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When does an RIA firm need to file a Form 13F with the SEC?

Posted by RIA in a Box

Oct 8, 2018 3:17:19 PM

Investment adviser 13F Edgar filing assistanceThe primary regulatory filing requirement for a registered investment adviser ("RIA") firm is the Form ADV. The Form ADV Part 1 and Part 2 is filed via the online Investment Adviser Registration Depository ("IARD") system. However, as we have previously discussed, some RIA firms may also need to submit additional filings such as the Section 13(d), 13(f), 13(g), 13(h), or Form 3,4, or 5. These additional filings are submitted to the Securities and Exchange Commission ("SEC") via the Electronic Data Gathering, Analysis, and Retrieval ("EDGAR") system. In this post, we highlight when an RIA firm may be required to submit a Form 13F filing to the SEC.


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Are RIA firms considered to be institutional investment managers for the purposes of filing the Form 13F?

Section 13(f) of the Securities Exchange Act requires an institutional investment manager firm to file a Form 13F if the firm exercises investment discretion with respect to $100 million or more in certain identified 13F securities. In general, the Form 13F is the most common EDGAR filing requirement for an RIA firm. It's important to note that many advisory firms meet the definition of an "institutional investment manager" for the purposes of the Form 13F filing since the firm exercises investment discretion.

As part of the SEC's Division of Investment Management Form 13F FAQ guide, the SEC staff notes:

An institutional investment manager is also a natural person or an entity that exercises investment discretion over the account of any other natural person or entity. For example, an investment adviser that manages private accounts, mutual fund assets, or pension plan assets is an institutional investment manager. So is the trust department of a bank.

As part of the FAQ guide, the SEC staff further clarifies "investment discretion" to mean:

An institutional investment manager exercises investment discretion if: (i) the manager has the power to determine which securities are bought or sold for the account(s) under management; or (ii) the manager makes decisions about which securities are bought or sold for the account(s), even though someone else is responsible for the investment decisions.

What type of securities are considered 13F securities?

Given the definitions above, the majority of RIA firms likely meet the definition of an institutional investment manager exercising investment discretion. Now, the next question for an investment advisory firm to consider is whether the firm has met the $100 million 13F securities threshold in order to be required to submit the Form 13F filing. At times, advisory firms may not recognize that the list of Section 13(f) securities is quite extensive and includes many exchange traded funds ("ETFs") that are commonly utilized by RIA firms. The SEC defines Section 13(f) securities as follows:

Section 13(f) securities generally include equity securities that trade on an exchange (including Nasdaq National Market System), certain equity options and warrants, shares of closed-end investment companies, and certain convertible debt securities. The shares of open-end investment companies (i.e., mutual funds) are not Section 13(f) securities.

Advisers can see the latest published list of Section 13(f) securities here.

When must an RIA firm first file a Form 13F?

Rule 13f-1(a)(1) requires that an institutional investment manager that exercises investment discretion over Section 13(f) securities "having an aggregate fair market value on the last trading day of any month of any calendar year of at least $100,000,000 shall file a report on Form 13F with the Commission within 45 days after the last day of such calendar year and within 45 days after the last day of each of the first three calendar quarters of the subsequent calendar year."

As part of FAQ guide, the SEC staff further clarifies:

The first such filing is due within 45 days after the end of the fourth quarter of the calendar year, i.e., the quarter ending December 31 of the same calendar year that you meet the $100 million filing threshold. The filing is due within 45 days after December 31, or, stated differently, by February 14 of the subsequent calendar year.

Rule 13f-1(a)(1) also requires that you submit three additional Form 13F filings during the subsequent calendar year.  Each filing is due within 45 days after the end of the calendar quarter, i.e., the calendar quarters that end on March 31, June 30, and September 30.

As an example, assume the RIA firm first reaches $100 million Form 13F filing threshold on June 30, 2018 of a given year. The firm's first Form 13F filing should be filed by February 14, 2019 (45 days after the last day of such calendar year).

We strongly suggest that the Chief Compliance Officer of all RIA firms, regardless of total regulatory assets under management, regularly review if the firm is required to file a Form 13F.

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Topics: RIA Compliance

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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