the structured data requirement. 

One commenter recommended that the Commission opt for the XBRL data language, 

rather than creating an XML schema designed specifically for beneficial ownership reporting.939 

This commenter stated that using the XBRL standard, rather than the proposed 13D/G-specific 

XML requirements, would result in significantly lower costs and greater efficiencies for filers, 

users of filings, and the Commission, while also enhancing the benefits of a structured data 

requirement by facilitating improved data quality and the ability to commingle the data with 

other datasets. We acknowledge that different structured data languages entail different costs and 

benefits for filers and data users.940 We believe that 13D/G-specific XML is more suitable than 

XBRL for Schedules 13D and 13G because it facilitates the use of a fillable form that should 

result in a lower cost of complying with the structured data requirement compared to XBRL, 

particularly for smaller and infrequent filers. Under an XBRL requirement, filers (including 

smaller and infrequent filers) would incur costs and burdens associated with tagging the 

disclosures (e.g., software licensing costs, time spent applying tags) or with paying a third party 

to do so. Thus, although some Schedule 13D and Schedule 13G filers, such as those currently 

subject to Inline XBRL reporting requirements (e.g., filers that are Commission registrants) or 

that otherwise have experience with XBRL may realize some efficiencies under an XBRL 

alternative, we believe the cost savings expected to arise from having a fillable form option 

 
939  See letter from XBRL US. 
940  See supra section IV.C.3.c for a discussion of costs associated with the 13D/G-specific XML requirements. 



270 

under the 13D/G-specific XML requirements would have a more substantial positive impact with 

respect to filers as a whole.  

In addition, while some Schedule 13D and Schedule 13G filers and data users may have 

familiarity with XBRL data and software, such filers and data users likely also have familiarity 

with data structured in form-specific XML languages on EDGAR. For instance, the Commission 

has found the use of form-specific XML on section 16 ownership reporting forms to have had 

positive impacts on filers (with respect to compliance costs) and users (in terms of data usability) 

of those disclosures without imposing significantly higher implementation costs on the 

Commission than other structured data requirements impose.941 For these reasons, we are 

requiring 13D/G-specific XML rather than Inline XBRL for Schedules 13D and 13G. 

V. Paperwork Reduction Act 

A. Summary of the Collections of Information  

Certain provisions of our rules, schedules and forms that will be affected by the final 

amendments contain “collection of information” requirements within the meaning of the PRA.942 

The Commission published a notice requesting comment on changes to these collection of 

information requirements in the Proposing Release and submitted these requirements to the 

Office of Management and Budget (“OMB”) for review in accordance with the PRA.943 The 

hours and costs associated with maintaining, disclosing, or providing the information required by 

the final amendments constitute paperwork burdens imposed by such collection of information. 

 
941  See Securities and Exchange Commission, Office of Structured Disclosure, Insider Transactions Data Sets, 

available at https://www.sec.gov/dera/data/form-345. 
942  44 U.S.C. 3501 et seq. 
943  44 U.S.C. 3507(d); 5 CFR 1320.11. 



271 

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of 

information requirement unless it displays a currently valid OMB control number.  

The title for the affected collections of information is “Regulation 13D and Regulation 

13G; Schedule 13D and Schedule 13G” (OMB Control No. 3235-0145). These schedules contain 

item and other requirements that outline the information a reporting person must disclose.944 The 

schedules were adopted under the Exchange Act. A description of the final amendments can be 

found in section II above, and a discussion of the economic effects of the final amendments can 

be found in section IV above. Compliance with the information collections is mandatory. 

Responses to the information collections are not kept confidential and there is no mandatory 

retention period for the information disclosed. 

B. Summary of Comment Letters on PRA Estimates  

In the Proposing Release, the Commission requested comment on the PRA burden hour 

and cost estimates and the analysis used to derive the estimates. We did not receive any comment 

letters in response to the request for comment on the PRA estimates and analysis included in the 

Proposing Release. 

C. Burden and Cost Estimates for the Final Amendments  

Below we estimate the incremental and aggregate effect on the paperwork burden as a 

result of the final amendments. As discussed in section II above, we have made a number of 

changes from the Proposed Amendments, and we have adjusted our estimates accordingly. For 

example, in the Proposing Release, the Commission estimated paperwork burden increases for 

Forms 3, 4, and 5 as well as Schedules 13D and 13G associated with proposed Rules 13d-3(e) 

and 13d-5(b)(1)(i) and (ii) and (b)(2)(i). Because we are not adopting those proposed rules, we 

 
944  See 17 CFR 240.13d-101 and 240.13d-102. 



272 

have adjusted the paperwork burden estimates from the Proposing Release accordingly. In 

addition, rather than basing our PRA estimates on the actual number of Schedule 13D and 13G 

filings in calendar year 2020, as the Commission did in the Proposing Release, we base our PRA 

estimates with respect to the final amendment to Rule 13d-2(b), in part, on the actual number of 

Schedule 13G filings in calendar year 2022.945 

At the outset, we note that the current OMB inventory for Regulation 13D-G reflects 

8,587 annual responses. This number is based on the number of initial Schedule 13D and 13G 

filings made. We think that the better approach is for the PRA to reflect the burdens arising from 

both the initial Schedule 13D and 13G filings and amended Schedule 13D and 13G filings. 

Accordingly, we first update the existing PRA burden estimates to reflect this new approach. 

Specifically, we are updating the current OMB inventory from 8,587 annual responses to 29,793 

annual responses to reflect the average number of initial and amended Schedule 13D and 13G 

filings per year that were made in calendar years 2020, 2021, and 2022.946 We then estimate the 

PRA impact of the final amendments using the updated inventory numbers as the baseline. Table 

1 below illustrates the resulting incremental change to the total annual compliance burden in 

hours and in costs. Additionally, we note that the current OMB inventory for the above-

referenced collections of information reflect an average of hourly rate of $400 per burden hour 

 
945  Compare Proposing Release at 13892, n.273, with infra note 952. 
946  In calendar year 2020, there were 5,288 Schedule 13D filings (comprised of 1,148 initial filings and 4,140 

amendments) and 22,080 Schedule 13G filings (comprised of 6,436 initial filings and 15,644 amendments) 
for a total of 27,368 filings. See DERA Memorandum at nn.3 & 24. In addition, during calendar year 2021, 
there were 5,434 Schedule 13D filings (comprised of 1,555 initial filings and 3,879 amendments) and 
24,874 Schedule 13G filings (comprised of 8,676 initial filings and 16,198 amendments) for a total of 
30,308 filings. See id. at 1, 8. Finally, in calendar year 2022, there were 5,179 Schedule 13D filings 
(comprised of 1,161 initial filings and 4,018 amendments) and 26,523 Schedule 13G filings (comprised of 
8,433 initial filings and 18,090 amendments) for a total of 31,702 filings. See supra section IV.B.3. Taking 
the three-year average of these amounts results in an average of 29,792 Schedule 13D and 13G filings per 
year, comprised of 1,288 initial Schedule 13D filings, 4,012 Schedule 13D amendments, 7,849 initial 
Schedule 13D filings, and 16,644 Schedule 13G amendments, when rounded to the nearest whole number. 



273 

borne by outside professionals. Similarly, in the Proposing Release, the Commission used an 

estimated cost of $400 per hour, recognizing that the costs of retaining outside professionals may 

vary depending on the nature of the professional services.947 The Commission recently 

determined to increase the estimated costs of such hourly rate to $600 per hour948 to adjust the 

estimate for inflation from Aug. 2006.949 Accordingly, we first update the existing PRA burden 

estimates to reflect this new cost estimate, as set out in the following Table 1. 

PRA Table 1: Change in PRA Burden Due to Updating Inventory Numbers 

 
± See supra note 946. 

±± The current OMB inventory reflects an average of 14.5 burden hours for each Schedule 13D filing and an average 
of 12.4 burden hours for each Schedule 13G filing. As noted above, however, the current OMB inventory only 
included initial Schedule 13D and 13G filings, and so these average burden hours were estimates with respect only 
to initial filings. Because Schedule 13D and 13G amendments generally contain a fraction of the information 
contained in an initial filing and because of the likely efficiencies associated with preparing an amendment based on 
the information disclosed in an initial filing, we estimate average burden hours per filing of 3 hours per Schedule 
13D amendment and 2 hours per Schedule 13G amendment. When applied to the updated average annual number of 
initial Schedule 13D filings (1,288), Schedule 13D amendments (4,012), initial Schedule 13G filings (7,849), and 
Schedule 13G amendments (16,644), see supra note 946, this reflects a total of 161,315 burden hours (when 
rounded to the nearest whole number). In addition, the current OMB inventory assumes that 25% of the burden 
associated with a Schedule 13D or 13G filing is borne by the reporting persons and 75% is borne by outside 
professionals. Thus, assuming that 25% of the total burden hours associated with Schedule 13D and 13G filings 
(161,315) is borne by the reporting persons yields a total of 40,329 internal burden hours (when rounded to the 
nearest whole number). 
±±± The current OMB inventory reflects a total cost burden of $32,894,000 for Regulation 13D-G, reflecting an 

 
947  See Proposing Release at 13894, n.280. 
948  We recognize that the costs of retaining outside professionals may vary depending on the nature of the 

professional services, but for purposes of this PRA analysis, we estimate that such costs would be an 
average of $600 per hour.  

949  See Listing Standards for Recovery of Erroneously Awarded Compensation, Release No. 33-11126 (Oct. 
26, 2022) [87 FR 73076 (Nov. 28, 2022)].   

 
Current OMB Inventory 

 

 
Updated Inventory 

 
Increased Burden Due to Update 

Current 
Annual 

Responses 
(A) 

Current 
Burden 
Hours 

(B) 

Current Cost 
Burden 

(C) 

Updated 
Annual 

Responses 
(D) ± 

 

Updated 
Burden 
Hours  
(E) ±± 

Updated Cost 
Burden 
(F) ±±± 

Increase in 
Number of 
Responses 
(G) = (D) 

- (A) 

Increase in 
Burden 
Hours 

(H) = (E)     
- (B) 

Increase in 
Cost Burden 
(I) = (F) - (C) 

 
8,587 

 
27,412 

 
$32,894,000 

 
29,792 

 
40,329 

 
$72,591,600 

 
21,205 

 
12,917 

 
$39,697,000 



274 

average of hourly rate of $400 per burden hour borne by outside professionals. As noted above, we are increasing 
this cost estimate to $600 per hour. Further, as noted above, assuming that 75% of the total burden hours associated 
with Schedule 13D and 13G filings (161,315) is borne by the reporting persons yields a total of 120,986 burden 
hours borne by outside professionals (when rounded to the nearest whole number). As such, we calculate the 
updated cost burden by multiplying (x) $600 by (y) 120,986. 

We believe that the final amendments potentially could increase the number of responses 

to this updated collection of information for Schedules 13D and 13G. Specifically, although we 

do not anticipate an increase in this collection due to our final amendment to Rule 13d-1, our 

final amendment to Rule 13d-2(b) with respect to the standard that requires an amendment to 

Schedule 13G could potentially increase the number of Schedule 13G amendments filed 

annually.950 For purposes of this PRA, therefore, we estimate that there could be an additional 

41,679 annual responses to the collection of information under Regulation 13D-G951 as a result 

of the final amendment to Rule 13d-2.952  

 
950  For example, Rule 13d-2(b) currently requires that a Schedule 13G be amended 45 days after the calendar 

year-end in which any change occurred to the information previously reported. Under our amendment to 
Rule 13d-2(b), a Schedule 13G will have to be amended within 45 days after the end of the calendar quarter 
in which a material change occurred to the information previously reported. Although an amendment under 
Rule 13d-2(b) currently is required for “any” change in the information previously reported, that rule only 
requires that one amendment be filed annually, if at all. Under the revisions we are adopting to that rule, 
although the standard for determining an amendment obligation would only arise upon a “material” change 
to the information previously reported, the rule changes could theoretically result in numerous amendments 
being filed on an annual basis, with as many as four Schedule 13G amendments being filed annually 
pursuant to revised Rule 13d-2(b). 

951  To the extent that a person or entity incurs a burden imposed by Regulation 13D-G, it is encompassed 
within the collection of information estimates for Regulation 13D-G. This burden includes the preparation, 
filing, processing and circulation of initial and amended Schedules 13D and 13G.  

952  As discussed in section IV.B.3 supra, a total of 18,090 Schedule 13G amendments were filed in calendar 
year 2022. Upon further review of that data set, we note that 15,100, or 83.47% of those Schedule 13G 
amendments were made within the first 45 days of calendar year 2022. In addition, we note for calendar 
years 2020, 2021, and 2022, there were an average of 16,644 Schedule 13G amendments filed each year. 
See supra note 946. Because Rule 13d-2(b) currently has a Schedule 13G amendment deadline of within 45 
days after calendar year-end, we assume that 83.47% of the 16,644 Schedule 13G amendments filed each 
year, or 13,893 filings (when rounded to the nearest whole number), were made pursuant to Rule 13d-2(b). 
As noted above, our amendment to Rule 13d-2(b) could result in a beneficial owner filing four Schedule 
13G amendments annually pursuant to Rule 13d-2(b), as compared to the one annual amendment that 
currently may be required by Rule 13d-2(b). See supra note 950. As such, for purposes of this PRA, we 
estimate that there will be 55,572 Schedule 13G amendments filed annually pursuant to Rule 13d-2(b) as a 
result of our amendment (calculated by multiplying (x) the 13,893 annual responses currently attributable 

 
 



275 

In addition to a potential increase in the number of annual responses, we expect that the 

final amendments will change the estimated burden per response for Regulation 13D-G. For both 

Schedule 13D and Schedule 13G filers, we expect that the structured data requirement will 

increase the estimated burden per response by requiring that the disclosures in those schedules be 

made using the 13D/G-specific XML. In addition, for Schedule 13D filers, we expect that the 

final amendment to Item 6 of Schedule 13D potentially could increase the estimated burden per 

response by specifying that disclosure is required under Item 6 for the use of cash-settled 

derivative securities with respect to an issuer’s securities.953 

The burden estimates were calculated by estimating the number of parties we anticipate 

would expend time, effort, and/or financial resources to generate, maintain, retain, disclose or 

provide information in connection with the final amendments and then multiplying by the 

estimated amount of time, on average, such parties would devote in response to the final 

amendments. The following table summarizes the calculations and assumptions used to derive 

our estimates of the aggregate increase in burden corresponding to the final amendments. 

 

 
to Rule 13d-2(b) by (y) four), resulting in 41,679 additional responses to the collection of information 
under Regulation 13D-G (calculated as the difference between (x) the 55,572 annual responses estimated to 
be attributable to Rule 13d-2(b) as a result of the amendments and (y) the 13,893 annual responses 
currently attributable to Rule 13d-2(b)). We note, however, that this estimate likely reflects the upper limit 
of the potential increases in the number of annual Regulation 13D-G responses as a result of our 
amendment to Rule 13d-2(b) because (1) the amendment revises Rule 13d-2(b) to require a Schedule 13G 
be amended only for a “material” change to the information previously reported, as compared to the current 
requirement that an amendment be filed for “any” change to the information previously reported, (2) the 
information previously reported by many Schedule 13G filers may not change materially on a quarterly 
basis, and (3) some of the Schedule 13G amendments filed in the first 45 days of a given calendar year may 
not have been made pursuant to Rule 13d-2(b). 

953  We further expect, however, that this potential increase may be offset in part by the amendment to Item 6 
that deletes the “including but not limited to” proviso. 



276 

PRA Table 2. Calculation of Increase in Burden Hours Resulting from the Final 
Amendments 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

a  As noted in PRA Table 1 and supra note 946, the updated OMB inventory will reflect 29,793 total Schedule 13D 
and 13G filings, comprised of 5,300 Schedule 13D filings and 24,493 Schedule 13G filings (in each case comprised 
of both initial filings and amendments). When taking into account the potential effects of the amendment to Rule 
13d-2(b) we estimate that the number of Schedule 13G filings could increase by 41,679, for a total of 66,172 annual 
Schedule 13G filings. See supra note 952.  

b As noted in PRA Table 1, the current OMB inventory reflects an average of 14.5 burden hours for each Schedule 
13D filing and an average of 12.4 burden hours for each Schedule 13G filing. We use these per filing burden hours 
as a baseline for estimating the burden impact of the final amendments. We estimate that the new structured data 
requirement will increase the burden per response for Schedule 13D and 13G filings (both initial and amended 
filings) by 0.5 burden hours. Our assumption is that the burden will be greatest in the first year after adoption, as 
filers adjust to the new requirements and update their Schedule 13D and 13G preparation and filing processes 
accordingly. We estimate that the burden of the structured data requirement will be 1 hour in the first year and 0.25 
hours in each of the following two years for a three-year average of 0.5 burden hours. Further, for the amendments 
to Item 6 of Schedule 13D, we estimate they will increase the burden by 0.1 hours for each initial Schedule 13D 
filing. Although these amendments could, in some cases, substantially increase the amount of disclosure made 
pursuant to Item 6, we believe that this estimate accurately reflects that only a relatively small percentage of all 
Schedule 13D filers hold cash-settled derivative securities and, therefore, will be required to make additional 
disclosures. In addition, we also expect that any increased burden may be offset in part by the amendment to Item 6 
that deletes the “but not limited to” proviso. Finally, because not every Schedule 13D amendment will respond to 
Item 6, we apply this increase only to initial filings. Taken together, we estimate that the amendments could increase 
the annual burden hours per initial Schedule 13D filing by 0.6 hours and increase the annual burden hours for each 
Schedule 13D amendment, and each initial Schedule 13G filing and Schedule 13G amendment by 0.5 hours. When 
added to the current averages, we estimate that, as a result of the final amendments, the new average per filing 
burden hours will be 15.1 hours for initial Schedule 13D filings, 3.5 hours for Schedule 13D amendments, 12.9 
hours for initial Schedule 13G filings, and 2.5 hours for Schedule 13G amendments. 

c Derived by multiplying the number of responses in each column by the burden hours per response, and rounded to 
the nearest whole number.  
d Derived by adding together the hours from “Column Totals” (280,538 hours) and subtracting from that total 
burden hours associated with Schedule 13D and 13G filings for Regulation 13D-G, as noted under PRA Table 1 
(161,315).  

 

Schedule 
13D Initial 

Filings 
(A) 

Schedule 13D 
Amendments 

(B) 

Schedule 13G 
Initial Filings 

(C) 

Schedule 13G 
Amendments 

(D) 

Number of 
Responses a      1,288 4,012 7,848 58,323 

 
Burden 

Hours Per 
Response b 

 

15.1 3.5 12.9 2.5 

Column Total c 19,449 14,042 101,239 145,808 

Aggregate  
Increase   

in Burden Hours d 
119,223 



277 

 
The table below illustrates the incremental change to the total annual compliance burden 

in hours and in costs as a result of the final amendments. The table sets forth the percentage 

estimates we typically use for the burden allocation for each response. 

PRA Table 3. Calculation of Aggregate Increase in Burden Hours Resulting from the Final 
Amendments 
 

 
 
 
 
 
 
 
 

† This number reflects an estimated increase of 41,679 annual responses to the updated Regulation 13D-G collection 
of information set forth in PRA Table 1. See supra note 952 and accompanying text. PRA Table 1 reflects an 
updated baseline total of 29,792 responses filed annually for Regulation 13D-G. 

†† Calculated as the sum of annual burden hour increases estimated for Schedule 13D and 13G filings. See supra 
PRA Table 2, “Aggregate Increase in Burden Hours.” 

††† The estimated increases in Columns (C) and (D) are rounded to the nearest whole number. 

Below we summarize the requested paperwork burden for Regulation 13D-G that will be 

submitted to OMB for review in accordance with the PRA, including the estimated total 

reporting burdens and costs, under the final amendments. This table includes both the 

adjustments to the PRA inventory reflected in PRA Table 1 and the aggregate burden increase 

resulting from the final rules reflected in PRA Table 3. 

PRA Table 4. Requested Paperwork Burden for Regulation 13D-G under the Final 
Amendments 

Total Number 
of Estimated 
Responses  

(A)† 

Total 
Increase in 

Burden Hours  
(B)†† 

 

 Increase in 
Internal Hours  

(C)††† 
 

= (B) x 25% 
 

 Increase in Outside 
Professional Hours  

(D)††† 
 

= (B) x 75% 
 

 Increase in Outside 
Professional Costs  

(E) 
 

= (D) x $600 

      
71,471 

    
119,223 

 
29,806 

 
89,417 

 
$53,650,200 

 
Current Burden 

 

 
Program Change 

 
Revised Burden 

Current 
Annual 

Responses 
(A) 

Current 
Burden 
Hours 

(B) 

Current Cost 
Burden 

(C) 

Increase in 
Number of 
Responses 

(D)± 
 

Increase 
in Burden 

Hours 
(E)±± 

Increase in 
Cost Burden 

(F) ±±± 

Annual 
Responses 
(G) = (A) 

+ (D) 

Burden 
Hours 

(H) = (B)     
+ (E) 

Cost Burden 
(I) = (C) + (F) 

 
8,587 

 
27,412 

 
$32,894,000 

 
62,884 

 
42,723 

 
$93,347,200 

 
71,471 

 
70,135 

 
$126,241,200 



278 

 
± Calculated as the sum of (x) the 21,205 increase in the number of annual responses as a result of the update of the 
current OMB inventory (from Column (G) in PRA Table 1) and (y) the 41,679 increase in the number of annual 
responses as a result of the final amendments (see supra note 952 and accompanying text). 
±± Calculated as the sum of (x) the 12,917 increase in the number of burden hours as a result of the update of the 
current OMB inventory (from Column (H) in PRA Table 1) and (y) the 29,806 increase in the number of burden 
hours as a result of the final amendments (from Column (C) in PRA Table 3). 
±±± Calculated as the sum of (x) the $39,697,000 increase in the cost burden as a result of the update of the current 
OMB inventory (from Column (G) in PRA Table 1) and (y) the $53,650,200 increase in the cost burden as a result 
of the final amendments (from Column (E) in PRA Table 3). 
VI. Regulatory Flexibility Act Certification 

The Regulatory Flexibility Act (“RFA”)954 requires Federal agencies, in promulgating 

rules, to consider the impact of those rules on small entities. Section 603(a) of the RFA generally 

requires the Commission to undertake an initial regulatory flexibility analysis of all proposed 

rules, or rule amendments, to determine the impact of the proposed rulemaking on “small 

entities,”955 while section 604(a) requires that the Commission generally provide a final 

regulatory flexibility analysis of rules it is adopting.956 Section 605(b) of the RFA states that 

these requirements shall not apply to any proposed or final rule or rule amendment if the head of 

the agency certifies that the rule will not, if promulgated, have a significant economic impact on 

a substantial number of small entities.957 The Commission certified in the Proposing Release that 

the Proposed Amendments would not have a significant economic impact on a substantial 

number of small entities for purposes of the RFA.958 

For purposes of Commission rulemaking in connection with the RFA, a small entity 

 
954  5 U.S.C. 601 et seq. 
955  Section 601(b) of the RFA permits agencies to formulate their own definitions of “small entities.” See 5 

U.S.C. 601(b). The Commission has adopted definitions for the term “small entity” for the purposes of 
Commission rulemaking in accordance with the RFA. Those definitions, as relevant to this rulemaking, are 
set forth in 17 CFR 240.0-10 and, with respect to investment companies, 17 CFR 270.0-10.  

956  See 5 U.S.C. 603(a), 604(a). 
957  See 5 U.S.C. 605(b). 
958  Proposing Release at 13895-96. 



279 

includes: (1) when used with reference to an “issuer” or a “person,” other than an investment 

company, an “issuer” or “person” that, on the last day of its most recent fiscal year, had total 

assets of $5 million or less;959 or (2) a broker-dealer with total capital (net worth plus 

subordinated liabilities) of less than $500,000 on the date in the prior fiscal year as of which its 

audited financial statements were prepared pursuant to 17 CFR 240.17a-5(d), or, if not required 

to file such statements, a broker-dealer with total capital (net worth plus subordinated liabilities) 

of less than $500,000 on the last business day of the preceding fiscal year (or in the time that it 

has been in business, if shorter); and is not affiliated with any person (other than a natural 

person) that is not a small business or small organization.960 An investment company, including a 

business development company,961 is considered to be a “small business” if it, together with 

other investment companies in the same group of related investment companies, has net assets of 

$50 million or less as of the end of its most recent fiscal year.962 

A description of the final amendments can be found in section II above, and a discussion 

of the economic effects of the final amendments can be found in section IV above. Although the 

final amendments will apply to beneficial owners regardless of their size, we believe that the vast 

majority of the beneficial owners that will be subject to the amendments will not be “small 

entities” for purposes of the RFA. For example, the amendments to the filing deadlines in Rules 

13d-1 and 13d-2, as well as the amendments to Rules 13 and 201 of Regulation S-T and the 

structured data requirement, only apply to persons who beneficially own more than five percent 

 
959  See 17 CFR 240.0-10(a). 
960  See 17 CFR 240.0-10(c). 
961  Business development companies are a category of closed-end investment company that are not registered 

under the Investment Company Act [15 U.S.C. 80a-2(a)(48) and 80a-53-64].  
962  17 CFR 270.0-10(a). 



280 

of a covered class of securities, thus providing a basis to conclude that such a person is unlikely 

to fall within the definition of “small entity.” In addition, to the extent that the final amendments 

to the filing deadlines apply to members of a group, in addition to individual entities, we believe 

that members of a group generally would be larger investors and similarly are unlikely to fall 

within the definition of “small entity.” 

We did not receive any comment letters in response to the request for comment on the 

RFA certification in the Proposing Release.963 Although some commenters asserted that certain 

of the Proposed Amendments would be unduly burdensome for smaller and non-institutional 

beneficial owners,964 those commenters did not indicate (or provide data that would suggest) that 

those beneficial owners would be small entities for purposes of the RFA. Thus, those comments 

do not alter our belief that the vast majority of the beneficial owners that will be subject to the 

amendments will not be small entities for purposes of the RFA. In addition, the final 

amendments include some modifications to the Proposed Amendments. As discussed in more 

detail in section II above, we are not adopting proposed Rule 13d-3(e), nor are we adopting many 

of the proposed amendments to Rules 13d-5 and 13d-6. We also have adopted longer deadlines 

than proposed for initial and amended Schedule 13G filings. We believe these modifications 

generally would reduce any burdens of the final amendments in the event any small entity 

becomes subject to them. Moreover, we do not believe that these modifications alter the basis 

upon which the Commission made the certification in the Proposing Release. 

For the foregoing reasons, the Commission certifies, pursuant to 5 U.S.C. 605(b), that the 

final amendments will not have a significant economic impact on a substantial number of small 

 
963  Proposing Release at 13896. 
964  See, e.g., letters from A. Day; E. Fraser; MFA; see also letters from B. Mason; S. Thornburg.281 

entities for purposes of the RFA.  

Statutory Authority 

We are adopting the rule amendments contained in this release under the authority set 

forth in sections 3(b), 13, and 23(a) of the Exchange Act.  

List of Subjects  

17 CFR Part 232 

 Administrative practice and procedure, Reporting and recordkeeping requirements, 

Securities. 

17 CFR Part 240 

 Reporting and recordkeeping requirements, Securities. 

Text of Amendments 

 For the reasons set out in the preamble, the Commission is amending title 17, chapter II, 

of the Code of Federal Regulations as follows: 

PART 232—REGULATION S-T—GENERAL RULES AND REGULATIONS FOR 

ELECTRONIC FILINGS 

1. The general authority citation for part 232 continues to read as follows: 

 Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 77sss(a), 78c(b), 78l, 78m, 

78n, 78o(d), 78w(a), 78ll, 80a-6(c), 80a-8, 80a-29, 80a-30, 80a-37, 80b-4, 80b-6a, 80b-10, 80b-

11, 7201 et seq.; and 18 U.S.C. 1350, unless otherwise noted. 

* * * * * 

2. Amend § 232.13 by: 

a. Revising paragraph (a)(4); and 

b. Designating the note following paragraph (a)(4) as note 1 to paragraph (a). 



282 

The revision reads as follows: 

§ 232.13   Date of filing; adjustment of filing date. 

(a) *    *    * 

(4) Notwithstanding paragraph (a)(2) of this section, a Form 3, 4, or 5 (referenced in §§ 

249.103, 249.104, and 249.105 of this chapter, respectively), a Schedule 14N (referenced in § 

240.14n-101 of this chapter), a Form 144 (referenced in § 239.144 of this chapter), or a Schedule 

13D or Schedule 13G, inclusive of any amendments thereto (§§ 240.13d-101 and 240.13d-102 of 

this chapter), submitted by direct transmission commencing on or before 10 p.m. Eastern 

Standard Time or Eastern Daylight Time, whichever is currently in effect, shall be deemed filed 

on the same business day. 

* * * * * 

§ 232.201   [Amended] 

3. Amend § 232.201(a) introductory text by:  

a. Removing the word “or” that immediately precedes “an Asset Data File”; and  

b. Adding after the phrase “Asset Data File (as defined in § 232.11),” the phrase “or a 

Schedule 13D or Schedule 13G (§§ 240.13d-101 and 240.13d-102 of this chapter),”. 

PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE 

ACT OF 1934 

4. The authority citation for part 240 continues to read, in part, as follows:  

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 

77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78l, 78m, 78n, 

78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll, 78mm, 80a-20, 

80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 



283 

U.S.C. 5221(e)(3); 18 U.S.C. 1350; and Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. 

L. 112-106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted. 

* * * * * 

 Section 240.13d-3 is also issued under Public Law 111-203 § 766, 124 Stat. 1799 (2010). 

* * * * * 

5. Amend § 240.13d-1 by revising paragraphs (a), (b)(1)(i) and (iii), (b)(2), (c) 

introductory text, (d), (e)(1) introductory text, (e)(1)(ii), (f)(1), (g), (i), and (j) to read as follows: 

§ 240.13d-1   Filing of Schedules 13D and 13G. 

(a) Any person who, after acquiring directly or indirectly the beneficial ownership of any 

equity security of a class which is specified in paragraph (i)(1) of this section, is directly or 

indirectly the beneficial owner of more than five percent of the class shall, within five business 

days after the date of the acquisition, file with the Commission, a statement containing the 

information required by Schedule 13D (§ 240.13d-101). 

(b) *    *    * 

(1) *    *    * 

(i) Such person has acquired such securities in the ordinary course of the person’s 

business and not with the purpose nor with the effect of changing or influencing the control of 

the issuer, nor in connection with or as a participant in any transaction having such purpose or 

effect, including any transaction subject to § 240.13d-3(b), other than activities solely in 

connection with a nomination under § 240.14a-11; and 

*    *    *    *    * 

(iii) Such person has promptly notified any other person (or group within the meaning of 

section 13(d)(3) of the Act) on whose behalf it holds, on a discretionary basis, securities 



284 

exceeding five percent of the class, of any acquisition or transaction on behalf of such other 

person which might be reportable by that person under section 13(d) of the Act. This paragraph 

(b)(1)(iii) only requires notice to the account owner of information which the filing person 

reasonably should be expected to know and which would advise the account owner of an 

obligation such account owner may have to file a statement, or an amendment thereto, pursuant 

to section 13(d) of the Act. 

*    *    *    *    * 

(2) The Schedule 13G filed pursuant to paragraph (b)(1) of this section shall be filed 

within 45 days after the end of the calendar quarter in which the person became obligated under 

paragraph (b)(1) of this section to report the person’s beneficial ownership as of the last day of 

the calendar quarter, provided, that it shall not be necessary to file a Schedule 13G unless the 

percentage of the class of equity security specified in paragraph (i)(1) of this section beneficially 

owned as of the end of the calendar quarter is more than five percent; however, if the person’s 

direct or indirect beneficial ownership exceeds 10 percent of the class of equity securities prior to 

the end of the calendar quarter, the initial Schedule 13G shall be filed within five business days 

after the end of the first month in which the person’s direct or indirect beneficial ownership 

exceeds 10 percent of the class of equity securities, computed as of the last day of the month. 

(c) A person who would otherwise be obligated under paragraph (a) of this section to file 

a statement on Schedule 13D (§ 240.13d-101) may, in lieu thereof, file with the Commission, 

within five business days after the date of an acquisition described in paragraph (a) of this 

section, a short-form statement on Schedule 13G (§ 240.13d-102). Provided, that the person: 

*    *    *    *    * 



285 

(d) Any person who, as of the end of any calendar quarter, is or becomes directly or 

indirectly the beneficial owner of more than five percent of any equity security of a class 

specified in paragraph (i)(1) of this section and who is not required to file a statement under 

paragraph (a) of this section by virtue of the exemption provided by section 13(d)(6)(A) or (B) of 

the Act (15 U.S.C. 78m(d)(6)(A) or 78m(d)(6)(B)), or because the beneficial ownership was 

acquired prior to December 22, 1970, or because the person otherwise (except for the exemption 

provided by section 13(d)(6)(C) of the Act (15 U.S.C. 78m(d)(6)(C))) is not required to file a 

statement, shall file with the Commission, within 45 days after the end of the calendar quarter in 

which the person became obligated to report under this paragraph (d), a statement containing the 

information required by Schedule 13G (§ 240.13d-102). 

(e)(1) Notwithstanding paragraphs (b) and (c) of this section and § 240.13d-2(b), a person 

that has reported that it is the beneficial owner of more than five percent of a class of equity 

securities in a statement on Schedule 13G (§ 240.13d-102) pursuant to paragraph (b) or (c) of 

this section, or is required to report the acquisition but has not yet filed the schedule, shall 

immediately become subject to paragraph (a) of this section and § 240.13d-2(a) and shall file a 

statement on Schedule 13D (§ 240.13d-101) within five business days if, and shall remain 

subject to those requirements for so long as, the person: 

*    *    *    *    * 

(ii) Is at that time the beneficial owner of more than five percent of a class of equity 

securities described in paragraph (i)(1) of this section. 

*    *    *    *    * 

(f)(1) Notwithstanding paragraph (c) of this section and § 240.13d-2(b), persons reporting 

on Schedule 13G (§ 240.13d-102) pursuant to paragraph (c) of this section shall immediately 



286 

become subject to paragraph (a) of this section and § 240.13d-2(a) and shall remain subject to 

those requirements for so long as, and shall file a statement on Schedule 13D (§ 240.13d-101) 

within five business days after the date on which the person’s beneficial ownership equals or 

exceeds 20 percent of the class of equity securities. 

*    *    *    *    * 

(g) Any person who has reported an acquisition of securities in a statement on Schedule 

13G (§ 240.13d-102) pursuant to paragraph (b) of this section, or has become obligated to report 

on Schedule 13G (§ 240.13d-102) but has not yet filed the Schedule, and thereafter ceases to be a 

person specified in paragraph (b)(1)(ii) of this section or determines that it no longer has 

acquired or holds the securities in the ordinary course of business shall immediately become 

subject to paragraph (a) or (c) of this section (if the person satisfies the requirements specified in 

paragraph (c)) and § 240.13d-2(a), (b), or (d), and shall file, within five business days thereafter, 

a statement on Schedule 13D (§ 240.13d-101) or amendment to Schedule 13G, as applicable, if 

the person is a beneficial owner at that time of more than five percent of the class of equity 

securities. 

*    *    *    *    * 

(i)(1) For the purpose of this section, the term equity security means any equity security 

of a class which is registered pursuant to section 12 of the Act, or any equity security of any 

insurance company which would have been required to be so registered except for the exemption 

contained in section 12(g)(2)(G) of the Act, or any equity security issued by a closed-end 

investment company registered under the Investment Company Act of 1940; provided, such term 

shall not include securities of a class of non-voting securities. 



287 

(2) For the purpose of this section, the term business day means any day, other than 

Saturday, Sunday, or a Federal holiday, from 12 a.m. to 11:59 p.m., Eastern Time. 

(j) For the purpose of sections 13(d) and 13(g) of the Act, any person, in determining the 

amount of outstanding securities of a class of equity securities, may rely upon information set 

forth in the issuer’s most recent quarterly or annual report, and any current report subsequent 

thereto, filed with the Commission pursuant to the Act, unless such person knows or has reason 

to believe that the information contained therein is inaccurate. 

*    *    *    *    * 

6. Amend § 240.13d-2 by:  

a. Revising paragraphs (a) through (d); and 

b. Removing the sectional authority citation from the end of the section. 

The revisions read as follows: 

§ 240.13d-2   Filing of amendments to Schedules 13D or 13G. 

(a) If any material change occurs in the facts set forth in the Schedule 13D (§ 240.13d-

101) required by § 240.13d-1(a), including, but not limited to, any material increase or decrease 

in the percentage of the class beneficially owned, the person or persons who were required to file 

the statement shall file or cause to be filed with the Commission an amendment disclosing that 

change within two business days after the date of such change. An acquisition or disposition of 

beneficial ownership of securities in an amount equal to one percent or more of the class of 

securities shall be deemed “material” for purposes of this section; acquisitions or dispositions of 

less than those amounts may be material, depending upon the facts and circumstances. 

(b) Notwithstanding paragraph (a) of this section, and provided that the person filing a 

Schedule 13G (§ 240.13d-102) pursuant to § 240.13d-1(b) or (c) continues to meet the 



288 

requirements set forth therein, any person who has filed a Schedule 13G (§ 240.13d-102) 

pursuant to § 240.13d-1(b), (c), or (d) shall amend the statement within 45 days after the end of 

each calendar quarter if, as of the end of the calendar quarter, there are any material changes in 

the information reported in the previous filing on that Schedule; provided, however, that an 

amendment need not be filed with respect to a change in the percent of the class outstanding 

previously reported if the change results solely from a change in the aggregate number of 

securities outstanding. Once an amendment has been filed reflecting beneficial ownership of five 

percent or less of the class of securities, no additional filings are required unless the person 

thereafter becomes the beneficial owner of more than five percent of the class and is required to 

file pursuant to § 240.13d-1. 

(c) Any person relying on § 240.13d-1(b) that has filed its initial Schedule 13G (§ 

240.13d-102) pursuant to § 240.13d-1(b) shall, in addition to filing any amendments pursuant to 

paragraph (b) of this section, file an amendment on Schedule 13G (§ 240.13d-102) within five 

business days after the end of the first month in which the person’s direct or indirect beneficial 

ownership, computed as of the last day of the month, exceeds 10 percent of the class of equity 

securities. Thereafter, that person shall, in addition to filing any amendments pursuant to 

paragraph (b) of this section, file an amendment on Schedule 13G (§ 240.13d-102) within five 

business days after the end of the first month in which the person's direct or indirect beneficial 

ownership, computed as of the last day of the month, increases or decreases by more than five 

percent of the class of equity securities. Once an amendment has been filed reflecting beneficial 

ownership of five percent or less of the class of securities, no additional filings are required by 

this paragraph (c). 



289 

(d) Any person relying on § 240.13d-1(c) that has filed its initial Schedule 13G (§ 

240.13d-102) pursuant to § 240.13d-1(c) shall, in addition to filing any amendments pursuant to 

paragraph (b) of this section, file an amendment on Schedule 13G (§ 240.13d-102) within two 

business days after acquiring, directly or indirectly, greater than 10 percent of a class of equity 

securities specified in § 240.13d-1(d), and thereafter within two business days after increasing or 

decreasing its beneficial ownership by more than five percent of the class of equity securities. 

Once an amendment has been filed reflecting beneficial ownership of five percent or less of the 

class of securities, no additional filings are required by this paragraph (d). 

*    *    *    *    * 

7. Amend § 240.13d-3 by: 

a. Revising paragraphs (d)(3) introductory text and (d)(4); and 

b. Removing the sectional authority citation from the end of the section. 

The revisions read as follows: 

§ 240.13d-3   Determination of beneficial owner. 

*    *    *    *    * 

(d) *    *    * 

(3) A person who in the ordinary course of such person’s business is a pledgee of 

securities under a written pledge agreement shall not be deemed to be the 

beneficial owner of such pledged securities until the pledgee has taken all formal 

steps necessary which are required to declare a default and determines that the 

power to vote or to direct the vote or to dispose or to direct the disposition of such 

pledged securities will be exercised, provided, that: 

*    *    *    *    * 



290 

(4) A person engaged in business as an underwriter of securities who acquires securities 

through such person’s participation in good faith in a firm commitment underwriting registered 

under the Securities Act of 1933 shall not be deemed to be the beneficial owner of such 

securities until the expiration of 40 days after the date of such acquisition. 

8. Revise § 240.13d-5 to read as follows: 

§ 240.13d-5   Acquisition of beneficial ownership. 

(a) A person who becomes a beneficial owner of securities shall be deemed to have 

acquired such beneficial ownership for purposes of section 13(d)(1) of the Act, whether such 

acquisition was through purchase or otherwise. However, executors or administrators of a 

decedent’s estate generally will be presumed not to have acquired the beneficial ownership held 

by the decedent’s estate until such time as such executors or administrators are qualified under 

local law to perform their duties. 

(b)(1)(i) When two or more persons agree to act together for the purpose of acquiring, 

holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be 

deemed to have acquired beneficial ownership, for purposes of sections 13(d) and (g) of the Act, 

as of the date of such agreement, of all equity securities of that issuer beneficially owned by any 

such persons.  

(ii) A group regulated as a person pursuant to section 13(d)(3) of the Act shall be deemed 

to have acquired beneficial ownership, as determined under paragraph (a) of this section and for 

purposes of sections 13(d)(1) and (2) of the Act, if any member of the group becomes the 

beneficial owner of additional equity securities in the same class beneficially owned by the group 

after the group’s formation. The beneficial ownership so acquired shall be reported as being held 



291 

by the group through the earlier of {x} the date of the group’s dissolution or {y} the date of that 

member’s withdrawal from the group. 

(iii) Notwithstanding paragraph (b)(1)(ii) of this section, a group regulated under section 

13(d)(3) of the Act shall not be deemed to have acquired beneficial ownership, as determined 

under paragraph (a) of this section, if, after the group’s formation, a member of the group 

becomes the beneficial owner of additional equity securities in the same class beneficially owned 

by the group through a sale by or transfer from another member of the group. 

(2)(i) A group regulated as a person pursuant to section 13(g)(3) of the Act shall be 

deemed to have become the beneficial owner, for purposes of sections 13(g)(1) and (2) of the 

Act, if any member of the group becomes a beneficial owner of additional equity securities in the 

same class held by the group after the group’s formation and through the earlier of {x} the date 

of the group’s dissolution or {y} the date of that member’s withdrawal from the group.   

(ii) Notwithstanding paragraph (b)(2)(i) of this section, a group regulated under section 

13(g)(3) of the Act shall not be deemed to have become the beneficial owner of additional equity 

securities in the same class beneficially owned by the group if, after the group’s formation, a 

member of the group becomes the beneficial owner of additional equity securities in the same 

class beneficially owned by the group through a sale by or transfer from another member of the 

group. 

9. Revise § 240.13d-6 to read as follows: 

§ 240.13d-6   Exemption of certain acquisitions. 

(a) The acquisition of securities of an issuer by a person who, prior to such acquisition, 

was a beneficial owner of more than five percent of the outstanding securities of the same class 

as those acquired shall be exempt from section 13(d) of the Act; provided, that: 



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(1) The acquisition is made pursuant to preemptive subscription rights in an offering 

made to all holders of securities of the class to which the preemptive subscription rights pertain; 

(2) Such person does not acquire additional securities except through the exercise of such 

person’s pro rata share of the preemptive subscription rights; and 

(3) The acquisition is duly reported, if required, pursuant to section 16(a) of the Act and 

the rules and regulations thereunder in this part. 

(b) A group shall be deemed not to have acquired any equity securities beneficially 

owned by the other members of the group solely by virtue of their concerted actions relating to 

the purchase of equity securities directly from an issuer in a transaction not involving a public 

offering; provided, that: 

(1) All the members of the group are persons specified in § 240.13d-1(b)(1)(ii); 

(2) The purchase is in the ordinary course of each member’s business and not with the 

purpose nor with the effect of changing or influencing control of the issuer, nor in connection 

with or as a participant in any transaction having such purpose or effect, including any 

transaction subject to § 240.13d-3(b); 

(3) There is no agreement among or between any members of the group to act together 

with respect to the issuer or its securities except for the purpose of facilitating the specific 

purchase involved; and 

(4) The only actions among or between any members of the group with respect to the 

issuer or its securities subsequent to the closing date of the non-public offering are those which 

are necessary to conclude ministerial matters directly related to the completion of the offer or 

sale of the securities. 

§ 240.13d-7   [Removed and Reserved] 



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10. Remove and reserve § 240.13d-7. 

11. Amend § 240.13d-101 by:  

a. Removing the note that reads “Note: Schedules filed in paper format shall include a 

signed original and five copies of the schedule, including all exhibits. See Rule 13d–7 for other 

parties to whom copies are to be sent.”; and 

b. Revising Item 6 and the paragraph following the “Name/Title” block.  

The revisions read as follows: 

§ 240.13d-101   Schedule 13D—Information to be included in statements filed pursuant to § 

240.13d-1(a) and amendments thereto filed pursuant to § 240.13d-2(a). 

*    *    *    *    * 

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to 

Securities of the Issuer. Describe any contracts, arrangements, understandings, or relationships 

(legal or otherwise) among the persons named in Item 2 and between such persons and any 

person with respect to any securities of the issuer, including any class of such issuer’s securities 

used as a reference security, in connection with any of the following: call options, put options, 

security-based swaps or any other derivative securities, transfer or voting of any of the securities, 

finder’s fees, joint ventures, loan or option arrangements, guarantees of profits, division of 

profits or loss, or the giving or withholding of proxies, naming the persons with whom such 

contracts, arrangements, understandings, or relationships have been entered into. Include such 

information for any of the securities that are pledged or otherwise subject to a contingency the 

occurrence of which would give another person voting power or investment power over such 

securities except that disclosure of standard default and similar provisions contained in loan 

agreements need not be included. 



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*    *    *    *    * 

The original statement shall be signed by each person on whose behalf the statement is filed or 

such person’s authorized representative. If the statement is signed on behalf of a person by such 

person’s authorized representative (other than an executive officer or general partner of the filing 

person), evidence of the representative's authority to sign on behalf of such person shall be filed 

with the statement; provided, however, that a power of attorney for this purpose which is already 

on file with the Commission may be incorporated by reference. The name and any title of each 

person who signs the statement shall be typed or printed beneath such person’s signature. 

*    *    *    *    * 

12. Amend § 240.13d-102 by:  

a. Revising Item 8 and the paragraph following the “Name/Title” block; and 

b. Removing the note at the end of the section.  

The revisions read as follows: 

§ 240.13d-102   Schedule 13G—Information to be included in statements filed pursuant to § 

240.13d-1(b), (c), and (d) and amendments thereto filed pursuant to § 240.13d-2. 

*    *    *    *    * 

Item 8. Identification and Classification of Members of the Group 

If a group has filed this schedule pursuant to § 240.13d-1(b)(1)(ii)(K), so indicate under Item 

3(k) and attach an exhibit stating the identity and Item 3 classification of each member of the 

group. If a group has filed this schedule pursuant to Rule 13d-1(c) or Rule 13d-1(d), attach an 

exhibit stating the identity of each member of the group. 

*    *    *    *    * 



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The original statement shall be signed by each person on whose behalf the statement is filed or 

such person’s authorized representative. If the statement is signed on behalf of a person by such 

person’s authorized representative other than an executive officer or general partner of the filing 

person, evidence of the representative’s authority to sign on behalf of such person shall be filed 

with the statement; provided, however, that a power of attorney for this purpose which is already 

on file with the Commission may be incorporated by reference. The name and any title of each 

person who signs the statement shall be typed or printed beneath such person’s signature. 

*    *    *    *    * 

By the Commission. 

Dated: October 10, 2023.  

 

 

Vanessa A. Countryman, 

Secretary.