On September 17, 2024, the Securities and Exchange Commission announced cease-and-desist proceedings against eleven institutional investment managers for failure to file reports required by the Securities Exchange Act of 1934. The SEC’s orders require all of the firms to file the reports that Section 13(f) requires from institutional investment mangers holding investment discretionary authority over at least $100 million in specified securities, generally equity securities listed in the United States and related securities. Two of the firms were also charged with violating the Exchange Act’s reporting requirement under Section 13(h) for “large traders,” a term defined to include parties investing more than $20 million in National Market System securities in a single calendar day or $200 million in a single calendar month.
The SEC’s orders all require the firms to cease and desist from their Exchange Act violations, Nine of the firms were assessed penalties ranging from $175,000 to $725,000. Two of the respondents were not fined, the SEC said, because they had reported their Exchange Act failures and had otherwise cooperated with the Commission’s enforcement staff. For the same reason, one respondent was not assessed a penalty for its failure to file large trader reports.
The respondents included two foreign advisers, one from Canada and another from Poland. The SEC’s decision to bring action against these two parties necessarily implies that the Commission believes that Sections 13(f) and 13(h) apply to qualifying institutional investment managers and to large traders outside the U.S. The actions under Section 13(h) appear to be only the second and third prosecutions the SEC has made under the provision, the first having been taken in 2023.
The Commission’s announcement of its actions is available here.
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