Unlucky 13 is a favorite with the SEC

If No.13 isn't already unlucky enough, it will be even more so if you fail to file Form 13(f) with the SEC. Investment advisors and broker/dealers should know what this report is.

Form 13(f) must be filed with the SEC by "institutional investment managers." It's a term that includes investment advisors who exercise investment discretion over Section 13(f) securities with an aggregate value of $100 million or more. The purpose of Section 13(f) is to increase investor confidence in the integrity of the U.S. securities markets.

For purposes of Section 13(f), institutional investment managers may include investment advisors, broker/dealers, banks and insurance companies, as well as pension funds and corporations that manage their own investment portfolios.

What are Section 13(f) securities?

The securities that institutional investment managers must report are found on the Official List of Section 13(f) Securities. The official list is published quarterly and is available for free on the SEC's Website (www.sec.gov). It is not available in hard copy or on a computer disk.

As a general rule, Section 13(f) securities include equity securities traded on an exchange or quoted on the Nasdaq, some equity options and warrants, shares of closed-end investment companies, and some convertible debt securities. Shares of open-end investment companies are not Section 13(f) securities and shouldn't be reported. On the other hand, shares of exchange-traded funds should be reported.

Form 13F requirements

Form 13F is a single EDGAR document with three separate parts: the cover page, the summary page and the information table. Form 13F filings may be searched and retrieved using the SEC's EDGAR database. These filings disclose the names of institutional investment managers, the names of the securities they manage and the class of securities, the CUSIP number, the number of shares owned and the total market value of each security.

The institutional investment manager must file Form 13F upon reaching the $100 million threshold on the last trading day of any month of any calendar year. Section 13(f) requires the first report to be filed "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."

The first Form 13(f) must be filed for the December quarter of the calendar year during which the threshold is surpassed. Following the initial filing, the manager must submit filings for the March, June and September quarters of the following calendar year, even if the market value of Section 13(f) securities falls below the $100 million level. As an example, if the $100 million filing threshold is met on the last trading day of July, the first Form 13(f) must be filed for the quarter ending in December and will be due no later than February 14 of the next year.

If you're required to file Form 13F, short positions should not be included. In addition, you should not subtract your short position(s) in a security from your long position(s) in that same security. Only the long position should be reported.

Securities that are owned and loaned to a third party should be reported on Form 13F. A third party that borrows these securities should not report them.

Put or call options that you hold, as well as warrants, should be reported on Form 13F. You should not report put or call options that you write. As was the case with short equity positions, short options positions are not reported on Form 13F.

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