seven days after acquisition of 10% of equity securities seems to
provide an unduly short time for preparation of a document of that
magnitude and significance'' and noting that ``[i]t will take longer
to prepare and check such a document properly'').
    \154\ See supra notes 138-139 and accompanying text.
    \155\ See Full Disclosure of Corporate Equity Ownership and in
Corporate Takeover Bids: Hearing on S. 510 Before the Subcomm. On
Securities of the S. Comm. On Banking and Currency, 90th Cong. 25
(1967) (statement of Manuel F. Cohen, Chairman, Securities and
Exchange Commission) (``We think that this bill would improve our
ability to elicit . . . information [regarding changes of control] .
. . in a timely way, that is necessary for appropriate investor
information and judgment.''); see also id. at 70 (statement of
Donald J. Calvin, Vice President, New York Stock Exchange) (noting
that Senator Harrison A. Williams, Jr. stated that ``[t]he primary
objective of this bill . . . is to provide full and timely
disclosure to stockholders'' and stating that ``[d]isclosure to
stockholders of events which may affect investment decisions is and
has been for many years a primary object of exchange policy'' and
that ``[w]e consider timely disclosure . . . vital to the fair
operation of a securities market'').
    \156\ See supra note 140 and accompanying text.
    \157\ We recognize that several commenters disagreed that
technological advancements and other developments in the financial
markets justify shortening the initial Schedule 13D deadline as
proposed. See supra notes 91-95 and accompanying text. For example,
some commenters noted that despite advances in technology, the
filing process still has numerous operational components that take
time to complete. See letter from IAA; see also letter from STB
(stating that ``calculation of beneficial ownership remains an
extremely manual process, can involve significant judgment and
relies on third party information''). Others described some ways in
which it may be more difficult to accumulate a significant equity
stake in today's financial markets. See infra notes 678-679 and
accompanying text. As an initial matter, we expect that the change
from the proposed five-calendar day deadline to a five-business day
deadline should mitigate these concerns. See infra note 165 and
accompanying text. In addition, for the reasons discussed infra
notes 166-168 and accompanying text, we believe that our analyses of
the current timing of Schedule 13D filings and accumulations of
significant equity stakes demonstrate that Schedule 13D filers are
capable, utilizing modern technology and in light of the
characteristics of today's financial markets, of complying with the
amended five-business day deadline. This is especially so given the
sophistication and size of many Schedule 13D filers. See supra note
58 and accompanying text. Finally, some commenters expressed
concerns about filers' ability to meet the proposed deadline (as
well as the other Schedule 13D and 13G filing deadlines) given the
amount of time it may take to obtain EDGAR filer codes. See, e.g.,
letters from MSBA; STB. To ensure they obtain their EDGAR filer
codes in a timely manner, we generally expect filers to begin the
process of applying for their EDGAR filer codes before they have
incurred a filing obligation (e.g., as they begin to acquire shares
with a control intent but before crossing the 5% threshold). Filers
should note that the Commission's staff reviews all Form ID
applications, and filers should allow sufficient time for that
review. Further, the Commission's staff works diligently to process
Form IDs promptly upon receipt of an application.
---------------------------------------------------------------------------

    Many commenters also expressed concern that shortening the initial
Schedule 13D filing deadline could, among other things, disincentivize
shareholder activism by reducing the amount of time such shareholders
have to accumulate positions in an issuer's covered class before filing
a Schedule 13D.\158\ According to those commenters, this reduction of
time could deprive issuers and their shareholders of the positive
benefits of such activism, thereby increasing management entrenchment
and reducing shareholder engagement and corporate accountability.\159\
---------------------------------------------------------------------------

    \158\ See supra notes 77-83 and accompanying text.
    \159\ See supra notes 77-83, 103 and accompanying text.
---------------------------------------------------------------------------

    Although we primarily are concerned with ensuring that investors
receive material information in a timely manner, we agree that we
should remain conscious of the competing interest that undue burdens
not be imposed on shareholders engaging in change of

control transactions.\160\ In the Proposing Release, the Commission
``recognize[d] the chilling effect that a shortening of the initial
Schedule 13D filing deadline could have on a shareholder's ability . .
. to effect changes at companies'' if the shortened deadline increases
the costs and reduces the incentives for shareholders attempting to
effect a change of control.\161\ Yet, the Commission further stated
that it did not believe ``that a shortening of the deadline would
unduly disrupt that balance,'' noting that ``many Schedule 13D filers
currently do not avail themselves of the full 10-day filing period.''
\162\ A number of commenters similarly asserted that the proposed five-
day deadline would not significantly impede shareholder activism or
impose significant costs or burdens on beneficial owners of more than
five percent of a covered class.\163\
---------------------------------------------------------------------------

    \160\ See Full Disclosure of Corporate Equity Ownership and in
Corporate Takeover Bids: Hearing on S. 510 Before the Subcomm. on
Securities of the S. Comm. on Banking and Currency, 90th Cong. 1
(1967) (statement of Manuel F. Cohen, Chairman, Securities and
Exchange Commission) (``It must be emphasized again that in
establishing requirements which will make this important information
available to stockholders, we must be careful not to tip the scales
to favor either incumbent management or those who would seek to oust
them. We believe that the provisions of the present bill . . .
reflect an appropriate balance among competing interests which, at
the same time, will fulfill the need of public stockholders to be
fully informed about the control and potential control of the
company in which they have invested.''); H.R. Rep. No. 1711, at 4
(1968) (``The bill avoids tipping the balance of regulation either
in favor of management or in favor of the person making the takeover
bid. It is designed to require full and fair disclosure for the
benefit of investors while at the same time providing the offeror
and management equal opportunity to fairly present their case.'');
113 Cong. Rec. 24, 664 (1967) (noting that ``takeover bids should
not be discouraged, since they often serve a useful purpose by
providing a check on entrenched but inefficient management'')
(statement of Sen. Harrison A. Williams, Jr.).
    \161\ Proposing Release at 13851. The Commission noted academic
research indicating that large blockholders may improve the share
price and the corporate governance of the companies in which they
invest and that all of a company's shareholders enjoy these
benefits. Proposing Release at 13851, n.30. The Commission further
recognized that shortening the initial Schedule 13D filing deadline
could reduce the profitability of such investments, making large
blockholders less inclined to make those investments or engage with
the companies in ways that produce such benefits. Id. This is
consistent with the concerns that many opposing commenters
expressed. See supra notes 77-83 and accompanying text; see also
infra section IV.C.1.b.i.
    \162\ Id.
    \163\ See supra notes 57-65 and accompanying text.
---------------------------------------------------------------------------

    Notwithstanding this support for the proposed five-calendar day
deadline, we have decided to instead adopt a five-business day
deadline. This change from the proposal comports with a recommendation
that a number of commenters, including several that opposed the
proposed amendments, made to the Commission.\164\ Further, this shift
to a ``business days''-based deadline also will help to address a
variety of concerns that commenters expressed about the burdens
associated with the proposed five-day deadline. Specifically, five
business days (as compared to five calendar days) gives beneficial
owners additional time to accumulate positions in an issuer before
filing a Schedule 13D and to prepare and file an accurate Schedule
13D.\165\ As with the proposed five-calendar day deadline, we also note
that many Schedule 13D filings currently are made within the amended
five-business day deadline.\166\ This demonstrates that at least some
Schedule 13D filers are likely to be unaffected by the shortened
deadline. And, many Schedule 13D filers are sophisticated, large
investors that have access to technology and resources that should
allow them to prepare and file a Schedule 13D within five business
days.\167\ As such, we do not anticipate a five-business day deadline
will be unduly disruptive for Schedule 13D filers.
---------------------------------------------------------------------------

    \164\ See supra notes 125, 130 and accompanying text.
    \165\ The five-business day deadline, as compared to the
proposed five-calendar day deadline, generally will give beneficial
owners additional time before their Schedule 13D filing is due if
the filing period encompasses days that are not business days (i.e.,
Saturday, Sunday, or a Federal holiday). As an illustrative example,
if a person acquires beneficial ownership of more than 5% of a
covered class on a Wednesday, then under the five-business day
deadline, the initial Schedule 13D is not due until the following
Wednesday (assuming there are no Federal holidays during that
period), giving the filer a total of seven days to prepare and
submit the Schedule 13D. However, under the proposed five-day
deadline, if a person acquires beneficial ownership of more than 5%
of a covered class on a Wednesday, then the initial Schedule 13D
will be due on the following Monday (assuming that Monday is not a
Federal holiday), giving the filer a total of five days to prepare
and submit the Schedule 13D. For purposes of performing this
comparison of the five-business day deadline to the proposed five-
day deadline, it is important to keep in mind that if the last day
of a filing deadline expressed in ``days'' falls on a Saturday,
Sunday, or Federal holiday, then such filing may be made on the next
business day thereafter. 17 CFR 240.0-3 (``[I]f the last day on
which [a filing] can be accepted as timely filed falls on a
Saturday, Sunday or holiday, such [filing] may be [made] on the
first business day following.'').
    \166\ See infra section IV.B.3.a.i (``Approximately 29 percent
of the initial Schedule 13D filings [in 2022], representing about 41
percent of all of the initial Schedule 13D filings that were filed
by the current filing deadline, were filed within the amended five-
business day deadline.'').
    \167\ See supra note 58 and accompanying text.
---------------------------------------------------------------------------

    With respect to shareholder activism in particular, we note that
for the vast majority of campaigns, the shareholder currently
accumulates at least 90 percent of its equity stake, with many
accumulating 100 percent of their equity stake, within the amended
five-business day deadline.\168\ This demonstrates that most
shareholder activists may not be affected by the shortened deadline. In
addition, for those campaigns that would be affected by the amended
five-business day deadline, we expect the activists will adapt to the
shortened deadline and continue to pursue the campaigns.\169\ For
example, for those campaigns in which the shareholder has accumulated
less than 90 percent of its equity stake within the amended five-
business day deadline, we note that the unrealized gains attributable
to the shares accumulated after the amended deadline generally
represent a significantly smaller portion of the shareholder's total
unrealized gains (when compared to the shares accumulated prior to the
amended deadline).\170\
---------------------------------------------------------------------------

    \168\ See infra section IV.C.1.b.i, Table 6 (noting that for
approximately 208 of the 215 campaigns conducted annually, at least
90% of the equity stake is accumulated within the amended five-
business day deadline); see also letter from Better Markets II
(citing the same analysis conducted in the DERA Memorandum for the
proposed five-day deadline and stating that the analysis
``indicate[s] that shortening the deadline should not significantly
impede activist campaigns'').
    \169\ See infra note 847 and accompanying text.
    \170\ See infra section IV.C.1.b.i, Table 6 (noting that for the
7 campaigns conducted annually for which less than 90% of the total
equity stake was accumulated by the amended five-business day
deadline, and the 1 campaign conducted annually for which less than
75% of the total equity stake was accumulated by the amended five-
business day deadline, the average percentages of the filer's
unrealized gains on reported equity stake, as of the day after
filing date, attributable to shares accumulated after amended
deadline were 9.1% and 22.6%, respectively); see also letter from
Better Markets II (citing the same analysis conducted in the DERA
Memorandum for the proposed five-day deadline and stating that ``for
filers who acquired less than 100% of their reported stake by the
proposed deadline, only 6.8% of their unrealized gains on average
were attributable to shares accumulated after the proposed
deadline'').
---------------------------------------------------------------------------

    Finally, we note that profits from shareholder activism may not be
derived solely from the increase in share price associated with the
public disclosure of an activist's more than five percent beneficial
ownership stake. Specifically, shareholder activists may continue to
experience abnormal positive returns from activism even after filing
their initial Schedule 13D. Thus, to the extent a shareholder activist
seeks to profit from increases in share price after the public
disclosure of its more than five percent beneficial ownership stake, we
would not expect a reduction in the profits associated with such
disclosure to be determinative as to whether a shareholder engages in
an activist campaign.
    The amended five-business day deadline reflects our attempt to
ensure

investors receive material information in a timely manner while, at the
same time, maintaining the appropriate balance between issuers of
securities and the shareholders who seek to exert influence or control
over issuers, especially when compared with the proposed five-calendar
day deadline, which many commenters supported,\171\ and the even
shorter deadlines many commenters recommended.\172\ We believe a five-
business day deadline is sufficiently prompt and represents a more
modern approach that reflects the technological advancements and other
developments in the financial markets in the more than 50 years since
the 10-day deadline was enacted. A five-business day deadline, as
compared to the current 10-day deadline, also would more closely align
the initial Schedule 13D filing deadline with the reporting deadline on
Form 8-K for issuers (generally, four business days) and Form 4 for
officers, directors, and beneficial owners of more than 10 percent of a
covered class (two business days), both in terms of the length of the
deadline and the use of ``business days,'' rather than ``days,'' to
express the deadline.\173\ This alignment should help to ensure that
investors consistently receive prompt disclosures of material
information, irrespective of the source. A five-business day deadline
for the initial Schedule 13D also is more consistent in both length and
form with the filing deadlines for similar beneficial ownership reports
in foreign jurisdictions.\174\
---------------------------------------------------------------------------

    \171\ See supra note 37 and accompanying text.
    \172\ See, e.g., letters from C. McEntee (recommending a same-
day initial Schedule 13D filing deadline); D. Choate (same); Corey
(same); Prof. Steinberg (recommending, among other things, a one-day
initial Schedule 13D filing deadline); J. Dunlop (recommending a
one-day initial Schedule 13D filing deadline); J. Kennedy (same);
Juan B. (same); Phillip (same); WLRK I (recommending, among other
things, a one-business day initial Schedule 13D filing deadline); C.
Jacobs (recommending a two-day initial Schedule 13D filing
deadline); NIRI (recommending a two-business day initial Schedule
13D filing deadline); PL Salvati (same); SCG (same); SCG & NIRI
(same); T. Reilly (recommending a three-day initial Schedule 13D
filing deadline).
    \173\ See supra note 150; see also letter from STB (noting that
most analogous securities laws governing reporting of material
changes (e.g., Form 8-K and section 16 filings) require filings
within time periods designated in business days rather than calendar
days). We further believe it is advisable to express all Schedule
13D filing deadlines (i.e., for both initial filings and amendments)
in ``business days.'' We expect that the consistent use of
``business days''--as opposed to using ``days'' or inconsistently
using both ``days'' and ``business days'' to express the filing
deadlines--will ease Schedule 13D filers' administrative burdens. We
also anticipate that this uniform approach across the filing
deadlines will make it easier for Schedule 13D filers to comply with
those deadlines. In addition, as amended, all of the Schedule 13G
deadlines that are less than 45 days also will be expressed in
``business days,'' consistent with one commenter's recommendation.
See letter from IAA (recommending that the Commission express
deadlines consistently in either calendar days or business days
across all of the Schedule 13D and 13G initial and amendment filing
deadlines, where the deadlines are less than 45 days to promote
compliance by making it simpler and less confusing to keep track of
the various deadlines).
    \174\ For example, Australia requires disclosure of any position
of 5% or more within two business days if any transaction affects or
is likely to affect control or potential control of the issuer. See
Corporations Act 2001 (Cth) sec. 671B (Austl.). The United Kingdom
imposes a two-trading-day deadline for disclosure of acquisitions in
excess of 3% of an issuer's securities. See Disclosure Rules and
Transparency Rules, Ch. 5 (U.K.). Germany requires a report
``immediately,'' but in no event later than four days after crossing
the acquisition threshold. See Securities Trading Act, Sept. 9,
1998, BGBL. I at 2708, as amended, pt. 5 (Ger.). Hong Kong
securities laws require a report within three business days of the
acquisition of a ``notifiable interest'' under the law. See Part XV
of the Securities and Futures Ordinance (promulgated by the
Securities and Futures Commission, effective Apr. 1, 2003) (H.K.).
We note that commenters disagreed as to the utility of referencing
foreign jurisdictions' beneficial ownership reporting deadlines for
purposes of determining the appropriate initial Schedule 13D filing
deadline. See supra note 55 and accompanying text. Nonetheless, we
believe that this comparative analysis suggests that a shortened
deadline is workable based on the experiences of these foreign
jurisdictions.
---------------------------------------------------------------------------

    Overall, because we expect that the vast majority of activist
campaigns, and the value they create, will continue unabated under the
amended rules,\175\ we conclude that the significant benefits of the
amendments outlined here and below \176\ justify their costs.
---------------------------------------------------------------------------

    \175\ See infra section IV.C.1.b.
    \176\ See infra section IV.C.a.
---------------------------------------------------------------------------

    Some commenters expressed other objections to the proposed
amendments. For example, several commenters disagreed with the
information asymmetry-based concerns in the Proposing Release as a
basis for the proposed amendments.\177\ We recognize that there are
information asymmetries involved in any market transaction and agree
that not all information asymmetries warrant a regulatory response. For
example, one commenter stated that the information asymmetries
described in the Proposing Release ``are simply the beneficial result
of research and initiative by investors and the sign of properly
functioning markets'' and expressed concern that ``[i]f activists have
no economic incentive to pursue activism, other shareholders will not
experience the increase in value that would have otherwise resulted
from the activist's conduct.'' \178\ We acknowledge that benefits may
stem from the information asymmetry between a Schedule 13D filer and
the market, and we recognize that the informational advantage of
Schedule 13D filers results, in general, from their own expenditures on
research and analysis or from their efforts and expenditures to pursue
changes at the issuers in which they accumulate these
shareholdings.\179\ As such, although the Proposing Release referred to
information asymmetries between Schedule 13D filers and selling
shareholders and expressed concern that those information asymmetries
``could harm investors,'' \180\ we do not focus on the reduction of
these asymmetries as a justification for shortening the initial
Schedule 13D deadline, as discussed in sections IV.C.1.a.iii and iv
below.
---------------------------------------------------------------------------

    \177\ See supra notes 84-90 and accompanying text.
    \178\ See letter from EIM I. Further, that commenter contrasted
the proposal with the Short Position Reporting Proposal and stated
that ``[t]he Commission does not explain why the research and
analysis of a short seller is entitled to protection and does not
constitute material non-public information about the company it is
shorting, while the research and analysis of an activist is somehow
characterized differently.'' Id.; see also supra note 84. The
commenter's comparison of our shortening of the initial Schedule 13D
deadline to the Short Position Reporting Proposal is inapt. We are
shortening the Schedule 13D deadline in order to ensure that
investors receive material information regarding potential changes
in control in a timely manner to facilitate their investment
decisions. This is consistent with the purpose of section 13(d), and
necessarily requires public disclosure, including of the Schedule
13D filer's identity. See supra note 155 and accompanying text;
Exchange Act section 13(d)(1)(A) (requiring a Schedule 13D filer to
disclose, among other things, its ``background and identity''). The
Short Position Reporting Proposal addresses a different regulatory
scheme, and the reasons for those proposed amendments are discussed
in that release. See Short Position Reporting Proposal. In addition,
contrary to the commenter's suggestion that the Commission is
disregarding the value of an activist's research and analysis, the
amended five-business day deadline represents our attempt to
maintain an appropriate balance between the requirement that
material information be timely disseminated to investors and the
competing interest that undue burdens not be imposed in the change
of control context.
    \179\ See infra sections IV.C.1.a.iii and iv.
    \180\ See Proposing Release at 13850 & n.19, 13881 & n.214.
---------------------------------------------------------------------------

    Some other information asymmetries may, however, raise concerns
that warrant a regulatory response. Specifically, the research and
analysis prepared by the staff of the Division of Economic and Risk
Analysis indicate that shortening the initial Schedule 13D deadline to
five business days could meaningfully reduce information asymmetries
between ``informed bystanders'' \181\ and other, less-informed
investors who sell their shares during the period after which an
initial Schedule 13D filing obligation has been incurred but before the
filing is made.\182\ The informational advantage those

``informed bystanders'' have over the selling shareholders in these
transactions and the associated wealth transfers may be perceived by
some market participants to be unfair. Thus, to the extent that a
shortened initial Schedule 13D filing deadline would reduce these
wealth transfers, thereby addressing this perceived unfairness, this
change could enhance trust in the securities markets and promote
capital formation.\183\
---------------------------------------------------------------------------

    \181\ See infra note 753 and accompanying text for a discussion
of the term ``informed bystanders,'' as used in this release.
    \182\ See infra section IV.C.1.a.iii.
    \183\ See id.
---------------------------------------------------------------------------

    We also note that some commenters questioned the appropriateness
and legality of the proposed amendments in light of certain U.S.
Supreme Court cases that the commenters cited for the proposition that
the ``sole purpose'' of the Williams Act is to protect shareholders
confronted with a cash tender offer.\184\ In both cases, the Court made
the cited statements in the limited context of determining causes of
action or remedies that are available for purported violations of
certain provisions of the Williams Act. Neither decision suggests that
the provisions and protections of the Williams Act are available only
when a cash tender offer is involved; in fact, the Court in Rondeau v.
Mosinee Paper Corp. referred to the defendant-shareholder's belated
compliance with section 13(d), notwithstanding the absence of a pending
or threatened cash tender offer.\185\ We also note statements in the
legislative history indicating that Congress intended that the Williams
Act would apply to any ``acqui[sition] of a substantial block of equity
securities . . . by a cash tender offer . . . or through open market or
privately negotiated purchases.'' \186\ We do not believe, therefore,
that our shortening of the initial Schedule 13D deadline must be tied
to risks shareholders face in connection with cash tender offers.
---------------------------------------------------------------------------

    \184\ See supra notes 90, 96 and accompanying text (describing
comment letters citing Piper et al. v. Chris-Craft Industries, Inc.
430 U.S. 1 (1977) and Rondeau v. Mosinee Paper Corp., 422 U.S. 49
(1975)).
    \185\ 442 U.S. at 59 (noting, in relevant part, that the
shareholder ``has now filed a proper Schedule 13D, and there has
been no suggestion that he will fail to comply with the Act's
requirement of reporting any material changes in the information
contained therein'' notwithstanding the fact that the shareholder
``has not attempted to obtain control of respondent, either by a
cash tender offer or any other device'').
    \186\ S. Rep. No. 90-550 to Accompany S. 510, (Aug. 29, 1967);
see also Full Disclosure of Corporate Equity Ownership and in
Corporate Takeover Bids: Hearing on S. 510 Before the Subcomm. on
Securities of the S. Comm. on Banking and Currency, 90th Cong. 16
(1967) (statement of Manuel F. Cohen, Chairman, Securities and
Exchange Commission) (stating that ``[t]he bill before you deals
with stock acquisitions in three specific contexts'' including ``the
acquisition by means of a cash tender offer'' and ``other
acquisitions by any person or group'').
---------------------------------------------------------------------------

    Finally, some opposing commenters expressed other doubts regarding
the Commission's authority to shorten the initial Schedule 13D deadline
as proposed \187\ and asserted that the Commission did not identify a
market event or failure that would justify the proposed
amendments.\188\ As noted above, however, section 13(d)(1) of the
Exchange Act clearly grants the Commission authority to shorten the
initial Schedule 13D filing deadline.\189\ In addition, the Commission
has long recognized that acquisitions made after a person acquires
beneficial ownership of more than five percent of a covered class but
before the person files an initial Schedule 13D constitute a
``disclosure gap [that] may deprive security holders of a fair
opportunity to adjust their evaluation of the securities of a company
with respect to [a] potential change in control.'' \190\ We believe
that the current length of that disclosure gap, together with the
information asymmetry \191\ that it may facilitate and the advancements
in technology and developments in the financial markets since Congress
enacted the Williams Act, provide grounds to shorten the initial
Schedule 13D filing deadline from 10 days to five business days.
---------------------------------------------------------------------------

    \187\ See supra note 96 and accompanying text.
    \188\ See supra notes 106, 109 and accompanying text.
    \189\ 15 U.S.C. 78m(d)(1) (requiring a Schedule 13D to be filed
``within ten days . . . or within such shorter time as the
Commission may establish by rule'').
    \190\ Report of the Securities and Exchange Commission on
Beneficial Ownership Reporting Requirements pursuant to section
13(h) of the Securities Exchange Act of 1934 (June 27, 1980).
Following a review of the effectiveness of section 13(d) conducted
more than four decades ago, the Commission evaluated the then
``increasingly prevalent practice of [large blockholders] acquiring
additional securities of [a covered] class during the 10-day period
after the acquisition which results in the beneficial ownership of
more than 5 percent and before the disclosure statement is required
to be, and normally is, filed. . . .'' Securities and Exchange
Commission Report on Tender Offer Laws, printed for the Use of the
S. Comm. on Banking, Housing and Urban Affairs (Comm. Print 1980).
The Commission provided multiple illustrative examples in which
``the existing notification system often does not provide
shareholders with relevant information in a timely manner.'' Id.
    \191\ See supra notes 181-183 and accompanying text.
---------------------------------------------------------------------------

2. Rule 13d-1(b), (c), and (d)
    Congress enacted section 13(g) in 1977 \192\ to address the absence
of beneficial ownership reporting by persons who had accumulated large
amounts of stock in a public issuer but were not required to file a
beneficial ownership report under section 13(d).\193\ Section 13(g) was
intended to ``supplement the current statutory scheme by providing
legislative authority for certain additional disclosure requirements
that in some cases could not be imposed administratively.'' \194\
Beneficial owners who currently report on Schedule 13G pursuant to
section 13(g) and corresponding Rule 13d-1(d) are not subject to
section 13(d) because they either made an exempt acquisition or an
acquisition otherwise not covered by the statute. Section 13(d), in
contrast to section 13(g), applies only to beneficial owners who make
non-exempt acquisitions of more than five percent of a covered class.
Section 13(g) was intended to close this gap.
---------------------------------------------------------------------------

    \192\ Domestic and Foreign Investment Improved Disclosure Act of
1977, Public Law 95-214, sec. 203, 91. Stat. 1494.
    \193\ S. Rep. No. 114, at 13 (1977).
    \194\ S. Rep. No. 95-114, at 13 (1977), as reprinted in 1977
U.S.C.C.A.N. 4098, 4111.
---------------------------------------------------------------------------

    In response to the enactment of section 13(g), the Commission
adopted Schedule 13G to serve two purposes: (1) provide an optional
short form disclosure statement for certain persons subject to section
13(d); and (2) provide a mandatory disclosure statement for persons
subject to section 13(g).\195\ Together with section 13(d), section
13(g) was intended to provide a ``comprehensive disclosure system of
corporate ownership'' applicable to all persons who are the beneficial
owners of more than five percent of a covered class.\196\ Rule 13d-
1(b), (c), and (d) provide the filing deadlines for the initial
Schedule 13G. Which deadline a person is subject to for its initial
Schedule 13G filing depends on whether the person is a QII, Exempt
Investor, or Passive Investor.
---------------------------------------------------------------------------

    \195\ Filing and Disclosure Requirements Relating to Beneficial
Ownership, Release No. 34-14692 (Apr. 21, 1978) [43 FR 18484 (Apr.
28, 1978)] (``Filing and Disclosure Release'').
    \196\ Id. at 18486; see also S. Rep. No. 114, at 14 (1977).
---------------------------------------------------------------------------

    A QII relying upon Rule 13d-1(b) currently is obligated under Rule
13d-1(b)(2) to file a Schedule 13G ``within 45 days after the end of
the calendar year in which the person became obligated'' to report
beneficial ownership, but only if such QII beneficially owns more than
five percent of a covered class at the end of a calendar year.\197\ If
the QII

beneficially owns more than 10 percent of a covered class as of the
last day of any month, then the initial Schedule 13G must be filed
within 10 days after the end of that month. A QII relying on Rule 13d-
1(b), therefore, may have beneficial ownership in excess of five
percent throughout the calendar year without incurring a filing
obligation unless the QII beneficially owns more than 10 percent of a
covered class at the end of any month during that year.
---------------------------------------------------------------------------

    \197\ First adopted as Rule 13d-5 in 1977 and subsequently
redesignated as Rule 13d-1(b)(1) in 1978, the predecessor to current
Rule 13d-1(b)(2) established that an institution eligible to report
on Schedule 13G had until 45 days after the end of the calendar year
to report beneficial ownership to the extent the percentage
beneficially owned exceeded 5% as of the end of the calendar year.
See Filing and Disclosure Release at 18486 (explaining that ``the
first proviso in new Rule 13d-1(b) has been added to make clear that
the obligation to file a Schedule 13G . . . need be determined only
on the last day of the calendar year'' and that ``filing [a]
Schedule 13G to disclose a beneficial ownership interest of more
than five but not more than ten percent will be required forty-five
days after the end of the calendar year''); see also Adoption of
Beneficial Ownership Disclosure Requirements, Release No. 34-13291
(Feb. 24, 1977) [42 FR 12342 (Mar. 3, 1977)] (describing the
Commission's adoption of new Rule 13d-5 and related new Form 13D-5,
which permitted brokers, dealers, banks, investment companies,
investment advisers, and employee benefit plans to utilize an
abbreviated disclosure notice).
---------------------------------------------------------------------------

    Rule 13d-1(d),\198\ as with Rule 13d-1(b), imposes an initial
Schedule 13G filing deadline of 45 days after the end of the calendar
year, but only for investors who have become beneficial owners without
having made an acquisition recognized under section 13(d)(1). Given
that these investors did not make the requisite acquisition that would
have subjected them to section 13(d), the Commission has previously
referred to this type of beneficial owner as an ``Exempt Investor.''
Unlike the QIIs and Passive Investors--discussed below, in the context
of Rule 13d-1(c)--who file a Schedule 13G in lieu of Schedule 13D and
at all times remain subject to section 13(d), Exempt Investors are
subject to section 13(g) at the time their initial filing obligation
arises. Exempt Investors reporting pursuant to Rule 13d-1(d) today may
include persons such as founders of companies and early investors in an
issuer's class of equity securities who made their acquisition before
the class was registered under section 12 of the Exchange Act.\199\
These beneficial owners may continue to influence or control the
issuer. Accordingly, the Commission has emphasized that the disclosures
required under section 13(g) are obtained in connection with the
overall regulatory purposes served by section 13(d).\200\
---------------------------------------------------------------------------

    \198\ 17 CFR 240.13d-1(d).
    \199\ The Commission has explained that certain ``persons who
are not required to file under Rule 13d-1(a) . . . would be required
to file a Schedule 13G pursuant to the amendments herein proposed.''
Filing and Disclosure Release at 18502. Such persons may include
``persons who acquired not more than two percent of a class of
securities within a twelve month period, who are exempt from Rule
13d-1(a) by Section 13(d)(6)(B).'' Id. The Commission also stated
that ``Regulation 13D-G . . . would require any person `otherwise'
not required to report pursuant to Section 13(d), but who is a
beneficial owner of more than five percent of a specified class of
equity securities to report on Schedule 13G.'' Id.
    \200\ Filing and Disclosure Release at 18486 (stating that ``the
enactment of section 13(g) has rendered moot the issue of whether
obtaining'' disclosure from institutional investors in the ordinary
course of their business and without any control intent ``under
section 13(d)(5) is within the primary purpose of section 13(d)'').
The Commission also emphasized ``the importance of disclosing to the
public the location of rapidly accumulated blocks of stock, even
though they have been acquired not with the purpose or with the
effect of changing or influencing control'' as a predicate for its
position. Id.
---------------------------------------------------------------------------

    Finally, a beneficial owner electing to report on Schedule 13G in
lieu of Schedule 13D in reliance on Rule 13d-1(c) as a Passive Investor
must file a Schedule 13G within 10 days after acquiring beneficial
ownership of more than five percent of a covered class. A person is
eligible to file as a Passive Investor only if such person is not
seeking to acquire or influence control of an issuer and beneficially
owns less than 20 percent of a covered class. Persons unable or
unwilling to certify under Item 10 of Schedule 13G that they do not
have a disqualifying purpose or effect because, for example, the
possibility exists that they may seek to exercise or influence control,
are ineligible to file a Schedule 13G and must instead file a Schedule
13D.
a. Proposed Amendments
    The Commission proposed to amend Rule 13d-1(b) and (d) to shorten
the filing deadline for the initial Schedule 13G to be filed by QIIs
and Exempt Investors to five business days after the end of the month
in which beneficial ownership exceeds five percent of a covered class.
The Commission expected that the proposed acceleration of these
deadlines would result in more timely disclosures while minimizing any
potential additional burdens.\201\ The Commission also believed that
these investors should already have well-established compliance systems
in place to monitor Schedule 13G ownership levels to determine whether
filing obligations have been triggered.\202\
---------------------------------------------------------------------------

    \201\ Proposing Release at 13856.
    \202\ Id.
---------------------------------------------------------------------------

    Given the proposal to shorten the initial reporting deadline to
five business days after the end of the month, the Commission also
recognized that the current provision of Rule 13d-1(b)(2) that operates
to accelerate that initial filing deadline if beneficial ownership
exceeds 10 percent at the end of any month would be unnecessary in
light of Rule 13d-2(c)'s overlapping Schedule 13G amendment
requirement.\203\ Accordingly, the Commission proposed to further amend
Rule 13d-1(b)(2) to delete the language that imposes an initial
reporting obligation on QIIs after exceeding 10 percent of a covered
class.
---------------------------------------------------------------------------

    \203\ Id.
---------------------------------------------------------------------------

    The Commission also proposed to amend the filing deadline in Rule
13d-1(c) to five days after the date the person becomes obligated to
file an initial Schedule 13G. The Commission believed that it would be
appropriate to amend the initial Schedule 13G filing deadline in Rule
13d-1(c) to match the proposed initial Schedule 13D filing deadline in
Rule 13d-1(a) in order to maintain the historical consistency between
the deadlines in Rule 13d-1(c) and (a) and to facilitate the overall
goal of increasing transparency in beneficial ownership.\204\
---------------------------------------------------------------------------

    \204\ Id.
---------------------------------------------------------------------------

    In proposing these amendments, the Commission stated that the
current initial Schedule 13G filing deadlines' length and manner of
applicability to QIIs and Exempt Investors together could, in certain
circumstances, frustrate the purposes of sections 13(d) and 13(g).\205\
For example, the Commission noted investors reporting pursuant to
current Rule 13d-1(b) and (d) may avoid beneficial ownership reporting
by selling down their positions before the end of the calendar year,
and, in the case of QIIs, selling down before the end of a month if
ownership exceeds 10 percent.\206\ The proposed amendments to the
filing deadlines for initial Schedule 13G filings by QIIs and Exempt
Investors, therefore, were intended to improve transparency and avoid
any gaps in reporting.\207\
---------------------------------------------------------------------------

    \205\ Id. at 13855.
    \206\ Id.
    \207\ Id. at 13855-56.
---------------------------------------------------------------------------

    In addition, the Commission noted that when Rule 13d-1(c) was
adopted in 1998, Passive Investors may not have had reasonable access
to advanced technologies to make more immediate filings possible.\208\
Consistent with its justification for proposing to shorten the initial
Schedule 13D filing deadline under Rule 13d-1(a), the Commission
asserted that Passive Investors today not only have gained valuable
experience complying with these reporting provisions, but also have
ready access to the necessary filing technology.\209\ As such, the
Commission proposed amending Rule 13d-1(c) in light of those
technological advancements and

its proposed amendment to the analogous filing deadline in Rule 13d-
1(a).
---------------------------------------------------------------------------

    \208\ Id. at 13856.
    \209\ Id.
---------------------------------------------------------------------------

b. Comments Received
    Commenters submitted a variety of views on the proposed amendments
to Rule 13d-1(b), (c), and (d). Several commenters supported the
proposed amendments.\210\ Some of those commenters supported
accelerating the initial Schedule 13G filing deadlines for many of the
same reasons they supported accelerating the initial Schedule 13D
filing deadline.\211\ Another commenter asserted that the proposed
amendments would benefit shareholders and other market participants by
facilitating sound corporate governance.\212\
---------------------------------------------------------------------------

    \210\ See, e.g., letters from AFL-CIO (supporting only the
proposed amendment to Rule 13d-1(c)); AFREF (same); AFREF, et al.
(same); Anonymous 3; Anonymous 5; Anonymous 11; Anonymous 12;
Anthony R.; C. Robinson; John F. Phinney Jr, CEO & Founder,
Convergence Inc. (June 15, 2023) (``Convergence'') (supporting only
the proposed amendment to Rule 13d-1(b)); EEI; Engineer; FedEx;
Freeport-McMoRan; Andrew Patrick White, Founder CEO of FundApps
(Feb. 28, 2022) (``FundApps'') (same); HMA I; J. Pieper; J. Soucie;
Jonah; Juan; Mark C.; Mike; Nasdaq; P. Worts; T. Mirvis, et al.;
Todd.
    \211\ See supra notes 38-40, 43-44 and accompanying text.
    \212\ See letter from AFREF. For example, the commenter asserted
that a shortened filing deadline would help investors ensure their
asset managers are fulfilling their fiduciary duties and help inform
the education and advocacy efforts of those with a stake in proxy
contests, shareholder resolutions, and other important votes. Id.
---------------------------------------------------------------------------

    Several commenters supported the proposed amendments based on
changes in technology and developments in the financial markets.\213\ A
number of commenters noted that some foreign jurisdictions require
beneficial ownership reporting on a shorter deadline than currently
required under Regulation 13D-G.\214\ One commenter viewed the current
Schedule 13G filing deadlines as outdated.\215\ Other commenters
asserted that the proposed amendments would not impose significant
costs to beneficial owners of more than five percent of a covered
class.\216\ And, another commenter stated that the proposed amendments
would be consistent in balancing the need for adequate disclosures with
burdens placed on filers to accurately prepare required
disclosures.\217\
---------------------------------------------------------------------------

    \213\ See, e.g., letters from AFL-CIO; C. Robinson; FedEx;
Freeport-McMoRan; T. Mirvis, et al.
    \214\ See, e.g., letters from AFREF; Convergence; FundApps.
    \215\ See letter from T. Mirvis, et al.
    \216\ See, e.g., letters from Anonymous 11; Freeport-McMoRan; J.
Soucie.
    \217\ See letter from FedEx.
---------------------------------------------------------------------------

    Several commenters opposed the proposed amendments.\218\ Some of
those commenters disagreed with the Commission's technological
advancement-based justifications for the proposed acceleration of the
beneficial ownership reporting deadlines.\219\ For example, one
commenter asserted that the Commission has never suggested that
technological ability to file is or should be the primary basis to
determine the appropriate filing deadlines for Schedules 13D and
13G.\220\ Another commenter stated that electronic filing of a Schedule
13G can take longer than physical mailing because of the time and
effort required to obtain EDGAR filing codes as compared to simply
making an overnight mailing or hand delivery of a paper filing.\221\
Another commenter questioned why the existence of new filing
technologies justify subjecting QIIs to Schedule 13G filing
requirements so much shorter than the ones currently in place.\222\
---------------------------------------------------------------------------

    \218\ See, e.g., letters from A. Day; ABA; AIMA; B. Mason; Dodge
& Cox; E. Fraser (opposing only the proposed amendment to Rule 13d-
1(c)); IAA (opposing only the proposed amendments to Rule 13d-1(b)
and (d)); ICI I; MFA (same); MSBA (supporting only the proposed
amendments to Rule 13d-1(c) and (d)); Perkins Coie; Kenneth E.
Bentsen, Jr, CEO and President, Securities Industry and Financial
Markets Association (Apr. 11, 2022) (``SIFMA'') (opposing only the
proposed amendments to Rule 13d-1(b) and (c)); Kyle Brandon,
Managing Director, Head of Derivatives Policy, SIFMA (June 27, 2023)
(``SIFMA & SIFMA AMG'') (same); State Street Corporation (Apr. 11,
2022) (``SSC'') (opposing only the proposed amendment to Rule 13d-
1(b)); STB; TIAA (opposing only the proposed amendment to Rule 13d-
1(b)); TRP.
    \219\ See, e.g., letters from ABA; Dodge & Cox; IAA; ICI I;
MSBA; STB; TIAA.
    \220\ See letter from ICI I. The commenter also stated that the
Commission has not made significant technological advances over the
years to its own systems that market participants rely on to prepare
Schedules 13D and 13G, making it challenging and costly for
investors to gather the information about beneficial ownership they
need to file Schedules 13D and 13G. Id.
    \221\ See letter from MSBA. The commenter also noted that
Passive and Exempt Investors generally do not have specialized
technology that would make it practical for them to file a Schedule
13G on the proposed accelerated bases.
    \222\ See letter from TIAA. The commenter also asserted that the
Proposing Release did not provide data showing that QIIs have as a
standard matter adopted the type of technological improvements that
would make it easier for them to prepare these filings on such a
short timeline. Id.
---------------------------------------------------------------------------

    Some opposing commenters acknowledged the technological advances
identified in the Proposing Release but disagreed that they justify the
proposed amendments. For example, one commenter stated that
technological advances do not support significantly reducing filing
deadlines as proposed because, despite advances in technology, the
filing process still has numerous operational components that take time
to complete.\223\ Similarly, some commenters stated that
notwithstanding any technological advancements, a month-end-based
reporting deadline for Schedule 13G would be difficult to meet because
much of the process is still manual and cannot be done reliably via any
current technology, including exercising the judgment required to
determine whether a person is a beneficial owner under the various
provisions of Rule 13d-3.\224\ Another commenter stated that, despite
technological advancements, it is often difficult for QIIs to gather
aggregate information quickly, confirm such information for accuracy,
draft disclosure documents and receive approval for filing purposes,
especially given that QIIs often beneficially own positions in many
issuers and those positions change frequently.\225\
---------------------------------------------------------------------------

    \223\ See letter from IAA (noting that ``an investment advisory
firm's reporting process could involve receiving spreadsheets from
multiple affiliates, consolidating those spreadsheets into one
report, reviewing the consolidated report for errors and
discrepancies, following up to correct issues, calculating
beneficial ownership, preparing Schedule 13D or 13G'' and may also
require them to obtain ``review by outside counsel . . . [and]
signatures (including from group members if needed)'').
    \224\ See letters from STB; TIAA. For example, one of these
commenters noted that notwithstanding any technological
advancements, a month-end-based reporting deadline for Schedule 13G
would be difficult to meet because analysis of Rule 13d-3 beneficial
ownership depends on the most recently published outstanding share
number from an issuer and, therefore, an investor cannot reliably
determine whether it is a 5% beneficial owner of any particular
stock as of a month-end reference date until the last day of such
month and there is no consistent monthly disclosure requirement for
an issuer's outstanding shares. See letter from STB.
    \225\ See letter from ABA.
---------------------------------------------------------------------------

    Opposing commenters also criticized some of the Commission's other
justifications for, or the purported benefits of, the proposed
amendments. For example, some commenters stated that the Commission has
not provided evidence to support its concerns regarding reporting gaps
and information asymmetries that would warrant the proposed
acceleration of the reporting deadlines.\226\ Others asserted that the
Commission has not articulated how the proposed amendments will promote
transparency into matters of corporate control and questioned the
necessity of the proposed amendments in that respect.\227\ Some of
those

commenters expressed the view that the Commission's existing rules
provide sufficient transparency into matters of corporate control with
respect to QIIs and Passive Investors,\228\ as well as Exempt
Investors.\229\ In addition, one commenter asserted that the Commission
has not persuasively explained why it is appropriate to accelerate the
beneficial ownership reporting deadlines as proposed.\230\ Some
commenters stated that the information filed on Schedule 13G by Passive
and Exempt Investors is unlikely to be material information that is
market-moving.\231\ Other commenters asserted that the proposed
amendments would provide little benefit to the market given that
institutional investment managers' trading activity is already subject
to significant scrutiny by the Commission and the public through the
filing of Form 13F.\232\
---------------------------------------------------------------------------

    \226\ See, e.g., letters from ICI I; SIFMA; TIAA. Those
commenters also asserted that the Commission's unsubstantiated
concerns about QIIs selling down positions before the end of a
reporting period to avoid a Schedule 13G filing does not provide an
appropriate basis for the proposed amendment to Rule 13d-1(b). Id.
    \227\ See letters from ABA; SIFMA; STB.
    \228\ See letters from ABA; STB. For example, those commenters
noted that QIIs and Passive Investors already are obligated to amend
their Schedule 13G promptly upon crossing a 10% beneficial ownership
threshold and are obligated to file an initial Schedule 13D if their
control intent changes. Id.
    \229\ See letters from SIFMA; STB. For example, those commenters
noted that Exempt Investors are largely investors who have held the
shares since prior to the issuer's IPO and, as such, their original
ownership is already materially disclosed in the IPO prospectus. Id.
In addition, those commenters noted that to the extent an Exempt
Investor's beneficial ownership either exceeds 10% or exceeds their
pre-IPO beneficial ownership level, it will be required to make
section 16 filings or make an initial Schedule 13D filing. Id.
    \230\ See letter from ICI I.
    \231\ See letters from ABA; MSBA. For example, those commenters
noted that a Schedule 13G filed by a Passive Investor does not
include information about potential changes in control and that
Passive Investors must certify that they do not have a control
intent. Id. Those commenters also noted that the proposed amendments
to Rule 13d-5 include a ``tipper-tippee'' provision with respect to
the filing of a Schedule 13D but not with respect to the filing of a
Schedule 13G, see letter from MSBA, and stated that accelerating the
filing deadline for Exempt Investors will provide no additional
information to the market given that the vast majority of Exempt
Investors become Exempt Investors following the effectiveness of a
registration statement which contains all of the information, if not
more, that would be included in a Schedule 13G. See letter from ABA.
    \232\ See letters from ABA; MFA.
---------------------------------------------------------------------------

    Several commenters also expressed concern regarding administrative
burdens associated with the proposed amendments to Rule 13d-1(b) and
(d).\233\ Some commenters noted that beneficial owners often file a
Schedule 13G for multiple different issuers, which ``strains'' their
filing resources at the end of the reporting period.\234\ One commenter
stated that a month-end-based reporting deadline applicable would
burden the external resources (including outside counsel, filing
agents, and the EDGAR system) needed to prepare and make these filings
given that all QIIs and Exempt Investors would be performing the
Schedule 13G filing analysis during the same five-business day
period.\235\ One commenter expressed concern that the proposed
amendment to Rule 13d-1(b) could create practical difficulties for
QIIs, including insufficient time to validate the data to be included
in a consolidated filing for a large institutional investor with
multiple entities.\236\ And, one commenter expressed concern that
institutional investors and other unregistered entities may lack the
infrastructure and personnel to comply with the revised filing
deadlines and described year-round monitoring of beneficial ownership
reporting obligations and the filing deadlines that would be required
under the proposed amendments as burdensome.\237\
---------------------------------------------------------------------------

    \233\ See, e.g., letters from ABA; IAA; ICI I; Perkins Coie;
SSC; STB; see also letter from MFA & NAPFM.
    \234\ See letters from IAA; ICI I.
    \235\ See letter from STB. The commenter also asserted that the
proposed five-business day period after month-end is not enough time
for outside counsel to gather the requisite information from their
clients and prepare a Schedule 13G filing and expressed concern that
investors may not be able to obtain EDGAR filing codes in time to
meet the proposed deadlines, noting that the Commission recently has
been taking three to five business days (and even longer during busy
periods) to generally provide such codes. Id.
    \236\ See letter from SSC; see also letter from IAA.
    \237\ See letter from Perkins Coie.
---------------------------------------------------------------------------

    Other commenters expressed similar concerns that the proposed
amendment to Rule 13d-1(b) would increase QIIs' filing burdens
significantly, without material benefit to investors.\238\ Some of
those commenters disagreed with the Commission's statement that QIIs
already have systems in place to monitor their beneficial ownership
levels and asserted that the proposed amendment would require
significant changes to their operational systems and processes.\239\
One commenter disagreed with the Commission's statement that the
proposed amendments only would require QIIs to monitor the beneficial
ownership levels on a monthly basis, suggesting instead that the
proposed amendments would require daily monitoring.\240\ Another
commenter expressed concern that, as a practical matter, the proposed
five-day deadline under Rule 13d-1(c) would be impossible to comply
with in most cases.\241\ The same commenter also stated that Exempt
Investors that are not affiliated with the issuer are unlikely to
become aware of their potential beneficial ownership reporting
obligations in a timely manner and, therefore, may be unlikely to be
able to comply with the proposed deadline under Rule 13d-1(d) given the
practical challenges associated with making a Schedule 13G filing.\242\
---------------------------------------------------------------------------

    \238\ See, e.g., letters from ABA; ICI I; SIFMA.
    \239\ See letters from ICI I; SIFMA.
    \240\ See letter from SIFMA.
    \241\ See letter from MSBA. For example, the commenter explained
that obtaining EDGAR filing codes by making a Form ID filing
requires the assistance of counsel and that such filing usually
takes 7 days to be processed by the Commission, by which time the
proposed deadline will have passed given that many Passive Investors
are unaware of their Schedule 13G filing obligations until after
they have crossed the 5% threshold. Id. The commenter also asserted
that even if a Passive Investor is aware of its Schedule 13G filing
obligation before it has crossed the 5% threshold, it is unlikely to
take steps to prepare for such obligation before actually crossing
the threshold. Id. In addition, the commenter noted that many
Schedule 13G filings have multiple filing persons, which requires
even more time in the preparation of the filing and the engagement
of counsel to help prepare the filing. Id.
    \242\ Id.
---------------------------------------------------------------------------

    Some commenters expressed concern that the proposed deadlines would
be unduly burdensome for smaller and non-institutional beneficial
owners,\243\ with one commenter stating that by increasing overhead
costs and expanding an already complex regulatory regime, the
Commission's accelerated timeline will render it particularly difficult
for smaller managers, who cannot readily bear the costs and
administrative burden of monthly filings.\244\ Some commenters also
asserted that the proposed amendment to Rule 13d-1(b) raises
significant concerns regarding harm to investment advisers and funds
and would impose substantial unnecessary costs on their clients.\245\
Similarly, some commenters stated that the proposed amendment to Rule
13d-1(b) and (d) would create a significant risk of prematurely
disclosing sensitive portfolio holdings information to the market,
which may result in front-running, copycatting, and other abusive
trading practices that harm advisers and their clients, including funds
and their investors.\246\ And, more generally, one commenter expressed
concern that the proposed amendments would create significant reporting
and monitoring burdens for all Schedule 13G filers.\247\
---------------------------------------------------------------------------

    \243\ See, e.g., letters from A. Day; E. Fraser; MFA.
    \244\ See letter from MFA.
    \245\ See letters from ICI I; MFA.
    \246\ See letters from IAA; ICI I.
    \247\ See letter from Perkins Coie.
---------------------------------------------------------------------------

    Opposing commenters also highlighted some other potential risks
associated with the proposed deadlines. For example, one commenter
expressed concern that reporting within such a short time period under
the proposed

amendment to Rule 13d-1(b) would increase the risk reported information
would subsequently need to be revised through amendments to Schedule
13G, potentially confusing the market.\248\ One commenter asserted that
the proposed amendments would increase the number of unintentionally
inaccurate filings.\249\ One commenter expressed concern that the
proposed amendments could negatively impact the ability of investors
and their advisors to draft meaningful disclosures and engage in
thoughtful analysis.\250\ Another commenter stated that the proposed
amendments could be more broadly disruptive to trading.\251\
---------------------------------------------------------------------------

    \248\ See letter from ICI I.
    \249\ See letter from ABA.
    \250\ See letter from STB; see also supra note 102.
    \251\ See letter from TRP. Specifically, the commenter posited
that there would be additional trading and volatility in certain
issuers just after the reporting deadline each month, as
institutional investors begin the process of accumulating or
reducing positions, followed by reduced liquidity leading up to the
reporting deadline, as they concluded that trading. Id.
---------------------------------------------------------------------------

    Finally, several opposing commenters expressed concern that the
proposed amendments do not reflect the differences between Schedule 13D
and 13G filers (particularly QIIs) based on the legislative and
administrative history of sections 13(d) and (g) of the Exchange
Act.\252\ And, other commenters expressed concern that the proposed
amendment to Rule 13d-1(b) would be unprecedented and inappropriate,
unnecessary to accomplish the Commission's regulatory objectives, and
inconsistent with the intent and administrative history of the rules
under sections 13(d) and 13(g).\253\
---------------------------------------------------------------------------

    \252\ See letters from ABA; ICI I.
    \253\ See id.
---------------------------------------------------------------------------

    The opposing commenters also provided some recommendations
regarding the proposed amendments. A number of those commenters
suggested a quarter-end-based initial Schedule 13G filing deadline for
QIIs and Exempt Investors rather than a month-end-based deadline. For
example, some commenters recommended that QIIs be required to file
their initial Schedule 13G within 45 days after the end of a calendar
quarter as of which the QII beneficially owns more than five percent of
a covered class to align with the filing timeframe under section 13(f)
and better reflect the distinction the Commission has historically made
between QIIs and other institutional investors.\254\ Similarly, some
commenters recommended that the Commission require that both QIIs and
Exempt Investors file their initial Schedule 13G 45 days after the end
of a calendar quarter, consistent with the Form 13F \255\ filing
deadline.\256\ One commenter recommended that QIIs be required to file
their initial Schedule 13G within 15 business days after the end of a
calendar quarter as of which the QII beneficially owns more than five
percent of a covered class.\257\ Another commenter recommended that
QIIs be required to file their initial Schedule 13G on a quarterly
basis with at least a 30-day period before the filing deadline.\258\
---------------------------------------------------------------------------

    \254\ See letters from Dodge & Cox; ICI I; SIFMA.
    \255\ See infra note 280 for a discussion of Form 13F and its
filing deadlines.
    \256\ See letters from IAA; MFA; see also IAC Recommendations
(recommending that the Commission shorten the initial filing
deadlines for QIIs and Exempt Investors to 45 days after the end of
a calendar quarter). One of the commenters stated that a quarterly
deadline would increase transparency for market participants as
compared with the current annual deadline and noted that
institutional investment managers are already reviewing and
assessing their holdings on a quarterly basis in order to prepare
Form 13F filings and are more equipped to submit accurate Schedule
13G filings with the same frequency. See letter from IAA. The
commenter also asserted that aligning the deadlines for initial
Schedule 13G filings with Form 13F filings would strike the right
balance between the Commission's concerns about information
asymmetry in the marketplace, and advisers' concerns about
operational strains and competitive disadvantages that would come
with publicly exposing their positions more frequently. Id.
    \257\ See letter from SSC.
    \258\ See letter from TRP.
---------------------------------------------------------------------------

    Opposing commenters also made alternative suggestions regarding the
proposed amendments. For example, one commenter recommended that QIIs
and Exempt Investors be required to file their initial Schedule 13G
within 10 days after the end of the month in which its beneficial
ownership exceeds five percent as of month-end.\259\ Another commenter
recommended that to the extent the Commission is concerned about
Schedule 13G filers acquiring additional shares after crossing the five
percent threshold without public disclosure, it should prohibit trading
after crossing the five percent threshold rather than accelerating the
filing deadlines.\260\ One commenter suggested that if the Commission
seeks to apply the proposed amendments to a broad set of investors
whose activities are largely unrelated to matters of corporate control,
or where such matters may be implicated but are already subject to
disclosure requirements under the existing disclosure regime, it should
conduct further study and analysis to better understand what percentage
of such investors ever are implicated in actual change in control
scenarios--to determine the percentage of activist matters where
earlier and more frequent disclosure of such investors' holding would
have been materially beneficial to investors.\261\ Another commenter
recommended that rather than adopting the proposed amendments, the
Commission should add a column to Form 13F requiring filers to
explicitly note, for each listed class of securities, whether the filer
has acquired over five percent beneficial ownership during the
reporting period.\262\ And, one commenter recommended that the
Commission consider extending the filing deadline for Passive Investors
(e.g., to 15 or 30 days) rather than accelerating it.\263\
---------------------------------------------------------------------------

    \259\ See letter from ABA.
    \260\ See letter from MSBA.
    \261\ See letter from STB. The commenter also suggested that if
the Commission's goal is market transparency more generally, and not
a targeted concern related to matters of corporate control, the
Commission should consider whether more appropriate tools exist to
disclose 5% beneficial ownership or material changes to such
positions in a more concise and efficient manner, using Form 13F as
an example. Id.
    \262\ See letter from MFA.
    \263\ See letter from E. Fraser. The commenter also recommended
that the Commission consider a provision for when a shareholder's
position goes over the 5% threshold because of ordinary corporate
actions that result in the number of outstanding shares to drop such
that the shareholder unwittingly has a holding over the 5% of
outstanding shares and suggested recommended that the Commission
consider increase the threshold from greater than 5% beneficial
ownership to 10%. Id.
---------------------------------------------------------------------------

    In addition, some supporting commenters recommended that the
Commission consider further shortening the initial Schedule 13G filing
deadlines.\264\ Those commenters, however, did not specify alternative
deadlines that the Commission should adopt.\265\
---------------------------------------------------------------------------

    \264\ See letters from AFREF; Freeport-McMoRan; HMA I.
    \265\ Id.
---------------------------------------------------------------------------

    Finally, some commenters that neither clearly supported nor opposed
the proposed amendments made recommendations to the Commission. One
commenter expressed the view that there should not be filing
differences between institutional investors and Passive Investors and
suggested that certain institutional investors should have more
stringent filing requirements than Passive Investors.\266\ Several
other commenters recommended that the Commission require Passive
Investors to file an initial Schedule 13G in five business days rather
than five calendar days.\267\
---------------------------------------------------------------------------

    \266\ See letter from J. Dunlop.
    \267\ See letters from ABA; Dodge & Cox; IAA; ICI I. Some of
these commenters suggested that a five-business day deadline would
be more appropriate in light of the steps required to prepare and
file an accurate Schedule 13G. See letters from Dodge & Cox, IAA;
ICI I; see also supra note 130.

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c. Final Amendments
    We are amending Rule 13d-1(b) and (d) to shorten the initial
Schedule 13G filing deadlines under those rules, with some
modifications from the proposals in response to commenter concerns.
Specifically, we are adopting an initial Schedule 13G filing deadline
of 45 days \268\ after calendar quarter-end for QIIs and Exempt
Investors. In addition, consistent with our amendment to the initial
Schedule 13D deadline, we are amending Rule 13d-1(c) to require that
Passive Investors file their initial Schedule 13G within five business
days after the date on which the Passive Investor acquired beneficial
ownership of more than five percent of a covered class.
---------------------------------------------------------------------------

    \268\ If the deadline falls on a Federal holiday, a Saturday, or
a Sunday, then the filing may be made on the next business day
thereafter. 17 CFR 240.0-3 (``[I]f the last day on which [a filing]
can be accepted as timely filed falls on a Saturday, Sunday or
holiday, such [filing] may be [made] on the first business day
following.'').
---------------------------------------------------------------------------

    As noted above, Rule 13d-1(b) and (d) currently require QIIs and
Exempt Investors, respectively, to file an initial Schedule 13G within
45 days after calendar year-end if, as of the end of that year, they
beneficially own more than five percent of a covered class. We are
amending Rule 13d-1(b) and (d) to require that QIIs and Exempt
Investors file their initial Schedule 13G within 45 days after calendar
quarter-end if, as of the end of that quarter, their beneficial
ownership exceeds five percent of a covered class (rather than five
business days after the end of the month in which beneficial ownership
exceeds five percent, as proposed). Further, because we are adopting
the new 45 days after quarter-end deadline rather than the proposed
five business days after month-end deadline, we are not adopting the
proposed amendment to delete the language in Rule 13d-1(b)(2) that
imposes an accelerated initial reporting obligation.\269\ Instead, we
are amending that rule to require that such an initial Schedule 13G be
filed within five business days (instead of the current requirement of
10 days) after the end of the first month in which the QII's beneficial
ownership exceeds 10 percent of a covered class, computed as of the
last day of the month.
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    \269\ See Proposing Release at 13856 (``Given the proposal to
shorten the initial reporting deadline [in Rule 13d-1(b)] to five
business days after the end of the month, the current provision of
Rule 13d-1(b)(2) that operates to accelerate that initial filing
deadline if beneficial ownership exceeds 10% at the end of any month
would be unnecessary . . . .'').
---------------------------------------------------------------------------

    The Commission adopted the current initial Schedule 13G filing
deadlines of 45 days after year-end in Rule 13d-1(b) and (d) in the
late 1970s.\270\ In light of the technological advancements and
developments in the financial markets in the more than 40 intervening
years,\271\ we believe it is appropriate to shorten those deadlines to
ensure beneficial ownership information disclosed in an initial
Schedule 13G is reported in a manner that is considered timely by
modern standards. We also expect that shortening those deadlines from
year-end to quarter-end will reduce the risk that QIIs and Exempt
Investors sell down their positions before the end of the year and
avoid reporting altogether,\272\ which should help to ensure large
accumulations of beneficial ownership are reported in a timely manner,
ultimately improving market transparency.\273\
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    \270\ See supra notes 197, 199 and accompanying text.
    \271\ See supra notes 138-144 and accompanying text for some
examples of those advancements and developments.
    \272\ See, e.g., Kristin Giglia, Note, A Little Letter, a Big
Difference: An Empirical Inquiry into Possible Misuse of Schedule
13G/13D Filings, 116 Colum. L. Rev. 105, 115-16 (2015) (explaining
that the availability of Schedule 13G may allow investors to
``intentionally structure their acquisition strategies to exploit
the gaps created by the current reporting regime, to their own
short-term benefit and to the overall detriment of market
transparency and investor confidence'' (internal quotations
omitted)). QIIs in particular may be able to amass sizeable amounts
of beneficial ownership without reporting such positions. Rule 13d-
1(b)(2) provides in relevant part that ``it shall not be necessary
to file a Schedule 13G unless the percentage of [a covered class]
beneficially owned as of the end of the calendar year is more than
five percent.'' 17 CFR 240.13d-1(b)(2). As such, a QII may
beneficially own in excess of 5% of a covered class for the entire
year, sell down its position to 5% or below on the last day of the
calendar year and bypass having to report at all under the current
regulatory framework assuming that its beneficial ownership
continues to be held in the ordinary course of business, without a
disqualifying purpose or effect, and does not exceed 10% of a
covered class.
    \273\ We note that some commenters asserted that the Commission
did not substantiate its concerns regarding reporting gaps and QIIs
selling down positions before the end of a reporting period to avoid
a Schedule 13G filing. See supra note 226 and accompanying text.
Given the potential materiality of the information disclosed on
Schedule 13G and its importance to the market, however, we believe
it is appropriate to take action to reduce the risk of such
reporting gaps, even absent evidence indicating that the practice of
selling down positions to avoid a Schedule 13G filing currently is
widespread. See Proposing Release at 13882, n.221 (noting the
importance to the market of information regarding beneficial
ownership, regardless of whether it is disclosed on Schedule 13D or
13G, based on evidence that the initial filing of Schedule 13G, like
that of Schedule 13D, generates a positive stock price reaction,
albeit smaller in magnitude). We also recognize that because the new
filing deadline will be tied to a QII's beneficial ownership as of
calendar quarter-end, QIIs may still be able to avoid a reporting
obligation if they sell down their positions before the end of a
quarter. We believe, however, that risk is lower under a quarter-
end-based deadline than a year-end-based deadline because of the
increased transaction costs, as well as disruptions with respect to
a long-term investment strategy, that would be associated with
selling down and building up positions multiple times throughout a
year.
---------------------------------------------------------------------------

    In the Proposing Release, the Commission stated its expectation
that the proposed initial Schedule 13G deadlines under Rule 13d-1(b)
and (d) (i.e., five business days after the end of the month in which
beneficial ownership exceeds five percent of a covered class) would
result in minimal additional burdens on filers because QIIs and Exempt
Investors ``already have well-established compliance systems in place
to monitor Schedule 13G ownership levels to determine whether filing
obligations have been triggered.'' \274\ Although some commenters
agreed with this expectation,\275\ several comments disagreed and
asserted that the proposed deadlines would be unduly burdensome for
QIIs and Exempt Investors (especially those that are smaller and non-
institutional investors) given the number of tasks and amount of
resources required to prepare a filing in such a limited amount of time
\276\ and that such burdens are not sufficiently mitigated by any
technological advancements to justify adopting the proposed
deadlines.\277\
---------------------------------------------------------------------------

    \274\ Proposing Release at 13856 (noting that ``QIIs currently
need to monitor beneficial ownership levels at least on a monthly
basis in case their holdings exceed more than 10% at the end of the
month'' and that ``Exempt Investors already need to monitor the
level of their beneficial ownership continuously or periodically to
ensure that the amount of their beneficial ownership does not
unintentionally exceed 2% in a 12-month period'').
    \275\ See supra note 216 and accompanying text (describing and
citing comment letters that asserted that the proposed amendments
would not impose significant burdens on Schedule 13G filers).
    \276\ See supra notes 233-247 and accompanying text.
    \277\ See supra notes 219-225 and accompanying text.
---------------------------------------------------------------------------

    Based on commenters' observations regarding the potentially
significant burdens that the proposed deadlines would impose on QIIs
and Exempt Investors, we have decided to take a different approach from
the proposal and instead amend Rule 13d-1(b) and (d) to require an
initial Schedule 13G be filed within 45 days after calendar quarter-
end. This change to a quarter-end-based deadline, rather than the
proposed month-end-based deadline, is consistent with the
recommendations that a number of commenters made to the
Commission.\278\ We note that those commenters recommended various
different numbers of days after quarter-end for the deadline.\279\
Taking into

account those various recommendations, believe that 45 days is the
appropriate length of time because it aligns with the filing deadline
for Form 13F,\280\ and many institutional investment managers who file
a Schedule 13G are already reviewing and assessing their holdings on a
quarterly basis in order to prepare Form 13F filings.\281\ In addition,
although most of the other amended Schedule 13D and 13G filing
deadlines will be expressed in ``business days,'' we believe the
potential compliance benefits of aligning the initial Schedule 13G
filing deadlines for QIIs and Exempt Investors with the Form 13F filing
deadline justify using calendar days rather than business days.\282\
---------------------------------------------------------------------------

    \278\ See supra notes 254-258 and accompanying text.
    \279\ See letters from Dodge & Cox (recommending a filing
deadline of 45 days after quarter-end); IAA (same); ICI I (same);
MFA (same); SIFMA (same); TRP (recommending a filing deadline of at
least 30 days after quarter-end); SSC (recommending a filing
deadline of 15 business days after quarter-end).
    \280\ Form 13F is the reporting form filed by institutional
investment managers pursuant to section 13(f) of the Exchange Act.
Under section 13(f)(1), institutional investment managers that use
the U.S. mail (or other means or instrumentality of interstate
commerce) in the course of their business and that exercise
investment discretion over $100 million or more in section 13(f)
securities must file Form 13F. Such institutional investment
managers must submit four Form 13F filings, with the first filing
due within 45 days after the end of the fourth quarter of the
calendar year (i.e., the quarter ending Dec. 31 of the same calendar
year that the $100 million filing threshold is reached) and the
three additional filings due 45 days after the end of the subsequent
three calendar quarters (i.e., the calendar quarters that end on
Mar. 31, June 30, and Sept. 30). See 17 CFR 240.13f-1(a)(1); see
also U.S. Securities & Exchange Commission, Division of Investment
Management, Frequently Asked Questions About Form 13F, available at
https://www.sec.gov/divisions/investment/13ffaq.
    \281\ See infra section IV.B.3.b, Table 4 (presenting statistics
regarding the number of Schedule 13G filers that also filed Form 13F
in 2022, noting that 84% of QIIs and 10% of Exempt Investors also
filed Form 13F).
    \282\ See letter from IAA (recommending that the Commission
express deadlines consistently in either calendar days or business
days across all of the Schedule 13D and 13G initial and amendment
filing deadlines, where the deadlines are less than 45 days to
promote compliance by making it simpler and less confusing to keep
track of the various deadlines).
---------------------------------------------------------------------------

    Even for those QIIs and Exempt Investors that are not Form 13F
filers, the 45-day period after calendar quarter-end deadline will be
familiar given that they currently must file their initial Schedule 13G
within 45 days after calendar year-end.\283\ As such, we believe that
many of those beneficial owners are well-positioned to submit their
Schedule 13G filings within 45 days after calendar quarter-end. This
deadline, therefore, is likely to be less burdensome and should require
fewer changes to QIIs' and Exempt Investors' existing compliance
operations than the proposed month-end-based deadline. We also expect
that the extended filing deadline (i.e., 45 days rather than the
proposed five business days) will address some commenters' concerns
that the more compressed time period under the proposed deadlines could
have negatively impacted the accuracy and usefulness of initial
Schedule 13G filings.\284\
---------------------------------------------------------------------------

    \283\ In addition, the amended deadline may result in the same
amount of time to file as under the current rules, depending on the
quarter in which the filing obligation is triggered. That is, if a
QII or Exempt Investor becomes the beneficial owner of more than 5%
of a covered class on or after Oct. 1 (the beginning of the fourth
calendar quarter) and remains above the 5% threshold as of Dec. 31
(both calendar year-end and the end of the fourth calendar quarter),
then they would have the same amount of time to prepare and submit
their initial Schedule 13G filing under both the current and amended
Rule 13d-1(b) and (d).
    \284\ See supra notes 248-250 and accompanying text.
---------------------------------------------------------------------------

    Further, a 45-day, quarter-end-based deadline (instead of the
proposed five-business day, month-end-based deadline) should help
mitigate concerns that some opposing commenters expressed regarding the
risk of QIIs and Exempt Investors prematurely disclosing sensitive
portfolio holdings information to the market (i.e., ``front-running''
and ``free-riding''),\285\ especially given that many of those Schedule
13G filers already are obligated to disclose their holdings via Form
13F on a quarterly basis. We also believe that, as compared with the
current year-end-based deadline, a quarter-end-based deadline will
increase transparency for market participants and better reflects the
technological advancements and developments in the financial markets
since the Commission adopted Rule 13d-1(b) and (d).\286\ Thus, we
believe that this deadline will address the goals that prompted the
Commission's reassessment of those rules in the Proposing Release
while, at the same time, avoiding inordinately burdening Schedule 13G
filers.
---------------------------------------------------------------------------

    \285\ See supra note 246 and accompanying text; see also infra
section IV.C.2.b.
    \286\ See, e.g., letter from IAA (``A quarterly deadline
significantly increases transparency for market participants as
compared with the current annual deadline.'').
---------------------------------------------------------------------------

    In addition, as discussed above, Rule 13d-1(c) currently requires
Passive Investors to file an initial Schedule 13G within 10 days of
acquiring beneficial ownership of more than five percent of a covered
class. As with our final amendment to Rule 13d-1(a), we are amending
Rule 13d-1(c) to require that Passive Investors file their initial
Schedule 13G within five business days after \287\ acquiring beneficial
ownership of more than five percent of a covered class. We believe it
is appropriate to amend the initial Schedule 13G filing deadline in
Rule 13d-1(c) to match the initial Schedule 13D filing deadline in Rule
13d-1(a) in order to maintain the historical regulatory consistency
between the deadlines in Rule 13d-1(c) and (a) and to facilitate the
overall goals of increasing transparency in beneficial ownership and
ensuring that investors receive material information in a timely
manner.
---------------------------------------------------------------------------

    \287\ See supra note 136 for a discussion of a revision we are
making to Rule 13d-1(c) to clarify that the five-business day
deadline is determined beginning on the day after the date on which
a person acquires beneficial ownership of more than 5% of a covered
class.
---------------------------------------------------------------------------

    Consistent with our rationale for shortening the initial Schedule
13D deadline, we believe that many Passive Investors are large and
sophisticated enough to prepare and file an initial Schedule 13G within
five business days.\288\ The change to a five-business day deadline
from the proposed five-calendar day deadline should mitigate
commenters' concerns regarding the burdens that a shortened deadline
would impose on Passive Investors and the workability of that
deadline.\289\ Further, we note that research indicates that at least
some beneficial owners may improperly rely on Rule 13d-1(c) to file a
Schedule 13G in lieu of a Schedule 13D to obscure their control
purpose.\290\ Given this increased likelihood, as compared to QIIs and
Exempt Investors,\291\ of Passive Investors ultimately having a control
purpose with respect to an issuer, we believe it is appropriate to
shorten their initial Schedule 13G filing deadline to five business
days in order for that deadline to continue to mirror the initial
Schedule 13D filing deadline. This is consistent with the Commission's
decision to require Passive Investors to file their initial Schedule
13G in 10 days, the same deadline as Schedule 13D, when it adopted Rule
13d-1(c).\292\
---------------------------------------------------------------------------

    \288\ See, for example, infra section IV.B.3.b, Table 4, which
indicates that 31% of Passive Investors that filed a Schedule 13G in
2022 also filed a Form 13F (which would only be required if, among
other things, they exercise investment discretion over $100 million
or more in section 13(f) securities).
    \289\ See supra note 241 and accompanying text.
    \290\ See Kristin Giglia, Note, A Little Letter, a Big
Difference: An Empirical Inquiry into Possible Misuse of Schedule
13G/13D Filings, 116 Colum. L. Rev. 105, 119 (2015) (``Activists can
fly under the radar, planning to effect large changes to the issuer
and even acquiring up to twenty percent ownership interest at a
relatively low price, all while maintaining that their intent is
still `passive.' '').
    \291\ Id. at n.160 (noting that QIIs and Exempt Investors are
less likely than Passive Investors ``to switch to a [Schedule] 13D
filing'').
    \292\ Amendments to Beneficial Ownership Reporting Requirements,
Release No. 34-39538 (Jan. 12, 1998) [63 FR 2854, 2854 (Jan. 16,
1998)] (stating that ``the Commission is imposing some safeguards''
on Passive Investors, including that an ``[i]nitial Schedule 13G
must be filed within 10 days (instead of year end)'' because ``a
control purpose reflects the state of mind of a filing person and
there are incentives to disclose less information''). The Commission
also indicated that, as compared to QIIs and Exempt Investors,
Passive Investors are more likely to represent ``voting blocks that
have the potential of affecting or influencing control of the
issuer'' which, therefore, warrants more timely notice to the market
of their existence. Id. at 2855.

---------------------------------------------------------------------------

3. Rule 13d-2(a) and (b)
    Section 13(d)(2) requires that an amendment must be filed to the
statement required under section 13(d)(1) if any material change occurs
in the facts set forth in the statement filed. Section 13(d)(2) does
not, however, identify a specific deadline by which such amendment must
be filed. Instead, Rule 13d-2(a) provides that such amendment must be
filed with the Commission ``promptly.'' \293\ The obligation to file an
amendment under current Rule 13d-2(a) is not limited to acquisitions.
Instead, changes in the disclosure narrative that are material also
must be reported in an amendment, as must material changes in the level
of beneficial ownership caused by an involuntary change in
circumstances, such as a reduction in the amount of beneficial
ownership caused solely by an increase in the number of shares
outstanding.\294\
---------------------------------------------------------------------------

    \293\ 17 CFR 240.13d-2(a).
    \294\ See id. (requiring an amendment ``[i]f any material change
occurs in the facts set forth in the Schedule 13D'' including ``any
material increase or decrease in the percentage of the class
beneficially owned'').
---------------------------------------------------------------------------

    Section 13(g)(2) requires that an amendment be filed to the
statement required under section 13(g)(1) if any material change occurs
in the facts set forth in the statement filed, but like section
13(d)(2), does not identify a deadline by which such amendment must be
filed. Rule 13d-2(b), however, does specify a deadline and provides
that for all persons who report beneficial ownership on Schedule 13G,
an amendment shall be filed ``within forty-five days after the end of
each calendar year if, as of the end of the calendar year, there are
any changes in the information reported in the previous filing on that
Schedule [13G].'' \295\
---------------------------------------------------------------------------

    \295\ 17 CFR 240.13d-2(b).
---------------------------------------------------------------------------

a. Proposed Amendments
    In the Proposing Release, the Commission proposed to amend Rule
13d-2(a) to require that all amendments to Schedule 13D be filed within
one business day after the date of the material change that triggers
the amendment obligation. The Commission proposed this change from the
``promptly'' standard to establish a specified filing deadline, remove
any uncertainty as to the date on which an amendment is due, and help
ensure that beneficial owners amend their filings in a more uniform and
consistent manner.\296\ The Commission stated that it did not believe
that requiring Schedule 13D amendments to be filed within one business
day after the date on which a material change occurs would place those
filers at a disadvantage.\297\ The Commission also stated that because
an amendment to a Schedule 13D only requires that the material change
be reported and not a complete set of new narrative responses to each
of the disclosure form's individual line items,\298\ it expected that
those amendments should present a lower administrative burden than the
initial Schedule 13D filing.\299\ In addition, the Commission noted
that that the proposed amendment would be consistent with its existing
view that, under the current ``promptly'' standard in Rule 13d-2(a),
``[a]ny delay beyond the date the filing reasonably can be filed may
not be prompt'' and that an amendment to a Schedule 13D reasonably
could be filed in as little as one day following the material
change.\300\
---------------------------------------------------------------------------

    \296\ Proposing Release at 13857.
    \297\ Id.
    \298\ Under Rule 13d-2(a), the Schedule 13D filer only has an
obligation to ``file or cause to be filed with the Commission an
amendment disclosing that [material] change.'' See also 17 CFR
240.12b-15, titled ``Amendments,'' which explains that
``[a]mendments filed pursuant to this section must set forth the
complete text of each item as amended.''
    \299\ Proposing Release at 13857.
    \300\ Id. at n.67 (quoting In re Cooper Laboratories, Release
No. 34-22171 (June 26, 1985)).
---------------------------------------------------------------------------

    The Commission also proposed to amend Rule 13d-2(b) to require that
a Schedule 13G be amended within five business days of the end of the
month in which a material change occurs in the information previously
reported. The Commission stated that accelerating the deadline for
amendments from the current standard of 45 days after the end of the
calendar year would help ensure that the information reported would be
timely and useful.\301\ The Commission also noted that this proposed
deadline would be consistent with the proposed five-business day
deadline from the end of the month applicable to QIIs' and Exempt
Investors' initial Schedule 13G filing obligations arising under Rule
13d-1(b) and (d).\302\ In addition, the Commission proposed a
``business day'' standard for the proposed deadline to partially
mitigate the time pressures resulting from the reduction of the current
45-day deadline.\303\
---------------------------------------------------------------------------

    \301\ Id. at 13857.
    \302\ Id.
    \303\ Id.
---------------------------------------------------------------------------

    The Commission further proposed to amend Rule 13d-2(b) to
substitute the term ``material'' in place of the term ``any'' to serve
as the standard for determining the type of change that will trigger an
amendment obligation under Rule 13d-2(b). The Commission noted that,
unlike sections 13(d)(2) and 13(g)(2), Rule 13d-2(b) does not include
an express materiality qualifier for Schedule 13G amendments and simply
requires an amendment for ``any change.'' \304\ At the time Rule 13d-
2(b) was adopted, however, the Commission stated that there is a
materiality standard inherent in the provisions governing Schedule 13G
filings.\305\ This inherent materiality standard is based on the fact
that any disclosure provided by a Schedule 13G filer, in light of the
infrequency of the reports and comparatively minimal statements
required to be made, is effectively material.\306\ The Commission's
proposed change, therefore, was intended to merely codify this view in
the text of Rule 13d-2(b).
---------------------------------------------------------------------------

    \304\ Id. at 13857-58.
    \305\ Id. at 13858.
    \306\ Id. (citing Filing and Disclosure Release at 18489
(stating the Commission's belief that because ``the information
required by Schedule 13G has been reduced to the minimum necessary
to satisfy the statutory purpose, . . . a materiality standard is
inherent in those requirements'' and ``it is unnecessary to further
minimize it by the insertion of an express materiality standard'')).
---------------------------------------------------------------------------

b. Comments Received
    The Commission received a variety of comments on the proposed
amendments to Rule 13d-2(a) and (b). Several commenters supported the
proposed amendments.\307\ Some of those commenters supported revising
the Schedule 13D and 13G amendment deadlines for many of the same
reasons they supported accelerating the initial Schedule 13D and 13G
filing deadlines.\308\
---------------------------------------------------------------------------

    \307\ See, e.g., letters from AFREF (supporting only the
proposed amendment to Rule 13d-2(a)); Anonymous 3; Anonymous 5;
Anonymous 11; Anonymous 12; Anthony R.; BRT (same); C. Robinson;
Engineer; FedEx; Freeport-McMoRan; HMA I; Jonah; J. Pieper; J.
Soucie; Juan; Mark C.; Mike; Nasdaq; P. Worts; SIFMA AMG (same);
TIAA (same); T. Mirvis, et al. (same); Todd. In addition, one
commenter, which neither clearly supported nor opposed the proposed
amendment to Rule 13d-2(b), supported the proposed shift from an
``any change'' to a ``material change'' standard. See letter from
IAA.
    \308\ See supra notes 38-41, 43-44 and accompanying text; see
also supra note 211 and accompanying text.
---------------------------------------------------------------------------

    In addition, several commenters supported the proposed amendments
to Rule 13d-2(a) and (b) based on changes in technology and
developments in the

financial markets.\309\ One commenter agreed with the concern in the
Proposing Release that material information about potential change of
control transactions is not being disseminated to the public in a
manner that would be considered timely in today's financial
markets.\310\ Other commenters asserted that the proposed amendments
would not impose significant costs or burdens on beneficial owners of
more than five percent of a covered class \311\ and that the proposed
amendments would be consistent in balancing the need for adequate
disclosures to investors with burdens placed on filers to accurately
prepare required disclosures.\312\
---------------------------------------------------------------------------

    \309\ See, e.g., letters from BRT; C. Robinson; FedEx; Freeport-
McMoRan; Nasdaq; T. Mirvis, et al.
    \310\ See letter from BRT.
    \311\ See, e.g., letters from Anonymous 11; BRT; J. Soucie.
    \312\ See letter from FedEx.
---------------------------------------------------------------------------

    A number of commenters opposed the proposed amendments to Rule 13d-
2(a) and (b).\313\ Several commenters disagreed with the Commission's
technological advancement-based justifications for the proposed
acceleration of the beneficial ownership reporting deadlines,\314\ some
of whom raised many of the same concerns that they expressed with
respect to the proposed acceleration of the initial Schedule 13D and
13G filing deadlines.\315\ One commenter stated that filing a Schedule
13D amendment is not just a question of technology, but often a
question of marshalling complex and evolving facts and making difficult
disclosure judgments.\316\
---------------------------------------------------------------------------

    \313\ See, e.g., letters from A. Day; ABA (opposing only the
proposed amendment to Rule 13d-2(a)); AIMA; B. Mason; Dodge & Cox;
EEI (same); EIM I (same); Hoak and Co. (Apr. 11, 2022) (``Hoak'')
(same); ICI I; MFA; MSBA (same); NVCA (same); Perkins Coie; SIFMA
(opposing only the proposed amendment to Rule 13d-2(b)); SIFMA &
SIFMA AMG (same); SSC (same); STB; TRP (same).
    \314\ See, e.g., letters from ABA; Dodge & Cox; IAA; ICI I;
TIAA.
    \315\ See supra notes 92-94, 220-224 and accompanying text.
    \316\ See letter from ABA. The commenter also noted that filing
a Schedule 13D amendment depends on many factors, including the
complexity of the information, the pace of developments of the
information, and the number of persons or parties who have an
interest in the disclosure and need to review the information,
contribute to its drafting, and, if they are signing the Schedule
13D, are subject to liability for the accuracy of the information.
Id.
---------------------------------------------------------------------------

    Some commenters focused solely on the proposed amendment to Rule
13d-2(a), expressing concern that a one-business day deadline would be
unduly burdensome and may not be enough time to prepare a Schedule 13D
amendment in all circumstances.\317\ For example, one commenter stated
that in its experience, it generally takes two to three business days,
and in some cases longer, to compile and file such amendments.\318\ One
commenter noted that if the Commission adopts the proposed structured
data requirements,\319\ this will add more time to the process of
preparing a Schedule 13D amendment and may make the proposed one-
business day deadline impractical.\320\ Another commenter asserted that
the proposed extension of the filing ``cut-off'' time to 10 p.m.\321\
would not be sufficient to offset the burden associated with meeting
the proposed one-business day deadline for a Schedule 13D
amendment.\322\
---------------------------------------------------------------------------

    \317\ See, e.g., letters from ABA; AIMA; EIM I; Hoak; ICI I;
MFA; MSBA; Perkins Coie; STB; see also letter from MFA & NAPFM.
    \318\ See letter from STB. The commenter also noted that while
the one-business day deadline may be feasible for an investor
engaged in a change of control objective, as that investor may have
(1) been taking preparatory steps toward such goal, (2) an internal
deal team and external advisors actively engaged in the project, and
(3) built the Schedule 13D amendment obligation into its workstream,
there are many situations requiring a Schedule 13D amendment in
which such advance notice and planning is not possible or practical.
Id. The commenter further asserted that practical concerns regarding
the ability to file an amendment pursuant to Rule 13d-2(a) in a
timely manner may cause some Schedule 13D filers to avoid filing
amendments for changes in their Schedule 13D disclosures, preferring
to take more risk that their determination on materiality is later
questioned than risk having a ``late'' filing with the Commission.
Id.
    \319\ See infra section II.F for a discussion of the proposed
structured data requirement for Schedules 13D and 13G.
    \320\ See letter from ABA.
    \321\ See infra section II.A.5 for a discussion of the proposed
extension of the filing ``cut-off'' time for Schedules 13D and 13G.
    \322\ See letter from Hoak.
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    Further, several commenters expressed concerns regarding the effect
of the proposed amendment to Rule 13d-2(a) on the accuracy of Schedule
13D amendments.\323\ For example, one of those commenters asserted that
the proposed amendment would make filing accurate amendments nearly
impossible.\324\ Some commenters expressed concern that by providing
Schedule 13D filers with insufficient time to prepare and file
amendments, the proposed amendment would increase the likelihood of
errors and risk of liability.\325\ Another commenter noted that the
proposed amendment to Rule 13d-2(a) could decrease transparency by
increasing the risk of errors in Schedule 13D amendments.\326\
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    \323\ See, e.g., letters from ABA; EEI; Hoak; MFA; NVCA.
    \324\ See letter from NVCA.
    \325\ See, e.g., letters from EIM I; Hoak; MFA.
    \326\ See letter from Hoak.
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    Commenters also expressed concerns about other potential downsides
associated with the proposed amendment to Rule 13d-2(a). For example,
some commenters expressed concern that the proposed amendment could
negatively impact the ability of investors and their advisors to draft
meaningful disclosures and engage in thoughtful analysis.\327\ Some
commenters noted that the proposed amendment to Rule 13d-2(a) may not
leave adequate time to prepare the filing in the event of unforeseen
circumstances, including the possibility that a necessary approver or
signer may not be available.\328\ And, one commenter stated that there
have been very few, if any, abuses associated with the current
``promptly'' regime and asserted that it has worked well and
effectively.\329\
---------------------------------------------------------------------------

    \327\ See letters from ABA; STB; see also supra note 102.
    \328\ See letters from EEI; Hoak.
    \329\ See letter from AIMA.
---------------------------------------------------------------------------

    In addition, some commenters questioned the basis for the proposed
amendment to Rule 13d-2(a). For example, some commenters noted that a
one-business day deadline for Schedule 13D amendments would be more
restrictive than the filing deadline for a Form 8-K.\330\ Similarly,
some commenters noted that Form 8-K and section 16 filings do not have
as restrictive filing deadlines as proposed under Rule 13d-2(a).\331\
One commenter asserted that the ``promptly'' standard under Rule 13d-
2(a) has ``generally been understood'' to mean within two

business days and disagreed with the Proposing Release that Commission
precedent supports a one-business day interpretation of that
standard.\332\
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    \330\ See letters from EIM I; MFA. Those commenters also stated
that the Commission has not justified imposing such a restrictive
deadline on Schedule 13D amendments, especially given the relatively
importance of a Form 8-K. Id. One of those commenters noted that
Schedule 13D amendments often disclose agreements between the
beneficial owner and the issuer, and issuers typically have four
business days to publicly disclose such agreements on Forms 8-K
after entering into them and often prefer to be the first to
disclose in order to control the initial message to the market, and
the proposed deadline would deprive issuers of this opportunity. See
letter from MFA. The commenter also asserted that the proposed
Schedule 13D amendment deadline would make it more difficult for
issuers and Schedule 13D filers to coordinate their messages
regarding material agreements they have entered into and may force
investors to publicly disclose an agreement in principle through a
Schedule 13D amendment before the terms are finalized, creating the
risk of prematurely disseminating information to the market that
turns out to be inaccurate or incomplete. Id.
    \331\ See letters from MFA; STB. Those commenters also asserted
that the Form 8-K and section 16 filing deadlines acknowledge the
balance between the importance of getting disclosures to investors
in a timely manner, with the complexity and labor required in order
to create such filings in a complete and thoughtful manner, noting
that section 16 filings require even less narrative disclosure than
a Schedule 13D amendment. Id.
    \332\ See letter from EIM I.
---------------------------------------------------------------------------

    Further, one commenter stated that the proposed amendment to Rule
13d-2(a) would ``unnecessarily sacrifice'' the flexibility that the
current version of the rule provides.\333\ Other commenters noted that
the promptness of a Schedule 13D amendment filing obligation under Rule
13d-2(a) currently is determined by considering the facts and
circumstances related to such filing and urged the Commission to
continue to consider the variation in circumstances that can lead to an
amendment obligation rather than applying the same standard in all
circumstances.\334\ One commenter asserted that the proposed amendment
to Rule 13d-2(a) could lead to a large increase in the number of late
Schedule 13D amendment filings.\335\
---------------------------------------------------------------------------

    \333\ See letter from ABA. The commenter stated that, as the
Commission has acknowledged in the past, in order to serve the
policies of the Williams Act, the timing for public filings should
vary based on the circumstances. Id.
    \334\ See letters from MFA; STB. The commenters noted, for
example, that a one-business day deadline may not be appropriate for
Schedule 13D amendments with respect to material changes that do not
have any nexus to a change or influence in corporate control. Id.
    \335\ See letter from ABA.
---------------------------------------------------------------------------

    In addition, some commenters expressed concern about the costs of
the proposed amendment to Rule 13d-2(a) relative to its benefits. For
example, one commenter stated that the proposed amendment to Rule 13d-
2(a) does not appropriately balance the need for prompt disclosure of
important, market-moving events with the need to avoid imposing an
undue, impracticable burden on investors making more routine
filings.\336\ Another commenter asserted that the burdens and risks of
the proposed amendment to Rule 13d-2(a) associated with venture capital
funds that make Schedule 13D filings exceed its benefits.\337\
---------------------------------------------------------------------------

    \336\ See letter from MFA.
    \337\ See letter from NVCA. Specifically, the commenter asserted
that the burden of inaccurate Schedule 13D amendments and the
associated risks are far greater than any benefit to be gained from
the information that a venture capital fund is reducing its share
ownership in the ordinary course of exiting investments and
providing returns to limited partner-investors. Id. The commenter
also noted that the proposed amendment would impose substantial
compliance burdens on venture capital funds that make Schedule 13D
filings and expressed concern that inaccurate Schedule 13D
amendments caused by the proposed accelerated deadline could result
in giving the market information that is misleading, particularly to
retail investors, which could reduce liquidity and negatively impact
an issuer's share price, harming all investors other than short
sellers. Id.
---------------------------------------------------------------------------

    Several commenters \338\ opposed the proposed amendment to Rule
13d-2(b) for many of the same reasons that they opposed the proposed
acceleration of the initial Schedule 13G filing deadlines for QIIs and
Exempt Investors.\339\ In addition, one commenter broadly asserted that
the costs of the proposed amendment to Rule 13d-2(b) ``far outweigh any
perceived benefits.'' \340\ Another commenter noted that many Schedule
13G filers have filing obligations with respect to multiple issuers and
that the proposed amendment may require ``hundreds of filings on a
monthly basis, as their investments fluctuate perpetually.'' \341\ And,
other commenters expressed the same concerns about the proposed
amendments to Rule 13d-2(a) and (b) that they expressed with respect to
the proposed acceleration of the initial Schedule 13D and 13G filing
deadlines.\342\
---------------------------------------------------------------------------

    \338\ See, e.g., letters from MFA; Perkins Coie; STB; TIAA; TRP.
    \339\ See supra notes 226-228, 235-236, 251 and accompanying
text.
    \340\ See letter from MFA. The commenter further stated that the
benefits of the proposed amendment would be minimal because Schedule
13G filers generally do not have control intent and already disclose
their holdings on Form 13F. Id.
    \341\ See letter from MFA.
    \342\ See supra notes 99, 106, 226, 243 and accompanying text;
see also letter from MFA & NAPFM.
---------------------------------------------------------------------------

    Finally, some commenters made recommendations to the Commission
regarding the proposed amendments to Rule 13d-2(a) and (b). For
example, some commenters that generally supported the proposed
amendments recommended that the Commission consider further shortening
the filing deadlines.\343\ Further, specifically with respect to the
proposed amendment to Rule 13d-2(a), one supporting commenter
recommended that the Commission include an assets under management-
based threshold for the proposed accelerated Schedule 13D filing
deadlines.\344\ Another commenter that generally supported revising the
Schedule 13D amendment deadline recommended that the Commission require
that Schedule 13D amendments be filed within three business days.\345\
---------------------------------------------------------------------------

    \343\ See letters from Freeport-McMoRan; HMA I.
    \344\ See letter from A. Day.
    \345\ See letter from SIFMA AMG.
---------------------------------------------------------------------------

    Conversely, several opposing commenters recommended that the
Commission retain the requirement that Schedule 13D amendments be filed
promptly, but require that they be filed within no more than a
specified number of days after the relevant triggering event (with
recommendations varying between two and four business days).\346\ One
opposing commenter suggested that the Commission require that Schedule
13D amendments be filed within five business days.\347\ Other
commenters, which either generally opposed or neither clearly supported
nor opposed the proposed amendment to Rule 13d-2(a), recommended that
the Commission require that Schedule 13D amendments be filed within two
business days.\348\
---------------------------------------------------------------------------

    \346\ See, e.g., letters from ABA; Dodge & Cox; ICI I; MFA. One
of those commenters also noted that to the extent that a Schedule
13D filer is able to file earlier, the filer would still be
obligated to do so because the rule would still require prompt
filings. See letter from ABA. Alternatively, the commenter suggested
that the Commission require that certain categories of amendments
(e.g., dispositions or acquisitions of beneficial ownership of 1% or
more) be filed within a specified one or two business day window.
Id. Similarly, another commenter recommended that the Commission add
a narrative setting forth its timing expectations in different
situations for the filing to satisfy the ``prompt'' standard,
including those where a shorter filing deadline would be required.
See letter from MFA.
    \347\ See letter from AIMA.
    \348\ See, e.g., letters from EEI; EIM I; Hoak; IAA; Perkins
Coie. Several of those commenters asserted that two business days
would be consistent with the current general understanding of the
``promptly'' standard. See letters from EIM I; IAA. Some commenters
indicated that a one-business day deadline for Schedule 13D
amendments would be too ``aggressive from an operational
perspective,'' would be extremely difficult for filers to comply
with, and could result in inadvertent errors, see letter from IAA,
and that a two-business day deadline would be less onerous for
investors yet would ensure the accuracy and transparency of the
information in their filings. See letter from EEI.
---------------------------------------------------------------------------

    In addition to focusing on the Schedule 13D filing deadline, some
opposing commenters made other recommendations with respect to the
proposed amendment to Rule 13d-2(a). For example, one opposing
commenter asserted that a Schedule 13D amendment should not be required
for involuntary changes in circumstances caused by the issuer because
such amendments do not relate to the Schedule 13D filer's action or
intent and are already disclosed to the market by the issuer.\349\
Another opposing commenter recommended that if the Commission believes
that a one-business day interpretation of ``promptly'' is not being
properly observed, it should clarify that in situations involving
acquisition of corporate control, ``promptly'' means one business
day.\350\ One commenter,

which neither clearly supported nor opposed the proposed amendment to
Rule 13d-2(a), recommended that the Commission define the percentage
ownership change that is deemed a ``material change'' as the specified
percentage only, and that it omit the subjective ``facts and
circumstances'' part of the standard.\351\
---------------------------------------------------------------------------

    \349\ See letter from Hoak.
    \350\ See letter from STB. The commenter recommended that the
Commission engage in further study to determine the percentage of
Schedule 13D filers that ultimately engage in activities that impact
corporate control and the number of such cases in which a Schedule
13D amendment is not filed within the one-business day timeframe.
Id. The commenter also suggested that the Commission engage in
further study regarding the different circumstances under which
Schedule 13D amendments are filed and consider whether requiring
such amendments to be filed within the one business day timeframe
would materially improve the information provided to investors
relating to such issuer control matters. Id.
    \351\ See letter from IAA.
---------------------------------------------------------------------------

    Further, a number of opposing commenters made recommendations
regarding the proposed amendment to Rule 13d-2(b). For example, several
commenters recommended that the Commission require Schedule 13G
amendments to be filed within 45 days after the end of a quarter in
which a material change occurred, consistent with the amendment
frequency for Form 13F.\352\ One commenter recommended that QIIs be
required to file an amended Schedule 13G within 20 business days after
the end of a quarter in which a material change has occurred.\353\ One
commenter, which neither clearly supported nor opposed the proposed
amendment to Rule 13d-2(b), recommended that the Commission require
that Schedule 13G amendments be filed within 10 days after the end of
the month in which a material change occurs.\354\
---------------------------------------------------------------------------

    \352\ See, e.g., letters from Dodge & Cox; IAA; ICI I.
    \353\ See letter from SSC. The commenter also recommended that
materiality be defined as more than a 5% change in beneficial
ownership. Id.
    \354\ See letter from ABA.
---------------------------------------------------------------------------

    In addition to focusing on the Schedule 13G amendment deadline,
some commenters made other recommendations with respect to Rule 13d-
2(b). For example, one opposing commenter suggested that the Commission
conduct further study and analysis to understand what percentage of
Schedule 13G filers are involved in change in control scenarios.\355\ A
number of commenters, which either generally opposed or neither clearly
supported nor opposed the proposed amendment to Rule 13d-2(b), also
requested that the Commission clarify what constitutes a ``material
change'' for Schedule 13G filers.\356\ One commenter recommended that
the Commission carve out QIIs from the accelerated filing deadline,
including because QIIs must certify that they do not have a control
intent.\357\ And, one commenter recommended that the Schedule 13G
amendment filing deadline be expressed in business days.\358\
---------------------------------------------------------------------------

    \355\ See letter from STB. The commenter also suggested that if
the Commission's goal is market transparency, and not a targeted
concern related to matters of corporate control, the Commission
should consider whether there are more appropriate tools to disclose
significant beneficial ownership positions or material changes to
such positions in a more concise and efficient manner (e.g., Form
13F). Id.
    \356\ See, e.g., letters from ABA; IAA; ICI I; STB. Several of
those commenters requested that the Commission confirm that a change
in beneficial ownership of less than 5% will not be deemed
``material'' for purposes of the rule. See letters from IAA; ICI I;
STB. Further, one of those commenters recommended that the
Commission clarify whether a Schedule 13G amendment obligation would
be triggered based on actual trading activity of an investor or
whether such obligation could be triggered based on changes in the
number of outstanding shares. See letter from STB. The commenter
also requested clarification as to whether an investor would be
permitted to ``net'' purchases and sales for purposes of the
analysis. Id.
    \357\ See letter from TIAA.
    \358\ See letter from IAA.
---------------------------------------------------------------------------

c. Final Amendments
    We are amending Rule 13d-2(a) and (b) to revise the Schedule 13D
and 13G amendment filing deadlines under those rules. In response to
commenter concerns, however, we are making some changes to the proposed
deadlines. Specifically, we are adopting a Schedule 13D amendment
filing deadline of two business days \359\ after the date of a material
change and a Schedule 13G amendment filing deadline of 45 days after
calendar quarter-end. We also are amending Rule 13d-2(b) to require an
amendment to a Schedule 13G be filed only if a ``material change''
occurs.
---------------------------------------------------------------------------

    \359\ See supra note 134 for a discussion of the new definition
of ``business day'' that we are adopting for purposes of Regulation
13D-G.
---------------------------------------------------------------------------

    As noted above, Rule 13d-2(a) currently requires that an amendment
be filed promptly if a material change occurs in the facts set forth in
a Schedule 13D. Although the Commission proposed to amend Rule 13d-2(a)
to replace the ``promptly'' standard with a one-business day deadline,
we are instead adopting a two-business day deadline in light of the
comments received. As noted in the Proposing Release, establishing a
specified filing deadline for Schedule 13D amendments should remove any
uncertainty as to the date on which an amendment is due and help ensure
that beneficial owners amend their filings in a more uniform and
consistent manner.\360\ We note, however, that several commenters
disagreed with the Commission's expectation that the proposed one-
business day deadline would impose minimal incremental burdens on
Schedule 13D filers.\361\ To the contrary, those commenters expressed
concerns about the workability of a one-business day deadline for
filing Schedule 13D amendments and described the burdens that
beneficial owners would incur trying to meet that deadline.\362\
---------------------------------------------------------------------------

    \360\ Proposing Release at 13857; see also letter from EIM I
(stating that replacing the ``promptly'' standard with a two-
business day deadline would ``provid[e] a more objective
deadline''). For that reason, we also disagree with commenters who
recommended we should retain a flexible standard. See supra notes
333-334 and accompanying text. We note that those recommendations
were made, in part, in response to the proposed one-business day
deadline. See, e.g., supra note 334 (describing some commenters'
assertion that a one-business day deadline may not be appropriate
for Schedule 13D amendments with respect to material changes that do
not have any nexus to a change or influence in corporate control).
As such, the additional time provided by the two-business day
deadline we are adopting should address some of these concerns. This
view is consistent with several commenters' assertions that
``promptly'' is generally understood to mean two business days. See
supra note 348.
    \361\ Id. (expressing the Commission's belief ``that requiring
Schedule 13D amendments to be filed within one business day after
the date on which a material change occurs will [not] place those
filers at a disadvantage'' and noting that ``those amendments should
present a lower administrative burden than the initial Schedule 13D
filing'').