When the SEC last month announced plans to effectively cut the number of 13F disclosures of hedge fund stock holdings journalists have to play with from a few thousand to a few hundred, we thought of it more as an amusing little parting gift from Jay Clayton to his once and future clients than something to get really worked up about. After all, as even Jim Cramer knows, the usefulness of these filings is at best questionable. After all, by the time they are made—no later than 45 days after the end of a quarter—it’s highly unlikely that they offer an accurate picture of what a particular hedge fund owns at the moment of their release. Indeed, it’s entirely possible for a hedge fund to sell everything on the first day of the next quarter and build an entirely new portfolio containing none of its former holdings, making as stark as possible the fact of what a 13F is: a snapshot—and a very old one by the time of its disclosure at that—of what a hedge fund held at a specific, increasingly distant moment, with no bearing on what said fund is actually doing now, or has been doing for the last six weeks. Plus, let’s be honest: No one really cares much about what a hedge fund with less than $3.5 billion was doing a month-and-a-half ago, and so all of the celebrity portfolios you’d like a peek at will still be coming to you anyway. (That all being said, 13Fs are the only window the public gets into these things, and for all of their out-of-dateness Goldman Sachs has managed to build a pretty successful portfolio out of them.)
Well, we might not think that the proposal’s that big a deal, but other people do. Lots of them. And they have takes! Well, really, they have one take—that this change is bad—expressed in what may be a record number of comment letters on an SEC proposal, 1,500 and counting as of July 28, an average of almost 80 per day, with more than a month from now still to go in the comment period. We randomly clicked on a couple dozen of the ones that have been released and found not a single one in favor of the proposal: “What are you guys thinking?” “I am strongly concerned.” “The SEC’s contempt for the individual investor is obvious.” “This will only further the inequities in our society by removing valuable information access to smaller investors.” “This is madness, totally crazy.” “Keep the transparency going. PLEASE.” “PLEASE DO NO RAISE THE REPORTING LIMITS.” “When is less transparency and less data ever a good thing for the small investor?”
In the interest of transparency (our interest, of course, not the SEC’s: It clearly doesn’t have an interest in transparency), we should note that the far more diligent folks over at DealBook did manage to find at least one supportive letter to Jay.
Chad Gassaway, a chartered market technician, backed the proposal: “In no other industry are companies required to divulge their proprietary strategies.” He said the forms were already flawed, since they do not require institutional investors to disclose their debt holdings or short positions.
The comments didn’t only offer incredulity, hectoring, begging and all-caps ad hominem attacks. They also made some suggestions on how to improve the proposal, although Clayton probably wants to read those even less than the ones impugning his motives and integrity.
Instead of raising the disclosure threshold, some comments suggested shortening the filing window to 30 days after the end of a quarter, instead of the current 45, or requiring funds to disclose all of their investment positions, including short bets.