Absent SEC or court action, institutional investment managers that meet or exceed certain thresholds face a February 14 deadline to file the first reports with the SEC on Form SHO.
Form SHO, which was adopted with Rule 13f-2 under the Securities Exchange Act of 1934, became effective on January 2, 2024. Compliance with the rule began on January 2, 2025.
Who is covered?
The rules and reporting requirements cover "institutional investment managers" as defined in the Exchange Act. That includes certain brokers-dealers, investment advisers, banks, insurance companies, pension funds and corporations.
What is covered?
Equity securities registered under Section 12 of the Exchange Act or those requiring issuer reports under Section 15(d) are covered. So are equity securities that are not subject to reporting or registration requirements.
What are the reporting triggers?
For securities subject to a reporting or registration requirement, reporting triggers are a monthly average gross short position valued at $10 million or more, or 2.5% or more of shares outstanding. For other equity securities, the threshold is a gross short position valued at $500,000 or more on any settlement date during the month.
What’s in the report?
Reports must include the end-of-month gross short position and net activity for each equity security. Reports are due within 14 days after month-end. The SEC will publish aggregate data about a month later.
How do you report?
Covered persons must submit Form SHO must be via EDGAR in XML format within 14 days after month-end. Form SHO includes a cover page and information tables detailing monthly gross positions and daily activity affecting short positions. All submitted information is deemed confidential under 17 CFR 200.83.
Are there cross-border implications?
The SEC clarified that Section 13(f)(2) applies to institutional investment managers operating in U.S. markets. The rule's cross-border reach is based on a territorial approach, focusing on domestic conduct subject to U.S. reporting requirements. However, statements by the SEC in its litigation briefs have muddied the waters.
What’s next?
The rule is subject to litigation and could be vacated or remanded by the court. A decision is not expected before the first report is due.
