In what has to be admitted is a strong field, none of the contentious, late-public-service-career innovations by Securities and Exchange Commission Chairman Jay Clayton to increase opacity, kneecap shareholder democracy, and ensure snitches get stitches and not much else have proven as controversial and his plan to save a few thousand hedge funds the trouble of telling the world what they owned six weeks ago. Investors small and large hate it, by the thousands. Companies who’d be a bit more in the dark about who their owners are, hate it, too. Goldman Sachs, which runs a very successful little index based on the filings, hates it. The New York Stock Exchange and Nasdaq hate it.
The absence of disclosures on equity holdings would deprive companies and investors of information they use to make decisions about shareholder engagement and investments, NYSE and Nasdaq wrote in opposition to the Securities and Exchange Commission plan as part of a comment period that ended Sept. 29.
At least, a Jay Clayton hating his every extra minute spent in the swamp known as the District of Columbia even more than the last must have thought: The hedge funds won’t hate it. They’ll love it. And, you know, maybe they’ll remember that in the increasingly likely scenario that Jay Clayton is not drawing a government paycheck next year and Clayton is singing for his supper once more at the sort of white-shoe law firms that hedge funds like to hire when they are in need of legal services.
But no! As it turns out, annoying as it may be to have to file a 13F four times a year, it’s apparently not nearly as expensive and onerous as the SEC believes, and those few thousand hedge funds Clayton proposes to spare them are actually more interested in knowing what those other few thousand hedge funds have been up to than saving themselves a little paperwork.
“The proposing release underestimated the costs associated with the loss of publicly available information,” the Washington-based group said in a letter dated Sept. 29…. “We believe that the SEC should reconsider the net benefits to managers given the relatively small amount of direct cost savings and the increased costs associated with the loss of information,” the MFA said in its letter.
The Alternative Investment Management Association, a hedge fund trade group based in London, concurred that the SEC had not “given sufficient consideration to the widespread uses of the data” in 13F filings. Aima added that the regulator also failed to provide a “detailed and balanced cost-benefit analysis that is necessary to support these proposals,” according to a comment letter dated Sept. 29.
Hedge Funds Skeptical of SEC Plan to Let Firms Conceal Stocks [Bloomberg]NYSE, Nasdaq Slam SEC Plan to Cut Hedge Fund Holding Disclosures [Bloomberg Law]