the shareholders who seek to exert influence or control over issuers
that Congress sought when enacting section 13(d).
---------------------------------------------------------------------------

    \848\ See letters from AFREF; Better Markets I; Labor Unions;
NIRI; R. Steel and Prof. Goshen; SCG; Sen. Baldwin, et al.; WLRK I.
    \849\ See letters from AFREF; NIRI; SCG; Sen. Baldwin, et al.
    \850\ See letter from SCG.
    \851\ See, e.g., Bebchuk et al. 2015 Study; Kedia et al. 2021
Study; Boyson & Pichler 2019 Study; Cremers et al. 2018 Study;
Swanson et al. 2022 Study; deHaan et al. 2019 Study; Brav et al.
2022 Study; Lilienfeld-Toal & Schnitzler 2020 Study; Swanson et al.
2022 Study.
---------------------------------------------------------------------------

    Some commenters stated that certain types of activist campaigns
were more likely to be forgone as a result of a shortened deadline. For
example, some commenters stated that a reduction in campaigns was more
likely among those campaigns targeting smaller issuers with lower
trading volumes \852\ or for certain types of activist campaigns (e.g.,
those pursuing changes at an issuer rather than a potential sale of the
issuer).\853\ Some commenters noted that the final amendments may
reduce competition among investors who pursue activist campaigns,\854\
as more sophisticated and experienced investors may be better able to
adapt to the final amendments. We acknowledge that the final amendments
may have differential impacts on different types of activist campaigns.
For instance, it may be more costly for a filer to accelerate the
completion of its stake under a shortened filing window for smaller,
less liquid issuers. However, in Table 6 above, we find that the
targets of filers who currently continue to accumulate a significant
fraction of their stake after the five-business day deadline are, on
average, slightly larger and more liquid than other targets. Further,
studies cited earlier in this section find that the abnormal stock
returns around the announcement of activist campaigns are lower for
larger issuers. These lower expected gains from campaigns at larger
issuers could make investors less likely to bear additional costs to
conduct such a campaign by one of the adaptation strategies discussed
(rather than forgoing the campaign) relative to potential campaigns at
smaller issuers even if these costs of doing so are lower than they
would be at smaller, less liquid issuers, as noted above.
---------------------------------------------------------------------------

    \852\ See letters from CIRCA I; ICM; Prof. Gordon.
    \853\ See letter from Profs. Swanson, Young, and Yust.
    \854\ See Lewis Study I (Exhibit to letter from EIM I); letter
from MFA.
---------------------------------------------------------------------------

    To summarize, while the amended filing deadline may make a minority
of campaigns less profitable and, as a result, could potentially reduce
shareholder value creation, we do not expect a substantial reduction in
the extent of activism as most historical campaigns would not have been
impacted by the amended filing deadline and since activists may adapt
to accommodate the amended deadline and we expect that in most if not
all cases, they will do so.
Implications of Changes to Activist Campaigns
    As referenced above, filers have various ways to adapt to the
amended filing deadlines and we expect that many filers will likely use
these methods of adaption to the amended filing deadline where they
remain incentivized to pursue their campaigns. For example, some filers
may proceed with smaller stakes, other filers may accumulate shares
more quickly during the amended filing window (or add to their stake
after the filing date), while others may acquire an economic interest
in the issuer, such as by using cash-settled swaps or other
derivatives. We expect that such adaptations are most likely to arise
in the context of non-corporate-action filings in which filers would
otherwise have continued to accumulate shares on the open market after
the amended filing deadline (i.e., campaigns like those represented in
Columns 2, 3, and 4 of Table 6).\855\ Some commenters stated that
investors have a target share accumulation that would be required to
make a campaign worthwhile and that in some cases this target would not
be achievable under the amended deadline.\856\ One of these commenters
noted that investors may file early if they reach their target
ownership before the filing deadline, but implied that one should not
assume

from observing these filings that they can reach their target ownership
with the same speed in all instances.\857\ We note also that some
commenters stated that the proposed five-calendar day filing window
would provide activist investors ample time to accrue a significant
stake,\858\ implying that filers would be able to adapt to the revised
deadline. While a filer's adaptation strategy will ultimately be based
on its assessment of the benefits and costs of various available
strategies, which will likely vary across filers and specific
situations, we expect that most of the profitable campaigns will
continue to be profitable notwithstanding the five-business day filing
deadline. In these cases, we expect activists to use adaptation
strategies rather than forgo the campaigns. And, we expect that most
campaigns will not be constrained by the amended filing deadline as,
historically, 97 percent of campaigns achieved 90 percent of their
position by the amended deadline.\859\
---------------------------------------------------------------------------

    \855\ As discussed in section IV.C.1.b.i above, we believe that
the process of acquiring shares is unlikely to be significantly
impacted in most other cases.
    \856\ See letters from AIMA; CIRCA I; ICM; Prof. Gordon.
    \857\ See letter from AIMA.
    \858\ See letters from ABA; Better Markets I; NASDAQ; SCG; WLRK
I.
    \859\ See Table 3 and supra note 724.
---------------------------------------------------------------------------

    The degree to which the benefits associated with earlier disclosure
under a shortened filing deadline would be achieved also depends on how
the filers respond to the shortened deadline. As an adaptation
strategy, some filers may simply proceed with acquiring a smaller stake
in an issuer, notwithstanding the reduced potential profits.
    Alternatively, filers could adapt to the amended filing deadline by
accumulating shares more quickly during the modified filing window or
adding to their stake after the filing date. Such approaches are likely
to preserve more fully both the current shareholder value impact of the
campaigns and the benefits of earlier disclosure. We acknowledge that
these adaptations would entail greater costs to filers because the
additional shares would likely be purchased at higher prices than under
the current accumulation pattern.\860\ Further, in some cases post-
filing purchases may be precluded because issuers could react to the
disclosure by adopting low-threshold poison pills or other defensive
measures. While some commenters suggest that adaptations that rely on
accumulating shares more quickly could further reduce market efficiency
should volatility increase as a result of aggressive purchasing,\861\
we do not believe that a temporary increase in volatility would be
disruptive enough to override the benefits to price informativeness
mentioned above.
---------------------------------------------------------------------------

    \860\ In the case of stock purchases after an earlier filing
date, these shares would be purchased at the higher stock price that
prevails after the filing date (i.e., the price reflecting the
market's knowledge of the filer's intentions). Accumulating shares
more quickly would generally entail purchases at higher prices
because, all else equal, larger order sizes or more aggressive
trading has greater price impact. See, e.g., Albert S. Kyle,
Continuous Auctions and Insider Trading, 53 Econometrica 1315
(1985).
    \861\ See letters from AIMA; EIM I; Rice Management; STB.
---------------------------------------------------------------------------

    Filers could also adapt by instead acquiring an economic interest
in the issuer, such as by using cash-settled swaps or other
derivatives.\862\ Although these instruments would not replace the
ownership of shares in the issuer, and generally do not provide voting
rights, they may have the effect of providing economic exposure to the
issuer without triggering the section 13(d) beneficial ownership
reporting obligation. Such economic exposure would allow filers to
remain financially incentivized to pursue campaigns that create
shareholder value, as opposed to forgoing such campaigns solely due to
the shortened filing deadline.
---------------------------------------------------------------------------

    \862\ Staff have noted that some Schedule 13D filers already
make use of cash-settled derivatives referencing the issuer in which
they report beneficial ownership. See, e.g., Memorandum of the Staff
of the Division of Economic and Risk Analysis, Supplemental Data and
Analysis Regarding the Proposed Reporting Thresholds in the Equity
Security-Based Swap Market (June 20, 2023), available at https://www.sec.gov/comments/s7-32-10/s73210-207819-419422.pdf. Thus, it is
plausible that at least some filers could adapt to the amendments by
making greater use of these instruments. See Security-Based Swaps
Release for a discussion of the circumstances in which a holder of a
SBS currently may be deemed the beneficial owner of the class of
equity securities referenced by the swap.
---------------------------------------------------------------------------

    Some commenters indicated that such a heavier reliance by activist
investors on derivatives may be an unintended consequence of a
shortened Schedule 13D filing window.\863\ Adaptations involving the
use of derivatives would generally entail some incremental costs to
these investors because of the premiums charged by counterparties for
these products, and, as noted, would not provide the investors with
voting rights beyond those associated with any shares they otherwise
beneficially own. That said, such approaches may often be the most
cost-effective alternative for activist investors and may preserve the
shareholder benefits associated with the campaigns.
---------------------------------------------------------------------------

    \863\ See letter from Profs. Swanson, Young, and Yust.
---------------------------------------------------------------------------

    An increased reliance on these products may, in certain situations,
reduce the overall benefits associated with a shortened filing deadline
by reducing the likelihood that disclosure of economic interests would
occur any earlier than under the status quo. In particular, cash-
settled swaps and related derivatives do not generally give rise to
beneficial ownership as they do not generally provide voting or
disposition rights over the reference securities.\864\ They therefore
generally fall outside the scope of the primary purpose of the Schedule
13D filings and the section 13(d) beneficial ownership reporting
system, which are focused on disclosure of a filer's accumulation of
equity securities that provide rights that could allow the filer to
control or influence control over an issuer. Nevertheless, it is
possible that some market participants may look to Schedule 13D filings
(in particular, Item 6 of Schedule 13D) for information about a filer's
accumulation of economic interests, such as cash-settled swaps and
derivatives without voting or disposition rights. Acquisition of these
instruments could allow a filer to obtain more than five percent of
economic interest in an issuer's covered class and then, at a later
point, cross the five percent beneficial ownership threshold through
holding or acquiring equity securities of the covered class--triggering
the requirement for a Schedule 13D filing in five business days--at a
later date. In this scenario, there is no delay in the disclosure of
the information that Schedule 13D filings and section 13(d) are
intended to provide--the beneficial ownership of the equity securities
that provide voting and disposition rights. However, the filer does
delay disclosure relative to obtaining the purely economic exposure of
more than five percent of the issuer represented by the cash-settled
swaps or derivatives. As such, an investor's pattern of accumulation of
economic interest, relative to when their campaign is revealed to the
market, may not differ from that under the status quo. In fact,
depending on the degree of reliance on cash-settled derivative
securities, complete disclosure of an investor's total economic
interest in an issuer may, under the final rules, be reduced or further
delayed than under the baseline, such as in cases where,
notwithstanding acquisition of these instruments, the investor
beneficially owns five percent or less of a covered class and no
Schedule 13D filing obligation is triggered. Still, we cannot predict
the extent to which investors will adapt by accumulating cash-settled
swaps or derivatives in lieu of equity securities, including because
cash-settled swaps and derivatives generally represent only an economic
interest in the issuer, with no voting rights or disposition rights
with respect to the reference securities, and therefore cannot be
presumed to be

equivalents to equity securities that do provide such rights.
---------------------------------------------------------------------------

    \864\ See supra section II.B.3.
---------------------------------------------------------------------------

    Initial Schedule 13D filings signal to the market that an investor
may intend to influence an issuer, often through activism. For market
participants that value such signals, regardless of beneficial
ownership, an increased reliance by activist investors on financial
instruments that generally do not trigger the section 13(d) beneficial
ownership reporting obligations, such as cash-settled swaps or
derivatives, may reduce the overall benefits associated with a
shortened filing deadline by reducing the likelihood that disclosure of
such information would occur any earlier than under the status quo.
    We note that one commenter stated that potential adaptations
presented in the DERA Memorandum are ``neither cost-free nor viable,''
\865\ and we recognize that the amended filing deadline may make a
minority of campaigns more costly, including as a result of the
adaptations. Similarly, we acknowledge that there would be costs, and
reduced benefits, to the extent activism is reduced as a result of the
final rules. However, we do not expect a substantial reduction in the
extent of activism as historical evidence suggests most campaigns would
not be impacted by the amended filing deadline.
---------------------------------------------------------------------------

    \865\ See letter from EIM IV (also stating that potential
adaptations ``would fundamentally alter how an activist assembles
its exposure to a given company in ways that would impair the
ability of an activist to pursue a particular campaign'').
---------------------------------------------------------------------------

ii. Compliance Costs
    A shortened initial Schedule 13D filing deadline may increase
compliance costs for beneficial owners who have an obligation to file
an initial Schedule 13D under the final rules. For example, beneficial
owners who regularly make significant stock investments could incur a
one-time cost to update their information technology systems to monitor
securities transactions and generate alerts and reports in time to
accommodate the rule change. They may also need to allocate more
resources on an ongoing basis to monitor their holdings in accordance
with the amended deadline so that they can meet their obligation to
file an initial Schedule 13D. In addition, external service providers
and advisers may charge higher fees for expedited processing and/or for
weekend services, which may be more frequently required under the final
amendments. Compliance costs may increase both in the context of non-
corporate-action filings and corporate action filings. The compliance
costs could be more significant for some filers (e.g., those with more
complex affiliate structures or investment strategies) than others.
    Commenters identified additional compliance challenges that may
arise as a result of the shortened initial Schedule 13D deadline. For
example, some commenters noted aspects of the initial Schedule 13D
filing process that have not become simplified as a result of
technological advancements, including nuanced legal analysis, drafting
of narratives, and certain data collection, determinations, and
computations that are accomplished manually or with reliance on
external resources.\866\ Others noted issues for first-time filers that
may be hard to resolve within five business days, such as the
processing time (including delays) for receiving EDGAR filing
codes,\867\ or stated that compliance burdens would be greater for non-
institutional filers or smaller institutional filers lacking certain
infrastructure or personnel,\868\ and that the accelerated filing
deadline may require an increased reliance on third parties.\869\
---------------------------------------------------------------------------

    \866\ See letters from ABA; Dodge & Cox; IAA; MSBA; STB.
    \867\ See letters from MSBA; STB.
    \868\ See letters from A. Day; E. Fraser; Perkins Coie.
    \869\ See letter from E. Fraser.
---------------------------------------------------------------------------

    We acknowledge that not all aspects of preparing and submitting an
initial Schedule 13D have been simplified by technology, and that the
amended filing deadline may increase certain compliance costs given the
need to complete these tasks in a shorter timeframe. We also
acknowledge that the incremental compliance burdens may be greater for
smaller, less experienced filers than for other filers due to their
more limited internal resources and expertise in preparing filings. In
particular, these filers are less likely to have operational systems
and processes in place to facilitate compliance with the revised filing
deadline. They are also likely to be more reliant on external advisers
and service providers, who may charge higher fees for expedited
processing and/or for weekend services.
2. Shortened Schedule 13G Filing Deadlines
    The final amendments to Rules 13d-1(b), (c), and (d) and 13d-2(b),
(c), and (d) shorten the filing deadlines for both initial and amended
Schedule 13G filings as well as, in certain cases, increasing their
frequency.\870\ As discussed in more detail in section II.A.2 above,
under the final amendments, QIIs and Exempt Investors will be required
to file an initial Schedule 13G within 45 days after calendar quarter-
end if, as of the end of that quarter, their beneficial ownership
exceeds five percent (rather than the current deadline of 45 days after
the calendar year-end at which beneficial ownership exceeds five
percent). The filing obligation for QIIs will be accelerated from 10
days to five business days after month-end if, as of such month-end,
their beneficial ownership exceeds 10 percent. Passive Investors will
be required to file an initial Schedule 13G within five business days
(rather than the current deadline of 10 days) after crossing the five
percent beneficial ownership threshold. All three filer types will be
required to file a Schedule 13G amendment within 45 calendar days after
any calendar quarter-end at which there is a material change in the
information previously reported in a Schedule 13G (rather than the
current deadline of 45 days after any calendar year-end at which there
are ``any changes'' in the information previously reported). For QIIs
and Passive Investors, the requirement to file a Schedule 13G amendment
upon exceeding 10 percent beneficial ownership or an increase or
decrease in beneficial ownership thereafter of more than five percent
will be accelerated. Specifically, QIIs will be required to file an
amendment five business days (rather than the current deadline of 10
days) after any month-end at which beneficial ownership meets one of
these thresholds, while Passive Investors will be required to file an
amendment within two business days (rather than the current deadline of
``promptly'') after beneficial ownership meets one of these thresholds.
---------------------------------------------------------------------------

    \870\ For the purpose of this economic analysis, we refer to an
``increased frequency'' of Schedule 13G filings under the final
amendments because the frequency of Schedule 13G filings is
generally expected to increase overall. However, the frequency of
filings will not necessarily increase in all cases. If there is only
one material change (or no such change) in the information reported
in a Schedule 13G filing over the course of a year, then the
reporting frequency generally will be the same as under the current
regime.
---------------------------------------------------------------------------

A. Benefits

    Academic research has provided evidence that at least some Schedule
13G filings contain value-relevant information that is not already
incorporated in market prices, as discussed in more detail below.\871\
The acceleration of such Schedule 13G filings under the final rules may
thus benefit market participants. Specifically,

investors and issuers, with earlier access to the information and an
updated stock price, may be able to make better-informed investment and
resource allocation decisions. At an economy level, this better-
informed decision-making may improve the efficiency of resource
allocation overall.
---------------------------------------------------------------------------

    \871\ See infra notes 883-885 and accompanying text.
---------------------------------------------------------------------------

    Some commenters agreed that the proposed acceleration of beneficial
ownership reporting as a whole, including the proposed revisions to
Schedule 13G filing deadlines, would make material information
available to all investors in a more timely manner.\872\ Some
commenters also specified reasons that the information in Schedule 13G
filings in particular is important to investors and issuers.\873\ For
example, one commenter stated that there are ``significant risks and
impacts of large holdings on investors irrespective of the stated
intentions of a large position holder,'' such as the risk of stock
price volatility if a large shareholding were to be sold.\874\ Another
commenter stated that the disclosure of beneficial owners in Schedule
13G filings, together with Schedule 13D filings, ``help inform the
education and advocacy efforts of those with a stake in . . . important
votes.'' \875\ Other commenters indicated that information about all
large shareholders facilitates issuer efforts to identify and engage
with these shareholders in order to elicit their views and ideas.\876\
---------------------------------------------------------------------------

    \872\ See letters from ABA; AFREF; EEI; FedEx; Freeport-McMoRan;
Nasdaq.
    \873\ See letters from AFREF; HMA I; Nasdaq; SCG.
    \874\ See letter from HMA I.
    \875\ See letter from AFREF.
    \876\ See letters from Nasdaq; SCG.
---------------------------------------------------------------------------

    On the other hand, some commenters stated that they do not believe
there is a ``harmful'' information asymmetry or other problem that
justifies an acceleration of the Schedule 13G deadlines,\877\ or
indicated that the earlier disclosure of the information in Schedule
13G filings would be of limited, if any, benefit.\878\ For example,
some indicated that the concerns that could justify accelerating
Schedule 13D filings would not equally apply to Schedule 13G
filings.\879\ Some commenters stated that the information in Schedule
13G filings is unlikely to be material because of the passive intent of
the filers \880\ or because of existing disclosures (such as Schedule
13F or Form N-PORT \881\ for some QIIs, or registration statements for
some Exempt Investors) that provide similar information.\882\
---------------------------------------------------------------------------

    \877\ See letters from ICI I; MFA; MSBA; SIFMA; SIFMA AMG; SSC;
TIAA; TRP.
    \878\ See letters from ABA; MFA; TRP.
    \879\ See letters from ICI I; MSBA; SIFMA; TIAA.
    \880\ See letters from ABA; MFA; MSBA; STB.
    \881\ Though a commenter referenced Form N-Q, we note that this
form has been rescinded and similar information is now disclosed in
Form N-PORT.
    \882\ See letters from ABA; MFA; SIFMA AMG.
---------------------------------------------------------------------------

    Given commenters' statements regarding a lack of material
information in Schedule 13G filings and limited benefits from the
acceleration of these filings, we reconsidered the evidence on the
market impact of these filings. Initial Schedule 13G filings by hedge
funds in particular have consistently been associated by multiple
academic studies with, on average, a statistically significant positive
stock price reaction around the filing date.\883\ Similarly, one study
found that all initial Schedule 13G filings that are not submitted 45
days after the end of the calendar year (i.e., generally Schedule 13G
filings by Passive Investors, including some hedge funds, which are
required to be made within 10 days of the trigger date) are associated,
on average, with a statistically significant stock market
reaction.\884\ This study also finds that initial Schedule 13G filings
submitted 45 days after the end of the calendar year (i.e., generally
Schedule 13G filings by QIIs and Exempt Investors, which include some
hedge funds) are not associated with a meaningful stock market reaction
on average.\885\ It is unclear whether this finding with respect to
post-year-end filings, in contrast to the findings with respect to
other Schedule 13G filings, is attributable to the different types of
persons filing on a calendar-year-end filing schedule or by an effect
of the year-end filing schedule itself on the significance of the
information to the market by the time it is reported on Schedule 13G.
Overall, this and other studies provide support for commenters'
assertions that at least some Schedule 13G filings contain market-
moving information.
---------------------------------------------------------------------------

    \883\ See, e.g., Albuquerque et al. 2022 Study (finding that
Schedule 13G filings by hedge funds are associated with an average
cumulative abnormal return of about 1.2% over the period from 30
days before to 10 days after the filing date); Alex Edmans et al.,
The Effect of Liquidity on Governance, 26 Rev. Fin. Stud. 1443
(2013) (``Edmans et al. 2013 Study'') (finding that Schedule 13G
filings by hedge funds are associated with an average cumulative
abnormal return of 0.8% over the period from one day before to one
day after the filing date); and Christopher Clifford, Value Creation
or Destruction? Hedge Funds as Shareholder Activists, 14 J. Corp.
Fin. 323 (2008) (``Clifford 2008 Study'') (finding that Schedule 13G
filings by hedge funds are associated with an average cumulative
abnormal return of 1.6% over the period from two days before to two
days after the filing date, and that there are similar positive
cumulative abnormal returns around the filing date for filings
submitted within 10 days of the trigger date and for all Schedule
13G filings by hedge funds regardless of the timing of the filing).
These researchers vary in their interpretation of these results,
with some attributing the positive returns to a governance role of
the filers (i.e., a contribution to the promotion of corporate
accountability) and others asserting that the positive return may be
a reflection of the market's view of the filers' stock-picking
ability. There may be further potential explanations for the market
reaction. For example, the presence of certain significant
shareholders (e.g., an investor known to pursue activist strategies
at some of the issuers in which they invest, or an institutional
investor known to have voted in the past in favor of changes
proposed by activists) could provide information about the
likelihood of a future activist campaign or the likelihood of
success of such a campaign. See, e.g., Kedia et al. 2021 Study
(finding that the composition of institutional ownership of an
issuer is associated with both the likelihood of being targeted by
an activist campaign and the outcomes of such campaigns).
    \884\ See Albuquerque et al. 2022 Study (finding, in a sample of
all Schedule 13G filings from 1996 to 2016, that Schedule 13G
filings that are not made 45 days after calendar year-end, but are
instead made on any other day, experience a statistically
significant cumulative abnormal return of 0.59% around the filing
date).
    \885\ See Albuquerque et al. 2022 Study (finding, in sample of
all Schedule 13G filings from 1996 to 2016, that the cumulative
abnormal return around the filing date for all such filings made 45
days after calendar year-end is not distinguishable from zero).
---------------------------------------------------------------------------

    Some commenters stated that any benefits of the proposed filing
deadlines would be limited due to an increase in inaccurate filings as
a result of the accelerated preparation of filings or due to a risk of
information overload from the increased number of filings.\886\ The
filing deadlines we are adopting in the final amendments for Schedule
13G require, in many cases, less frequent filing, and provide longer
windows prior to filing, than the proposed filing deadlines.
Accordingly, the adopted filing deadlines, as compared to the proposed
filing deadlines, may mitigate the risk of inaccurate filings or
information overload suggested by commenters.
---------------------------------------------------------------------------

    \886\ See letters from MFA; NVCA; STB.
---------------------------------------------------------------------------

    One commenter stated that the Commission did not address ``which
investors stand to benefit'' from the proposed accelerated filing
deadlines, and indicated that, while retail and long-term investors
would not benefit, ``sophisticated short-term professional investors''
would profit at the expense of the investors filing Schedule 13G.\887\
While we are unable to predict with a reasonable degree of confidence
which specific investors or categories of investors are likely to
benefit most from the acceleration of disclosures, we note that the
revisions to the final deadlines relative to the proposed amendments in
many cases should mitigate the commenter's concern that the benefits

would accrue primarily to short-term traders at the expense of Schedule
13G filers.\888\ In particular, as discussed below, the lower frequency
of disclosure and increased filing windows being adopted, relative to
the proposed amendments, should reduce the risk that parties (including
short-term professional investors) profit by anticipating and ``front-
running'' the trades of the filer.\889\ We also acknowledge that the
benefits are likely to vary across filings, across filer types, and
across issuers. For example, there may be lower benefits in cases where
alternate, existing disclosures provide similar information on a
similar timeframe, such as with respect to QIIs that also file Form
13F.
---------------------------------------------------------------------------

    \887\ See letter from TRP.
    \888\ See letter from TRP.
    \889\ See section IV.C.2.b below for further discussion of
``front-running'' risks.
---------------------------------------------------------------------------

    The economic analysis in the Proposing Release also indicated that
the proposed frequency of Schedule 13G filings could have particular
informational benefits resolving a concern whereby, currently, QIIs and
Exempt Investors may avoid beneficial ownership reporting by selling
down their positions by the end of the calendar year.\890\ Some
commenters indicated that statements in the Proposing Release that
investors may currently avoid beneficial ownership reporting in this
way were unsubstantiated or inconsistent with their experience.\891\ We
acknowledge that it is unclear whether and to what extent investors
sell down securities holdings before calendar year-end to avoid
beneficial ownership reporting, as well as what motives would be likely
to drive such behavior, particularly given that many filers would
likely be required to disclose such holdings before year-end on other
forms and schedules in any event. We are unable to undertake a
systematic quantitative analysis of such behavior because we can only
observe holdings that are sold before year-end when they are reported
on Form 13F or through other disclosures, which are precisely the
situations that present less of a concern with respect to the lack of a
Schedule 13G filing during that period. We also acknowledge that it is
unclear how material any information about the filers' beneficial
ownership may be in these cases in light of the short-term or transient
nature of this ownership and the academic research discussed
above.\892\ That said, by requiring disclosure at the end of a quarter,
the final amendments may reduce the opportunities to avoid a Schedule
13G filing, which could elicit incremental value-relevant information
to the benefit of market participants as more filings are disclosed.
---------------------------------------------------------------------------

    \890\ See Proposing Release at 13882.
    \891\ See letters from ICI I; SIFMA; TIAA.
    \892\ See supra note 885 regarding research finding no
significant stock market return, on average, around year-end filings
of Schedule 13G. See also supra note 883 regarding potential reasons
for a significant stock market reaction around some Schedule 13G
filings, all of which would be weakened in the case of a short-term
or transient holding.
---------------------------------------------------------------------------

b. Costs
    All Schedule 13G filers may incur one-time compliance costs to
update their systems and processes to comply with the revised filing
deadlines, such as updating any information technology systems used to
monitor beneficial ownership and generate associated alerts and
reports. All such filers are also likely to incur incremental ongoing
compliance costs to review beneficial ownership on a more frequent
basis and potentially (to the extent that there are material changes in
the information previously reported) prepare more frequent Schedule 13G
filings. These ongoing costs may include costs associated with
gathering information from multiple sources, determining whether
changes are material, and, if changes are deemed to be material,
drafting a filing, validating its content, obtaining signatures,
processing the filing into the required format (via internal personnel
or an external EDGAR filing agent), and submitting it. In addition,
filing agents (and potentially other external advisers) may charge
higher fees for expedited processing and/or for weekend services, which
may be more frequently required (particularly for Passive Investors)
under the accelerated deadlines.
    Some commenters, although not expressly distinguishing between the
Schedule 13D and Schedule 13G requirements, stated that they did not
expect the proposed accelerated deadlines to be overly burdensome on
filers,\893\ with one stating that filers are ``highly likely to be
sophisticated and experienced investors with the proper resources to
file promptly.'' \894\
---------------------------------------------------------------------------

    \893\ See letters from Anonymous 10; Freeport-McMoRan; J.
Soucie.
    \894\ See letter from Freeport-McMoRan.
---------------------------------------------------------------------------

    Other commenters stated that they expected significant increases in
compliance burdens from the proposed Schedule 13G filing deadlines
which were not sufficiently accounted for in the Proposing Release,
citing, for example, the significant increase in the required frequency
of reporting and of monitoring holdings; \895\ that many investors must
file Schedule 13G for many different issuers; \896\ and that filers may
not already have the required systems in place or have access to the
required infrastructure and personnel to comply.\897\
---------------------------------------------------------------------------

    \895\ See letters from ABA; ICI I; MFA; SIFMA AMG.
    \896\ See letters from IAA; ICI I; MFA.
    \897\ See letters from ICI I; SIFMA; SIFMA AMG.
---------------------------------------------------------------------------

    Some commenters also noted various practical challenges that would
make it difficult to complete all of the required steps to submit an
accurate Schedule 13G within the proposed filing windows (i.e., five
business days, five calendar days, or one business day), such as steps
that require manual work or cannot be expedited through the use of
technology; \898\ constraints with respect to the availability and
system capacity of any outside staff or services that are used; \899\
issues related to the necessary involvement of multiple parties,
entities, or signatories; \900\ and a lack of sufficient time to
validate the content of the filing.\901\ Some commenters noted that
first-time, non-institutional, or smaller filers may face particular
challenges in complying with the proposed filing deadlines.\902\
---------------------------------------------------------------------------

    \898\ See letters from E. Fraser; IAA; MSBA; STB; TIAA.
    \899\ See letters from MSBA; STB.
    \900\ See letters from MSBA; SSC; STB.
    \901\ See letters from ABA; MFA; SSC; STB.
    \902\ See letters from E. Fraser; ICI I; MFA; MSBA; STB.
---------------------------------------------------------------------------

    In response to the concerns about compliance costs and challenges
related to the proposed amendments, we note that, for QIIs and Exempt
Investors, the final amendments require a lower frequency of initial
and amended filings (generally quarterly as opposed to monthly) and
allow more time to prepare filings (45 calendar days as opposed to five
business days) as compared to the proposed amendments. Many of these
filers (about 84 percent of QIIs and 10 percent of Exempt Investors in
2022, per Table 4 above) already file Form 13F on a similar schedule.
As indicated by some commenters,\903\ filers may thus be better
equipped to assess their holdings and (potentially) prepare Schedule
13G filings on a quarterly schedule. Further, under the final
amendments, QIIs should be able to monitor beneficial ownership that
could exceed 10 percent of a covered class (or, thereafter, change by
more than five percent) on a monthly basis, as they do now, rather than
daily, as may have been required under the proposed amendments. Passive
Investors will also

be permitted to submit most Schedule 13G amendments on a quarterly
cadence (rather than monthly, as proposed), with 45 calendar days
(rather than five business days, as proposed) after the end of the
period to submit the filings, though their initial filings will be
required within five business days after the trigger date (rather than
five calendar days, as proposed). They will also be permitted to file a
Schedule 13G amendment within two business days of their holdings
exceeding 10 percent of a covered class (or, thereafter, for changes of
five percent or more), rather than one business day, as proposed.
Finally, to provide time to implement the new Schedule 13G filing
deadlines, compliance is not required until September 30, 2024.
---------------------------------------------------------------------------

    \903\ See letters from IAA; ICI I; SIFMA; SIFMA AMG; SSC; TRP.
---------------------------------------------------------------------------

    We acknowledge that the incremental compliance burdens of the
revised deadlines may be greater for smaller, less experienced filers
than for other filers due to their more limited internal resources and
expertise in preparing filings. In particular, these filers are less
likely to have operational systems and processes in place that would
facilitate compliance with the revised filing deadlines. The compliance
burdens may be greatest for smaller, less experienced Passive Investors
when filing an initial Schedule 13G, as these investors may, for
example, be most likely to incur fees for expedited processing and/or
for weekend services given the revised deadline for their filings (five
business days after the trigger date) and their likely reliance on
external advisors and service providers. That said, all of the changes
relative to the proposed amendments should at least partially mitigate
commenters' concerns about compliance costs and challenges discussed
above, including for first-time, non-institutional, or smaller filers.
For example, under the Proposed Amendments, Schedule 13G filers could
have been required to file as many as 12 amendments per year under the
month-end filing deadline in Rule 13d-2(b). Under the final amendments,
however, Schedule 13G filers' burdens may be significantly lower, as
the quarter-end filing deadline in amended Rule 13d-2(b) results in a
maximum of four amendments per year pursuant to that rule.
    We also acknowledge that the accelerated Schedule 13G filing
deadlines may give rise to incremental free-riding and front-running
risks. That is, there is a risk that more frequent filings with a
shorter filing window may reveal a filer's proprietary information or
trading strategies to other market participants, thus allowing those
participants to ``free ride'' by copying the filer's strategies without
incurring the same cost as the fund to research, identify and devise
profitable strategies.\904\ Further, more frequent filings with a
shorter filing window could also allow other investors to better
anticipate trades of the filers. These other investors may attempt to
``front run'' or trade ahead of filers to capture any impact on the
prices of traded securities.\905\ Any increase in free-riding and
front-running may ultimately diminish a filer's investment returns and
thus harm the filer and any clients or investors of the filer. Such
risks may also reduce incentives to engage in research and analysis
about potential shareholdings or to pursue some investment
opportunities, which may reduce market efficiency and the efficient
allocation of capital to its most productive uses. Any related
reduction in the number of significant shareholders of issuers may also
reduce the operational efficiency of affected issuers, due to the role
large shareholders may play in the promoting of corporate
accountability either through direct monitoring of management or the
threat of exiting an investment.\906\
---------------------------------------------------------------------------

    \904\ See, e.g., Marno Verbeek & Yu Wang, Better than the
Original? The Relative Success of Copycat Funds, 37 J. Bank. Fin.
3454 (2013) (studying potential free-riding behavior and finding
that some funds duplicate the disclosed asset holdings of actively
managed mutual funds, and that free-riding on the portfolios
disclosed by ``past winning funds'' generates significantly better
performance net of trading costs and expenses than the vast majority
of mutual funds).
    \905\ See, e.g., Sophie Shive & Hayong Yun, Are Mutual Funds
Sitting Ducks? 107 J. Fin. Econ. 220 (2013) (studying potential
front-running behavior and finding that hedge funds trade on
expected mutual fund flows, and that this type of anticipatory
trading is stronger after 2004 when quarterly portfolio disclosure
was required of mutual funds).
    \906\ See, e.g., Edmans et al. 2013 Study (finding that initial
Schedule 13G filings are followed by improvements in operating
performance and associating this relation with the role of
significant shareholders); see also Alex Edmans & Clifford
Holderness, Blockholders: A Survey of Theory and Evidence, 1 Handb.
Econ. Corp. Gov. 541 (2017); Andrei Shleifer & Robert Vishny, Large
Shareholders and Corporate Control, 94 J. Pol. Econ. 461 (1986).
---------------------------------------------------------------------------

    Some commenters disagreed with the Commission's statement in the
Proposing Release that the risks of front-running and free-riding
associated with the proposed Schedule 13G filing deadlines were likely
to be low,\907\ raising concerns that both the proposed frequency of
reporting and the proposed filing windows (i.e., five business days,
five calendar days, or one business day) would lead to significant
risks of revealing proprietary trading strategies and, because
disclosure may be required while trades or trading strategies are still
in progress, of facilitating predatory trading.\908\ We believe that
the revised deadlines in the final amendments relative to the proposed
amendments should reduce these risks, particularly for filers that are
already reporting holdings on a similar timeframe on Form 13F. That
said, confidential treatment requests for Form 13F filings that may
allow some filers to defer disclosing some or all of their holdings on
that form \909\ are not available for Schedule 13G filings, so even
Form 13F filers and their clients may bear some additional risk of
free-riding and front-running when filing Schedule 13G.
---------------------------------------------------------------------------

    \907\ See Proposing Release at 13886.
    \908\ For comments regarding the proposed frequency of
reporting, see letters from Dodge & Cox; IAA; ICI I; SSC; TIAA; TRP.
For comments regarding the proposed filing windows, see letters from
Dodge & Cox; IAA; TRP.
    \909\ For example, information about holdings in reportable
securities that would reveal a filer's ongoing program of
acquisition or disposition of a reportable security, open risk
arbitrage positions, and investment strategies that utilize block
positioning may be eligible for confidential treatment with respect
to Form 13F for the period of time necessary to effectuate the
filer's strategy. See Section 13(f) Confidential Treatment Requests,
letter from staff of Division of Investment Management (June 17,
1998), available at https://www.sec.gov/investment/divisionsinvestmentguidance13fpt2htm.
---------------------------------------------------------------------------

    There could also be negative effects on competition in the market
for investment management services from accelerated Schedule 13G filing
deadlines, as noted by some commenters.\910\ In particular, the free-
riding and front-running risks discussed above could reduce incentives
for investment managers to construct proprietary investment strategies,
and any increased compliance burdens may increase barriers to entry.
However, for the reasons discussed above, we expect such risks and
burdens, and therefore any resulting effect on competition, to be
mitigated under the revised filing deadlines as compared to the
proposed filing deadlines.
---------------------------------------------------------------------------

    \910\ See letters from MFA (stating that the proposed Schedule
13G filing requirements would ``create more substantial barriers to
entry, thereby discouraging new potential entrants to the investment
management market''); TIAA (stating that the proposed Schedule 13G
filing requirements would put ``investment advisers--particularly
active advisers--at a real competitive disadvantage'' due to
``competitors attempting to copy or trade ahead of QIIs' investment
strategies and engage in other manipulative trading practices'').
---------------------------------------------------------------------------

3. Other Amendments
a. Revised Filing Deadline for Schedule 13D Amendments
    The final amendment to Rule 13d-2(a) revises the filing deadline
for amendments to Schedule 13D to two business days after the date on
which a material change occurs, as compared to

the baseline requirement that amendments be filed ``promptly'' after
such date.
    We believe that replacing the ``promptly'' requirement with a
bright-line, two-business day requirement will provide greater clarity
as to when material changes are to be disclosed, which could reduce any
current filer confusion. In addition, to the extent that the revised
deadline results in earlier disclosure of some Schedule 13D amendments
than under the baseline, this deadline may allow the information to be
incorporated into market prices earlier, allow market participants to
make better-informed investment decisions, and enhance the efficiency
of resource allocation at the economy level. For those filers that
would not otherwise have filed their amendments within two business
days after a material change, the revised deadline for Schedule 13D
amendments may somewhat increase compliance costs.
    In particular, these filers may bear greater costs due to the need
to complete the necessary tasks (including gathering information from
multiple sources, determining whether changes are material, drafting
and validating the content of the filing, obtaining signatures,
processing the filing into the required format via internal personnel
or an external EDGAR filing agent, and submitting the filing) more
quickly. In addition, filing agents (and potentially other external
advisers) may charge higher fees for expedited processing and/or for
weekend services, which may be more frequently required under the
revised deadline. There may also be compliance challenges involved in
accessing external advisers or coordinating among multiple signatories
or parties in a short timeframe. Any such costs and challenges are
likely to be more burdensome for small, non-institutional, and less
experienced filers with fewer in-house resources. In particular, these
filers are less likely to have operational systems and processes in
place that would facilitate compliance with the revised filing deadline
and are likely to be more reliant on external advisers and service
providers. The compliance costs and challenges are also likely to be
greater for institutional filers with more complex business
organizations, including those with sub-advisory relationships common
in the investment management industry.
    One commenter asserted that the ``promptly'' standard under Rule
13d-2(a) has ``generally been understood'' to mean within two business
days.\911\ Accordingly both the benefits and costs of the revised
deadline for Schedule 13D amendments will likely be limited in the case
of Schedule 13D amendments that would have been made within two
business days even in the absence of the final amendments. Some
commenters questioned whether a revised deadline for Schedule 13D
amendments would materially improve the information available to
investors and other market participants,\912\ with two commenters
questioning the benefits with respect to specific subsets of filers
\913\ and one stating that ``there have been very few, if any, abuses
associated with the current `promptly' regime and . . . it has worked
well and effectively.'' \914\ We acknowledge that the extent of any
benefits of the revised deadline are likely to vary across filers,
types of filings, and issuers, with greater benefits associated with
those Schedule 13D amendments that have more of a market impact (e.g.,
because they report a more significant change in holdings or plans) and
that also would otherwise have been filed a greater number of days
after the material change.
---------------------------------------------------------------------------

    \911\ See letter from EIM I.
    \912\ See letters from AIMA; NVCA; STB. One of these commenters
specified that, in the context of venture capital funds making
distributions of shares to their limited partners, a one-business
day filing deadline would risk ``erroneously signaling a sell-off to
the market,'' harming liquidity and market efficiency, particularly
for thinly traded companies that are more likely to be dominated by
retail investors. See letter from NVCA.
    \913\ See letters from NVCA; STB.
    \914\ See letter from AIMA.
---------------------------------------------------------------------------

    The proposed amendments would have required amendments to Schedule
13D to be filed one business day after the date on which a material
change occurs. Many commenters raised concerns about compliance
challenges and costs associated with the limited time that would be
available to consider the need for, prepare, and submit a filing under
this proposed deadline.\915\ While some of the commenters raising such
concerns indicated that more than two days may be required to complete
the required tasks,\916\ some identified a two business day deadline as
a more practicable period for compliance.\917\ We agree with these
commenters and therefore expect that the revision of this filing
deadline to two business days, rather than one business day, after the
date on which a material change occurs will mitigate some concerns
about difficulties in complying with the amended deadline.
---------------------------------------------------------------------------

    \915\ See letters from ABA; AIMA; IAA; ICI I; EEI; EIM I; Hoak;
MFA; MSBA; NVCA; Perkins Coie; STB.
    \916\ See letters from AIMA; ICI I; STB.
    \917\ See letters from IAA; EIM I; Hoak; NVCA; Perkins Coie.
---------------------------------------------------------------------------

b. Amendments to Item 6 of Schedule 13D
    The final amendment to Item 6 of Schedule 13D makes explicit that
cash-settled derivative securities (including cash-settled SBS) that
use the issuer's securities as a reference security are included among
the types of contracts, arrangements, understandings, and relationships
that must be disclosed under that Item. This final amendment will not
change the treatment of derivative securities for the purpose of
determining beneficial ownership. To the extent that this final
amendment elicits additional disclosure that may not otherwise have
been provided, investors and the market may benefit from a more
complete understanding of all of a filer's interests in an issuer. In
particular, this final amendment may provide more information about the
overall economic exposure of the filer to the issuer, which may be
associated with the actions the filer may be expected to take and thus
the shareholder value impact associated with the filing.\918\ However,
filers could incur additional compliance costs to the extent that they
have not already been providing such disclosure. In particular, filers
may need to expend additional internal resources and/or consult
external advisors to draft the required disclosures and to monitor
interests in cash-settled derivative securities in order to report any
material changes. In section V.C below we estimate for purposes of the
Paperwork Reduction Act of 1995 (``PRA'') that this final amendment
will impose, on average, an additional 0.1 burden hour per filing.
---------------------------------------------------------------------------

    \918\ See, e.g., Lilienfeld-Toal & Schnitzler 2020 Study
(suggesting that the percentage of beneficial ownership reported in
Schedule 13D is an indicator of the types of actions the filer may
be expected to take and finding that this percentage is a
statistically significant predictor of the announcement returns
around the filing date).
---------------------------------------------------------------------------

    One commenter indicated that the inclusion of SBS in Item 6 would
not provide incremental benefits beyond other disclosures, including
disclosures that are under consideration in a different proposed
rulemaking.\919\ We continue to believe that, given current disclosure
requirements, the final amendment to Item 6 may elicit additional
disclosure that may not otherwise have been provided. Further, to the
extent some of this information may be made public in other documents,
investors may benefit from being able to review all of a filer's
interests in an issuer in a single location.
---------------------------------------------------------------------------

    \919\ See letter from IAA; see also Schedule 10B Proposal.

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

c. Structured Data Requirement for Schedules 13D and 13G
    The final rules require all disclosures reported on Schedules 13D
and 13G other than the exhibits to be submitted using 13D/G-specific
XML. We continue to believe, as discussed in the Proposing Release,
that requiring the disclosures in a structured, machine-readable data
language will improve the public dissemination and accessibility of the
information in these disclosures by facilitating its extraction and
analysis. Some commenters agreed that a structured data requirement
would enhance the benefits of the disclosures by making the information
easier to access and analyze.\920\
---------------------------------------------------------------------------

    \920\ See, e.g., letters from ICI I; M. Slavens.
---------------------------------------------------------------------------

    We expect that the structured data requirement will impose some
incremental compliance costs on filers. In section V.C below we
estimate for purposes of the PRA that these requirements will impose,
on average, an additional 0.5 burden hour per filing. One commenter
expressed concern that structured data requirement would be unduly
burdensome for small beneficial owners.\921\ Filers will have the
option of using a fillable web form that converts inputted disclosures
into 13D/G-specific XML, which should limit the incremental burden on
filers that elect to use this approach. In particular, we expect that
the availability of a fillable web form should, due to its ease of use,
mitigate the concern raised by a commenter that the structured data
requirement would be unduly burdensome for small beneficial owners.
Filers who instead choose to submit filings directly in 13D/G-specific
XML may bear implementation costs of establishing related compliance
processes and expertise and/or, as one commenter indicated, ongoing
costs of working with third-party vendors.\922\ Making submissions
directly in 13D/G-specific XML is an approach that may be more likely
to be taken by filers expecting to submit larger numbers of Schedule
13D and Schedule 13G filings, such as QIIs. We expect the costs of
submitting Schedule 13D/G directly in 13D/G-specific XML will vary
based on prior experience with encoding and transmitting structured
disclosures. Per Table 4 in section IV.B.3.b above, 84 percent of the
QIIs filing initial Schedule 13Gs in 2022 were also Schedule 13F
filers, and thus have such experience.
---------------------------------------------------------------------------

    \921\ See letter from A. Day.
    \922\ See letter from ICI I.
---------------------------------------------------------------------------

    One commenter, while supporting the proposed structured data
requirement, raised concerns about the additional time necessary to
comply with the structured data requirement within the shortened filing
windows that were proposed.\923\ We acknowledge that the structured
data requirement will increase the amount of time needed to submit
filings. We believe the extended time permitted to file Schedule 13D
and Schedule 13G amendments, and, for QIIs and Exempt Investors, to
file initial Schedule 13G filings under the final rules as compared to
the proposed deadlines should mitigate some of the concerns raised by
this commenter about the time required to comply with the structured
data requirement.
---------------------------------------------------------------------------

    \923\ Id.
---------------------------------------------------------------------------

d. Amendments to Regulation S-T
    The final amendments to Regulation S-T revise the time by which
Schedule 13D and 13G filings must be submitted in order to be deemed to
have been filed on a given business day from 5:30 p.m. to 10 p.m.
Eastern Standard Time or Eastern Daylight Saving Time, whichever is
currently in effect, on that day. This change may, on the margin,
mitigate the incremental compliance challenges and costs associated
with the revised filing deadlines, particularly for filers located in a
different time zone than the Commission's principal office or those
operating in multiple time zones. Some commenters agreed that these
extended filing hours would benefit filers in light of the shortened
filing deadlines.\924\
---------------------------------------------------------------------------

    \924\ See letters from IAA; ICI I.
---------------------------------------------------------------------------

    The final amendments to Regulation S-T also make temporary hardship
exemptions under Rule 201 of Regulation S-T unavailable with respect to
Schedule 13D and 13G filings. We expect this change to have no
meaningful economic effects as filers will be able to request a filing
date adjustment under existing Rule 13(b) of Regulation S-T under
similar circumstances as a temporary hardship exemption.\925\
---------------------------------------------------------------------------

    \925\ Commission staff may grant the request if it appears that
the adjustment is appropriate and consistent with the public
interest and the protection of investors. See Rule 13(b) of
Regulation S-T.
---------------------------------------------------------------------------

D. Reasonable Alternatives to the Final Rules

    We considered many alternatives to the final rules. Some of these
are discussed earlier in this release. In this section, we present
certain significant alternatives and a discussion of their benefits and
costs relative to the final rules.
1. Alternative Filing Deadlines
    We considered both earlier and later (and more and less frequent)
filing deadlines relative to those that we are adopting. In general,
earlier (or more frequent) filing deadlines may have increased the
benefits, but also the costs, of the amendments, while later (or less
frequent) deadlines would have decreased the costs but also the
benefits of the amendments. The economic implications of some
alternative filing deadlines (namely, those that were proposed but not
adopted) are discussed in more detail above.
    With respect to the initial Schedule 13D filing deadline, which
will be five business days after the trigger date, we also considered a
deadline of greater or fewer days after the trigger date. Additionally,
we considered deadlines stated in calendar days as opposed to business
days, which, when applied to the same number of days (i.e., five
calendar days), would have the effect of decreasing the number of days
a person would have to file an initial Schedule 13D in cases where
weekends or holidays fall in the middle of the filing window. In
general, a shorter deadline and the resulting earlier disclosures may
have increased the benefits discussed above for those non-corporate-
action filings that would not already be considered timely with respect
to such shorter deadline. A shorter deadline may also have further
reduced the risk discussed above of shareholders selling to informed
bystanders prior to a Schedule 13D filing (as demonstrated in Figure 6
above), which may have further enhanced trust in markets and capital
formation.
    However, a shorter deadline may also have increased the number of
activist campaigns forgone compared to the amended filing deadlines,
due to two effects. First, a shorter deadline would mean that, given
current share accumulation patterns, there would be a greater number of
potential campaigns for which filers would have to consider whether or
not to proceed and if so, how.\926\ Second, the likelihood of adapting
may decrease if it is more difficult for filers to adapt to an even
shorter deadline than that which we are adopting. An increase in
forgone activist campaigns may have further reduced shareholder value
creation. A reduction in the pursuit of activism may also have related
negative effects on operational efficiency, market efficiency,
liquidity,

and capital formation, as discussed in the context of the adopted
deadline above.
---------------------------------------------------------------------------

    \926\ See supra Figures 2, 3a, and 3b for the percentage of
filers that have completed accumulating all, 90%, or 75%
respectively of their reported stake by each calendar day after the
trigger date.
---------------------------------------------------------------------------

    In the case of a longer deadline, the implications for the
incremental benefits and costs would have been the reverse of those for
a shorter deadline. We note that there is no clear breakpoint in either
the accumulation pattern of filers or in the abnormal trading volume
prior to Schedule 13D filings that could help to support a particular
filing deadline, including five-business day deadline we are adopting.
    A deadline expressed in calendar days would also have incremental
effects beyond a direct effect on the length of the filing window. In
particular, such a deadline would decrease the consistency in the total
number of business hours that persons would have to continue
accumulating shares and to draft and submit a filing after their
trigger date.\927\ For example, a five-calendar day deadline may
represent anywhere from two to five business days depending on the
occurrence of weekends and holidays after the trigger date. This
inconsistency may distort the campaigns that are pursued by activists
or the timing of these campaigns. For example, an activist who crosses
the five percent threshold on a Monday would generally have five
trading days from the trigger date to accumulate further shares and
potentially increase their profits prior to filing and informing the
market of their activity. In contrast, an activist who reaches the same
threshold on a Friday prior to a Federal holiday on the following
Monday would only have two trading days after the trigger date to
accumulate shares before making a Schedule 13D filing. Because
investors who reach the threshold near a weekend or holiday would thus
be at a relative disadvantage, activists may be relatively more
incentivized to pursue campaigns at issuers where liquidity conditions
(i.e., availability and ease of share purchase transactions) facilitate
crossing the five percent threshold early in a week at a lower
cost.\928\ Any effect of this kind, in turn, would have a detrimental
effect on operational efficiency at the market level by influencing
which campaigns are more likely to be pursued.
---------------------------------------------------------------------------

    \927\ See, e.g., letter from Profs. Bishop and Partnoy III
(recommending a five-business day deadline because it would be
``consistent with other regulatory and trading practices,'' and
noting that ``the unit of analysis in examining trading should be
trading days'').
    \928\ See Gantchev & Jotikasthira 2018 Study regarding the role
of institutional selling demand on the timing of Schedule 13D
trigger dates.
---------------------------------------------------------------------------

    A deadline expressed in calendar days could also increase
compliance costs, given that external service providers and advisers
may charge higher fees for weekend or holiday services, which may be
more frequently required under a deadline expressed in calendar days.
However, a deadline expressed in calendar days would increase the
consistency in the total number of calendar days that persons would
have to submit a filing. For example, five business days may represent
anywhere from seven to 10 calendar days. If a significant amount of
investment, advisory, drafting, or other activities in preparation of a
Schedule 13D filing takes place on weekends and holidays, it is
possible that this inconsistency in calendar days would advantage some
filers over others (i.e., those who are better positioned to work over
weekends and holidays versus those who are not).
    With respect to the initial Schedule 13G filing deadline for
Passive Investors, which will be five business days after the trigger
date, we also considered longer and shorter deadlines (and the use of
deadlines expressed in business as opposed to calendar days, which
would have had the effect of lengthening the deadline for the same
number of stated days). A longer deadline would have eased commenters'
concerns about the compliance costs and complications for Passive
Investors.\929\ However, researchers have found that those Schedule 13G
filings that are not made 45 days after year-end (i.e., generally
Schedule 13G filings by Passive Investors) are associated, on average,
with a statistically significant positive abnormal stock return,\930\
albeit smaller than that generally found for Schedule 13D filings.\931\
This result may imply that at least some of these disclosures contain
material information whose earlier disclosure could benefit investors
(and which may have enhanced the efficiency of resource allocation at
the economy level). A longer deadline would have reduced any such
benefits. In the case of a shorter deadline, the implications for the
incremental benefits and costs would have been the reverse of those for
a longer deadline.
---------------------------------------------------------------------------

    \929\ See, e.g., letters from IAA; MSBA.
    \930\ See supra note 884.
    \931\ See supra note 827.
---------------------------------------------------------------------------

2. Tiered Approaches
    We considered ``tiered'' approaches to the initial Schedule 13D
filing deadline, in contrast to the uniform approach to the filing
deadline being adopted. We considered, for example, maintaining the
current 10-day deadline for acquisitions of more than five percent but
no more than 10 percent of a covered class while instituting an
amended, shorter deadline in cases where beneficial ownership exceeds
10 percent. We also considered whether the deadline for the initial
Schedule 13D filing should vary based on a specified characteristic of
the issuer of the covered class, such as its market capitalization or
trading volume. Finally, we considered maintaining the 10-day deadline
for those filers that elect to ``stand still'' by not acquiring
additional beneficial ownership of the covered class once the five
percent threshold has been crossed until the corresponding Schedule 13D
is filed.
    One commenter stated that a tiered approach that would maintain a
10-day deadline for filing a Schedule 13D pertaining to beneficial
ownership in micro-, small-, and mid-capitalization issuers ``may serve
to limit the impact that reforms to Rule 13d-1(a) have on shareholder
engagement and monitoring,'' particularly at micro-, small-, and mid-
capitalization issuers where, in the commenter's view, ``such effective
engagement and monitoring is most necessary.'' \932\ Another commenter
suggested requiring persons who cross certain higher thresholds (e.g.,
a 10 percent beneficial ownership threshold) or who accumulate certain
amounts after crossing the five percent threshold (e.g., an additional
three percent) file their initial Schedule 13D on the proposed
accelerated timeline, but ``allowing investors who trigger Schedule 13D
filings for more technical reasons and who are not accumulating stock
in connection with a potential activist engagement (e.g., proxy
contests or intended take-private activity) to continue filing under
the current regime.'' \933\ This commenter also supported maintaining
the 10-day deadline for ``an investor who crosses the 5% threshold but
acquires no additional stock after the initial crossing transaction,''
stating that ``there is no informational disadvantage for existing
investors in such circumstances'' and that in some cases there is
``earlier disclosure by the issuer relating to the [crossing]
transaction'' and therefore ``little purpose [is] served by
accelerating the timeline for the investor to prepare its disclosure.''
\934\
---------------------------------------------------------------------------

    \932\ See letter from ICM.
    \933\ See letter from STB.
    \934\ Id.
---------------------------------------------------------------------------

    We acknowledge that there is significant heterogeneity in the
benefits and costs of the amended filing deadline across different
types of filers and

issuers. For example, as discussed above, these benefits and costs are
likely to vary across ``corporate action'' as compared to ``non-
corporate-action'' filings,\935\ across issuers of different
sizes,\936\ and by the identity of the filer.\937\ Ideally, a tiered
approach would be used to accelerate disclosure specifically in
circumstances where the benefits of accelerated disclosure are greater
and the costs of accelerated disclosure are lower. However, there are
many important dimensions across which the benefits and costs are
likely to vary, complicating the task of designing a tiered approach.
Further, the subgroups of filings that are associated with the greatest
costs under an accelerated filing deadline (and where there thus could
be significant advantages of maintaining the 10-day deadline) are also
the same subgroups associated with the greatest benefits under an
accelerated deadline, while those associated with lower costs are
associated with lower benefits.\938\ This pattern mitigates our ability
to improve the costs of the amendments by implementing a tiered
approach.
---------------------------------------------------------------------------

    \935\ See section IV.B.3.a.ii above for definitions of these
terms and section IV.C.1 above for discussions in which we conclude
that both the benefits and costs of the shortened initial Schedule
13D filing deadline are likely to be limited for corporate action
filings.
    \936\ Academic research has associated smaller issuer market
capitalization with a higher positive abnormal stock return around
the filing of an initial Schedule 13D. See supra note 829. A higher
positive abnormal stock return may imply higher costs if there is
less such activism under an accelerated filing timeline but also
higher benefits to investors from accelerating disclosure due to the
greater importance of the information to the market.
    \937\ Academic research has associated Schedule 13D filers'
reputations (based on their financial clout, expertise, or
aggressive style of engagement) with the size of the positive
abnormal stock return around the filing. See, e.g., C. N. V.
Krishnan et al., The Second Wave of Hedge Fund Activism: The
Importance of Reputation, Clout, and Expertise, 40 J. Corp. Fin. 296
(2016); and Travis Johnson & Nathan Swem, Reputation and Investor
Activism: A Structural Approach, 139 J. Fin. Econ. 29 (2021). As
discussed supra note 936, a higher positive abnormal stock return
may imply both higher costs and higher benefits of accelerating the
filing deadline.
    \938\ See supra notes 936-937 for examples of some such
subgroups.
---------------------------------------------------------------------------

3. Modify Structured Data Requirement
    We considered modifying the proposed structured data requirement
for Schedules 13D and 13G. We considered, for example, requiring only
the quantitative disclosures reported on Schedules 13D and 13G to be
provided in a structured data language. Narrowing the scope of the
structuring requirement in this way could simplify the resulting
dataset to include only the information that might be used most widely
by market participants, analysts, and Commission staff for aggregation,
comparison, and analysis, which may better suit those users who wish to
focus their analysis on such information and forgo the additional step
of filtering out other data. However, the non-quantitative disclosures
on Schedules 13D and 13G, such as textual narratives and identification
checkboxes, are also likely to be valuable for many data users,
including market participants, analysts, and Commission staff, to
access and analyze in an efficient and automated manner. In addition,
we expect that the incremental cost savings to filers of requiring only
the quantitative disclosures to be structured would be low, because
filers would only be forgoing the costs of inputting their textual and
checkbox disclosures into fillable web forms (or of tagging those
disclosures directly or by means of a filing agent) rather than broader
costs associated with structured data implementation more generally.
For these reasons, we have determined not to modify the scope of the
structured data requirement.
    One commenter recommended that the Commission opt for the XBRL data
language, rather than creating an XML schema designed specifically for
beneficial ownership reporting.\939\ This commenter stated that using
the XBRL standard, rather than the proposed 13D/G-specific XML
requirements, would result in significantly lower costs and greater
efficiencies for filers, users of filings, and the Commission, while
also enhancing the benefits of a structured data requirement by
facilitating improved data quality and the ability to commingle the
data with other datasets. We acknowledge that different structured data
languages entail different costs and benefits for filers and data
users.\940\ We believe that 13D/G-specific XML is more suitable than
XBRL for Schedules 13D and 13G because it facilitates the use of a
fillable form that should result in a lower cost of complying with the
structured data requirement compared to XBRL, particularly for smaller
and infrequent filers. Under an XBRL requirement, filers (including
smaller and infrequent filers) would incur costs and burdens associated
with tagging the disclosures (e.g., software licensing costs, time
spent applying tags) or with paying a third party to do so. Thus,
although some Schedule 13D and Schedule 13G filers, such as those
currently subject to Inline XBRL reporting requirements (e.g., filers
that are Commission registrants) or that otherwise have experience with
XBRL may realize some efficiencies under an XBRL alternative, we
believe the cost savings expected to arise from having a fillable form
option under the 13D/G-specific XML requirements would have a more
substantial positive impact with respect to filers as a whole.
---------------------------------------------------------------------------

    \939\ See letter from XBRL US.
    \940\ See supra section IV.C.3.c for a discussion of costs
associated with the 13D/G-specific XML requirements.
---------------------------------------------------------------------------

    In addition, while some Schedule 13D and Schedule 13G filers and
data users may have familiarity with XBRL data and software, such
filers and data users likely also have familiarity with data structured
in form-specific XML languages on EDGAR. For instance, the Commission
has found the use of form-specific XML on section 16 ownership
reporting forms to have had positive impacts on filers (with respect to
compliance costs) and users (in terms of data usability) of those
disclosures without imposing significantly higher implementation costs
on the Commission than other structured data requirements impose.\941\
For these reasons, we are requiring 13D/G-specific XML rather than
Inline XBRL for Schedules 13D and 13G.
---------------------------------------------------------------------------

    \941\ See Securities and Exchange Commission, Office of
Structured Disclosure, Insider Transactions Data Sets, available at
https://www.sec.gov/dera/data/form-345.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

A. Summary of the Collections of Information

    Certain provisions of our rules, schedules and forms that will be
affected by the final amendments contain ``collection of information''
requirements within the meaning of the PRA.\942\ The Commission
published a notice requesting comment on changes to these collection of
information requirements in the Proposing Release and submitted these
requirements to the Office of Management and Budget (``OMB'') for
review in accordance with the PRA.\943\ The hours and costs associated
with maintaining, disclosing, or providing the information required by
the final amendments constitute paperwork burdens imposed by such
collection of information. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
requirement unless it displays a currently valid OMB control number.
---------------------------------------------------------------------------

    \942\ 44 U.S.C. 3501 et seq.
    \943\ 44 U.S.C. 3507(d); 5 CFR 1320.11.
---------------------------------------------------------------------------

    The title for the affected collections of information is
``Regulation 13D and Regulation 13G; Schedule 13D and Schedule 13G''
(OMB Control No. 3235-0145). These schedules contain item

and other requirements that outline the information a reporting person
must disclose.\944\ The schedules were adopted under the Exchange Act.
A description of the final amendments can be found in section II above,
and a discussion of the economic effects of the final amendments can be
found in section IV above. Compliance with the information collections
is mandatory. Responses to the information collections are not kept
confidential and there is no mandatory retention period for the
information disclosed.
---------------------------------------------------------------------------

    \944\ See 17 CFR 240.13d-101 and 240.13d-102.
---------------------------------------------------------------------------

B. Summary of Comment Letters on PRA Estimates

    In the Proposing Release, the Commission requested comment on the
PRA burden hour and cost estimates and the analysis used to derive the
estimates. We did not receive any comment letters in response to the
request for comment on the PRA estimates and analysis included in the
Proposing Release.

C. Burden and Cost Estimates for the Final Amendments

    Below we estimate the incremental and aggregate effect on the
paperwork burden as a result of the final amendments. As discussed in
section II above, we have made a number of changes from the Proposed
Amendments, and we have adjusted our estimates accordingly. For
example, in the Proposing Release, the Commission estimated paperwork
burden increases for Forms 3, 4, and 5 as well as Schedules 13D and 13G
associated with proposed Rules 13d-3(e) and 13d-5(b)(1)(i) and (ii) and
(b)(2)(i). Because we are not adopting those proposed rules, we have
adjusted the paperwork burden estimates from the Proposing Release
accordingly. In addition, rather than basing our PRA estimates on the
actual number of Schedule 13D and 13G filings in calendar year 2020, as
the Commission did in the Proposing Release, we base our PRA estimates
with respect to the final amendment to Rule 13d-2(b), in part, on the
actual number of Schedule 13G filings in calendar year 2022.\945\
---------------------------------------------------------------------------

    \945\ Compare Proposing Release at 13892, n.273, with infra note
952.
---------------------------------------------------------------------------

    At the outset, we note that the current OMB inventory for
Regulation 13D-G reflects 8,587 annual responses. This number is based
on the number of initial Schedule 13D and 13G filings made. We think
that the better approach is for the PRA to reflect the burdens arising
from both the initial Schedule 13D and 13G filings and amended Schedule
13D and 13G filings. Accordingly, we first update the existing PRA
burden estimates to reflect this new approach. Specifically, we are
updating the current OMB inventory from 8,587 annual responses to
29,793 annual responses to reflect the average number of initial and
amended Schedule 13D and 13G filings per year that were made in
calendar years 2020, 2021, and 2022.\946\ We then estimate the PRA
impact of the final amendments using the updated inventory numbers as
the baseline. Table 1 below illustrates the resulting incremental
change to the total annual compliance burden in hours and in costs.
Additionally, we note that the current OMB inventory for the above-
referenced collections of information reflect an average of hourly rate
of $400 per burden hour borne by outside professionals. Similarly, in
the Proposing Release, the Commission used an estimated cost of $400
per hour, recognizing that the costs of retaining outside professionals
may vary depending on the nature of the professional services.\947\ The
Commission recently determined to increase the estimated costs of such
hourly rate to $600 per hour \948\ to adjust the estimate for inflation
from Aug. 2006.\949\ Accordingly, we first update the existing PRA
burden estimates to reflect this new cost estimate, as set out in the
following Table 1.
---------------------------------------------------------------------------

    \946\ In calendar year 2020, there were 5,288 Schedule 13D
filings (comprised of 1,148 initial filings and 4,140 amendments)
and 22,080 Schedule 13G filings (comprised of 6,436 initial filings
and 15,644 amendments) for a total of 27,368 filings. See DERA
Memorandum at nn.3 & 24. In addition, during calendar year 2021,
there were 5,434 Schedule 13D filings (comprised of 1,555 initial
filings and 3,879 amendments) and 24,874 Schedule 13G filings
(comprised of 8,676 initial filings and 16,198 amendments) for a
total of 30,308 filings. See id. at 1, 8. Finally, in calendar year
2022, there were 5,179 Schedule 13D filings (comprised of 1,161
initial filings and 4,018 amendments) and 26,523 Schedule 13G
filings (comprised of 8,433 initial filings and 18,090 amendments)
for a total of 31,702 filings. See supra section IV.B.3. Taking the
three-year average of these amounts results in an average of 29,792
Schedule 13D and 13G filings per year, comprised of 1,288 initial
Schedule 13D filings, 4,012 Schedule 13D amendments, 7,849 initial
Schedule 13D filings, and 16,644 Schedule 13G amendments, when
rounded to the nearest whole number.
    \947\ See Proposing Release at 13894, n.280.
    \948\ We recognize that the costs of retaining outside
professionals may vary depending on the nature of the professional
services, but for purposes of this PRA analysis, we estimate that
such costs would be an average of $600 per hour.
    \949\ See Listing Standards for Recovery of Erroneously Awarded
Compensation, Release No. 33-11126 (Oct. 26, 2022) [87 FR 73076
(Nov. 28, 2022)].

                                                               PRA Table 1--Change in PRA Burden Due To Updating Inventory Numbers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Current OMB inventory                                                    Updated inventory                            Increased burden due to update
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Increase in
                Current annual responses                  Current  burden    Current cost   Updated  annual  Updated  burden    Updated cost      number of       Increase in      Increase in
                                                                hours           burden          responses          hours           burden         responses       burden hours     cost burden
(A)                                                                  (B)                (C)     (D)      minus>     minus>
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
8,587...................................................          27,412      $32,894,000           29,792           40,329      $72,591,600           21,205           12,917      $39,697,000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 See supra note 946.
 The current OMB inventory reflects an average of 14.5 burden hours for each Schedule 13D filing and an average of 12.4 burden hours for each Schedule 13G filing. As
  noted above, however, the current OMB inventory only included initial Schedule 13D and 13G filings, and so these average burden hours were estimates with respect only to initial filings.
  Because Schedule 13D and 13G amendments generally contain a fraction of the information contained in an initial filing and because of the likely efficiencies associated with preparing an
  amendment based on the information disclosed in an initial filing, we estimate average burden hours per filing of 3 hours per Schedule 13D amendment and 2 hours per Schedule 13G amendment.
  When applied to the updated average annual number of initial Schedule 13D filings (1,288), Schedule 13D amendments (4,012), initial Schedule 13G filings (7,849), and Schedule 13G amendments
  (16,644), see supra note 946, this reflects a total of 161,315 burden hours (when rounded to the nearest whole number). In addition, the current OMB inventory assumes that 25% of the burden
  associated with a Schedule 13D or 13G filing is borne by the reporting persons and 75% is borne by outside professionals. Thus, assuming that 25% of the total burden hours associated with
  Schedule 13D and 13G filings (161,315) is borne by the reporting persons yields a total of 40,329 internal burden hours (when rounded to the nearest whole number).
 The current OMB inventory reflects a total cost burden of $32,894,000 for Regulation 13D-G, reflecting an average of hourly rate of $400 per burden hour
  borne by outside professionals. As noted above, we are increasing this cost estimate to $600 per hour. Further, as noted above, assuming that 75% of the total burden hours associated with
  Schedule 13D and 13G filings (161,315) is borne by the reporting persons yields a total of 120,986 burden hours borne by outside professionals (when rounded to the nearest whole number). As
  such, we calculate the updated cost burden by multiplying (x) $600 by (y) 120,986.

    We believe that the final amendments potentially could increase the
number of responses to this updated collection of information for
Schedules 13D and 13G. Specifically, although we do not anticipate an
increase in this collection due to our final amendment to Rule 13d-1,
our final amendment to Rule 13d-2(b) with respect to the standard that
requires an amendment to Schedule 13G could potentially increase the
number of Schedule 13G amendments filed annually.\950\ For purposes of
this PRA, therefore, we estimate that there could be an additional
41,679 annual responses to the collection of information under
Regulation 13D-G \951\ as a result of the final amendment to Rule 13d-
2.\952\
---------------------------------------------------------------------------

    \950\ For example, Rule 13d-2(b) currently requires that a
Schedule 13G be amended 45 days after the calendar year-end in which
any change occurred to the information previously reported. Under
our amendment to Rule 13d-2(b), a Schedule 13G will have to be
amended within 45 days after the end of the calendar quarter in
which a material change occurred to the information previously
reported. Although an amendment under Rule 13d-2(b) currently is
required for ``any'' change in the information previously reported,
that rule only requires that one amendment be filed annually, if at
all. Under the revisions we are adopting to that rule, although the
standard for determining an amendment obligation would only arise
upon a ``material'' change to the information previously reported,
the rule changes could theoretically result in numerous amendments
being filed on an annual basis, with as many as four Schedule 13G
amendments being filed annually pursuant to revised Rule 13d-2(b).
    \951\ To the extent that a person or entity incurs a burden
imposed by Regulation 13D-G, it is encompassed within the collection
of information estimates for Regulation 13D-G. This burden includes
the preparation, filing, processing and circulation of initial and
amended Schedules 13D and 13G.
    \952\ As discussed in section IV.B.3 supra, a total of 18,090
Schedule 13G amendments were filed in calendar year 2022. Upon
further review of that data set, we note that 15,100, or 83.47% of
those Schedule 13G amendments were made within the first 45 days of
calendar year 2022. In addition, we note for calendar years 2020,
2021, and 2022, there were an average of 16,644 Schedule 13G
amendments filed each year. See supra note 946. Because Rule 13d-
2(b) currently has a Schedule 13G amendment deadline of within 45
days after calendar year-end, we assume that 83.47% of the 16,644
Schedule 13G amendments filed each year, or 13,893 filings (when
rounded to the nearest whole number), were made pursuant to Rule
13d-2(b). As noted above, our amendment to Rule 13d-2(b) could
result in a beneficial owner filing four Schedule 13G amendments
annually pursuant to Rule 13d-2(b), as compared to the one annual
amendment that currently may be required by Rule 13d-2(b). See supra
note 950. As such, for purposes of this PRA, we estimate that there
will be 55,572 Schedule 13G amendments filed annually pursuant to
Rule 13d-2(b) as a result of our amendment (calculated by
multiplying (x) the 13,893 annual responses currently attributable
to Rule 13d-2(b) by (y) four), resulting in 41,679 additional
responses to the collection of information under Regulation 13D-G
(calculated as the difference between (x) the 55,572 annual
responses estimated to be attributable to Rule 13d-2(b) as a result
of the amendments and (y) the 13,893 annual responses currently
attributable to Rule 13d-2(b)). We note, however, that this estimate
likely reflects the upper limit of the potential increases in the
number of annual Regulation 13D-G responses as a result of our
amendment to Rule 13d-2(b) because (1) the amendment revises Rule
13d-2(b) to require a Schedule 13G be amended only for a
``material'' change to the information previously reported, as
compared to the current requirement that an amendment be filed for
``any'' change to the information previously reported, (2) the
information previously reported by many Schedule 13G filers may not
change materially on a quarterly basis, and (3) some of the Schedule
13G amendments filed in the first 45 days of a given calendar year
may not have been made pursuant to Rule 13d-2(b).
---------------------------------------------------------------------------

    In addition to a potential increase in the number of annual
responses, we expect that the final amendments will change the
estimated burden per response for Regulation 13D-G. For both Schedule
13D and Schedule 13G filers, we expect that the structured data
requirement will increase the estimated burden per response by
requiring that the disclosures in those schedules be made using the
13D/G-specific XML. In addition, for Schedule 13D filers, we expect
that the final amendment to Item 6 of Schedule 13D potentially could
increase the estimated burden per response by specifying that
disclosure is required under Item 6 for the use of cash-settled
derivative securities with respect to an issuer's securities.\953\
---------------------------------------------------------------------------

    \953\ We further expect, however, that this potential increase
may be offset in part by the amendment to Item 6 that deletes the
``including but not limited to'' proviso.
---------------------------------------------------------------------------

    The burden estimates were calculated by estimating the number of
parties we anticipate would expend time, effort, and/or financial
resources to generate, maintain, retain, disclose or provide
information in connection with the final amendments and then
multiplying by the estimated amount of time, on average, such parties
would devote in response to the final amendments. The following table
summarizes the calculations and assumptions used to derive our
estimates of the aggregate increase in burden corresponding to the
final amendments.

            PRA Table 2--Calculation of Increase in Burden Hours Resulting From the Final Amendments
----------------------------------------------------------------------------------------------------------------
                                            Schedule 13D                        Schedule 13G
                                           initial filings    Schedule 13D     initial filings    Schedule 13G
                                                 (A)         amendments (B)          (C)         amendments (D)
----------------------------------------------------------------------------------------------------------------
Number of Responses \a\.................             1,288             4,012             7,848            58,323
Burden Hours Per Response \b\...........              15.1               3.5              12.9               2.5
Column Total \c\........................            19,449            14,042           101,239           145,808
                                         -----------------------------------------------------------------------
Aggregate Increase in Burden Hours \d\..                                  119,223
----------------------------------------------------------------------------------------------------------------
\a\ As noted in PRA Table 1 and supra note 946, the updated OMB inventory will reflect 29,793 total Schedule 13D
  and 13G filings, comprised of 5,300 Schedule 13D filings and 24,493 Schedule 13G filings (in each case
  comprised of both initial filings and amendments). When taking into account the potential effects of the
  amendment to Rule 13d-2(b) we estimate that the number of Schedule 13G filings could increase by 41,679, for a
  total of 66,172 annual Schedule 13G filings. See supra note 952.
\b\ As noted in PRA Table 1, the current OMB inventory reflects an average of 14.5 burden hours for each
  Schedule 13D filing and an average of 12.4 burden hours for each Schedule 13G filing. We use these per filing
  burden hours as a baseline for estimating the burden impact of the final amendments. We estimate that the new
  structured data requirement will increase the burden per response for Schedule 13D and 13G filings (both
  initial and amended filings) by 0.5 burden hours. Our assumption is that the burden will be greatest in the
  first year after adoption, as filers adjust to the new requirements and update their Schedule 13D and 13G
  preparation and filing processes accordingly. We estimate that the burden of the structured data requirement
  will be 1 hour in the first year and 0.25 hours in each of the following two years for a three-year average of
  0.5 burden hours. Further, for the amendments to Item 6 of Schedule 13D, we estimate they will increase the
  burden by 0.1 hours for each initial Schedule 13D filing. Although these amendments could, in some cases,
  substantially increase the amount of disclosure made pursuant to Item 6, we believe that this estimate
  accurately reflects that only a relatively small percentage of all Schedule 13D filers hold cash-settled
  derivative securities and, therefore, will be required to make additional disclosures. In addition, we also
  expect that any increased burden may be offset in part by the amendment to Item 6 that deletes the ``but not
  limited to'' proviso. Finally, because not every Schedule 13D amendment will respond to Item 6, we apply this
  increase only to initial filings. Taken together, we estimate that the amendments could increase the annual
  burden hours per initial Schedule 13D filing by 0.6 hours and increase the annual burden hours for each
  Schedule 13D amendment, and each initial Schedule 13G filing and Schedule 13G amendment by 0.5 hours. When
  added to the current averages, we estimate that, as a result of the final amendments, the new average per
  filing burden hours will be 15.1 hours for initial Schedule 13D filings, 3.5 hours for Schedule 13D
  amendments, 12.9 hours for initial Schedule 13G filings, and 2.5 hours for Schedule 13G amendments.

\c\ Derived by multiplying the number of responses in each column by the burden hours per response, and rounded
  to the nearest whole number.
\d\ Derived by adding together the hours from ``Column Totals'' (280,538 hours) and subtracting from that total
  burden hours associated with Schedule 13D and 13G filings for Regulation 13D-G, as noted under PRA Table 1
  (161,315).

    The table below illustrates the incremental change to the total
annual compliance burden in hours and in costs as a result of the final
amendments. The table sets forth the percentage estimates we typically
use for the burden allocation for each response.

       PRA Table 3--Calculation of Aggregate Increase in Burden Hours Resulting From the Final Amendments
----------------------------------------------------------------------------------------------------------------
   Total number of       Total increase in     Increase in internal   Increase in outside    Increase in outside
 estimated responses        burden hours              hours            professional hours    professional costs
(A)  [dagger]          (B)  [dagger][dagger]                   (C)                  (D)       (E) = (D) x $600
                                              [dagger][dagger][dagg  [dagger][dagger][dagg
                                                 er] = (B) x 25%        er] = (B) x 75%
----------------------------------------------------------------------------------------------------------------
            71,471                119,223                 29,806                 89,417            $53,650,200
----------------------------------------------------------------------------------------------------------------
[dagger] This number reflects an estimated increase of 41,679 annual responses to the updated Regulation 13D-G
  collection of information set forth in PRA Table 1. See supra note 952 and accompanying text. PRA Table 1
  reflects an updated baseline total of 29,792 responses filed annually for Regulation 13D-G.
[dagger][dagger] Calculated as the sum of annual burden hour increases estimated for Schedule 13D and 13G
  filings. See supra PRA Table 2, ``Aggregate Increase in Burden Hours.''
[dagger][dagger][dagger] The estimated increases in Columns (C) and (D) are rounded to the nearest whole number.

    Below we summarize the requested paperwork burden for Regulation
13D-G that will be submitted to OMB for review in accordance with the
PRA, including the estimated total reporting burdens and costs, under
the final amendments. This table includes both the adjustments to the
PRA inventory reflected in PRA Table 1 and the aggregate burden
increase resulting from the final rules reflected in PRA Table 3.

                                 PRA Table 4--Requested Paperwork Burden for Regulation 13D-G Under the Final Amendments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Current burden                                      Program change                                     Revised burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Increase in
 Current annual    Current burden    Current cost      number of       Increase in      Increase in         Annual        Burden hours     Cost burden
    responses          hours            burden         responses       burden hours     cost burden       responses
(A)                          (B)                (C)     (D)      minus>     minus>
--------------------------------------------------------------------------------------------------------------------------------------------------------
          8,587           27,412      $32,894,000           62,884           42,723      $93,347,200           71,471           70,135     $126,241,200
--------------------------------------------------------------------------------------------------------------------------------------------------------
 Calculated as the sum of (x) the 21,205 increase in the number of annual responses as a result of the update of the current OMB inventory
  (from Column (G) in PRA Table 1) and (y) the 41,679 increase in the number of annual responses as a result of the final amendments (see supra note 952
  and accompanying text).
 Calculated as the sum of (x) the 12,917 increase in the number of burden hours as a result of the update of the current OMB
  inventory (from Column (H) in PRA Table 1) and (y) the 29,806 increase in the number of burden hours as a result of the final amendments (from Column
  (C) in PRA Table 3).
 Calculated as the sum of (x) the $39,697,000 increase in the cost burden as a result of the update of the current
  OMB inventory (from Column (G) in PRA Table 1) and (y) the $53,650,200 increase in the cost burden as a result of the final amendments (from Column
  (E) in PRA Table 3).

VI. Regulatory Flexibility Act Certification

    The Regulatory Flexibility Act (``RFA'') \954\ requires Federal
agencies, in promulgating rules, to consider the impact of those rules
on small entities. Section 603(a) of the RFA generally requires the
Commission to undertake an initial regulatory flexibility analysis of
all proposed rules, or rule amendments, to determine the impact of the
proposed rulemaking on ``small entities,'' \955\ while section 604(a)
requires that the Commission generally provide a final regulatory
flexibility analysis of rules it is adopting.\956\ Section 605(b) of
the RFA states that these requirements shall not apply to any proposed
or final rule or rule amendment if the head of the agency certifies
that the rule will not, if promulgated, have a significant economic
impact on a substantial number of small entities.\957\ The Commission
certified in the Proposing Release that the Proposed Amendments would
not have a significant economic impact on a substantial number of small
entities for purposes of the RFA.\958\
---------------------------------------------------------------------------

    \954\ 5 U.S.C. 601 et seq.
    \955\ Section 601(b) of the RFA permits agencies to formulate
their own definitions of ``small entities.'' See 5 U.S.C. 601(b).
The Commission has adopted definitions for the term ``small entity''
for the purposes of Commission rulemaking in accordance with the
RFA. Those definitions, as relevant to this rulemaking, are set
forth in 17 CFR 240.0-10 and, with respect to investment companies,
17 CFR 270.0-10.
    \956\ See 5 U.S.C. 603(a), 604(a).
    \957\ See 5 U.S.C. 605(b).
    \958\ Proposing Release at 13895-96.
---------------------------------------------------------------------------

    For purposes of Commission rulemaking in connection with the RFA, a
small entity includes: (1) when used with reference to an ``issuer'' or
a ``person,'' other than an investment company, an ``issuer'' or
``person'' that, on the last day of its most recent fiscal year, had
total assets of $5 million or less; \959\ or (2) a broker-dealer with
total capital (net worth plus subordinated liabilities) of less than
$500,000 on the date in the prior fiscal year as of which its audited
financial statements were prepared pursuant to 17 CFR 240.17a-5(d), or,
if not required to file such statements, a broker-dealer with total
capital (net worth plus subordinated liabilities) of less than $500,000
on the last business day of the preceding fiscal year (or in the time
that it has been in business, if shorter); and is not affiliated with
any person (other than a natural person) that is not a small business
or small organization.\960\ An investment company, including a business
development company,\961\ is considered to be a ``small business'' if
it, together

with other investment companies in the same group of related investment
companies, has net assets of $50 million or less as of the end of its
most recent fiscal year.\962\
---------------------------------------------------------------------------

    \959\ See 17 CFR 240.0-10(a).
    \960\ See 17 CFR 240.0-10(c).
    \961\ Business development companies are a category of closed-
end investment company that are not registered under the Investment
Company Act [15 U.S.C. 80a-2(a)(48) and 80a-53-64].
    \962\ 17 CFR 270.0-10(a).
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    A description of the final amendments can be found in section II
above, and a discussion of the economic effects of the final amendments
can be found in section IV above. Although the final amendments will
apply to beneficial owners regardless of their size, we believe that
the vast majority of the beneficial owners that will be subject to the
amendments will not be ``small entities'' for purposes of the RFA. For
example, the amendments to the filing deadlines in Rules 13d-1 and 13d-
2, as well as the amendments to Rules 13 and 201 of Regulation S-T and
the structured data requirement, only apply to persons who beneficially
own more than five percent of a covered class of securities, thus
providing a basis to conclude that such a person is unlikely to fall
within the definition of ``small entity.'' In addition, to the extent
that the final amendments to the filing deadlines apply to members of a
group, in addition to individual entities, we believe that members of a
group generally would be larger investors and similarly are unlikely to
fall within the definition of ``small entity.''
    We did not receive any comment letters in response to the request
for comment on the RFA certification in the Proposing Release.\963\
Although some commenters asserted that certain of the Proposed
Amendments would be unduly burdensome for smaller and non-institutional
beneficial owners,\964\ those commenters did not indicate (or provide
data that would suggest) that those beneficial owners would be small
entities for purposes of the RFA. Thus, those comments do not alter our
belief that the vast majority of the beneficial owners that will be
subject to the amendments will not be small entities for purposes of
the RFA. In addition, the final amendments include some modifications
to the Proposed Amendments. As discussed in more detail in section II
above, we are not adopting proposed Rule 13d-3(e), nor are we adopting
many of the proposed amendments to Rules 13d-5 and 13d-6. We also have
adopted longer deadlines than proposed for initial and amended Schedule
13G filings. We believe these modifications generally would reduce any
burdens of the final amendments in the event any small entity becomes
subject to them. Moreover, we do not believe that these modifications
alter the basis upon which the Commission made the certification in the
Proposing Release.
---------------------------------------------------------------------------

    \963\ Proposing Release at 13896.
    \964\ See, e.g., letters from A. Day; E. Fraser; MFA; see also
letters from B. Mason; S. Thornburg.
---------------------------------------------------------------------------

    For the foregoing reasons, the Commission certifies, pursuant to 5
U.S.C. 605(b), that the final amendments will not have a significant
economic impact on a substantial number of small entities for purposes
of the RFA.

Statutory Authority

    We are adopting the rule amendments contained in this release under
the authority set forth in sections 3(b), 13, and 23(a) of the Exchange
Act.

List of Subjects

17 CFR Part 232

    Administrative practice and procedure, Reporting and recordkeeping
requirements, Securities.

17 CFR Part 240

    Reporting and recordkeeping requirements, Securities.

Text of Amendments

    For the reasons set out in the preamble, the Commission is amending
title 17, chapter II, of the Code of Federal Regulations as follows:

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS

0
1. The general authority citation for part 232 continues to read as
follows:

    Authority:  15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, 80b-4, 80b-6a, 80b-10, 80b-11, 7201
et seq.; and 18 U.S.C. 1350, unless otherwise noted.
* * * * *

0
2. Amend Sec.  232.13 by:
0
a. Revising paragraph (a)(4); and
0
b. Designating the note following paragraph (a)(4) as note 1 to
paragraph (a).
    The revision reads as follows:

Sec.  232.13   Date of filing; adjustment of filing date.

    (a) * * *
    (4) Notwithstanding paragraph (a)(2) of this section, a Form 3, 4,
or 5 (referenced in Sec. Sec.  249.103, 249.104, and 249.105 of this
chapter, respectively), a Schedule 14N (referenced in Sec.  240.14n-101
of this chapter), a Form 144 (referenced in Sec.  239.144 of this
chapter), or a Schedule 13D or Schedule 13G, inclusive of any
amendments thereto (Sec. Sec.  240.13d-101 and 240.13d-102 of this
chapter), submitted by direct transmission commencing on or before 10
p.m. Eastern Standard Time or Eastern Daylight Time, whichever is
currently in effect, shall be deemed filed on the same business day.
* * * * *

Sec.  232.201   [Amended]

0
3. Amend Sec.  232.201(a) introductory text by:
0
a. Removing the word ``or'' that immediately precedes ``an Asset Data
File''; and
0
b. Adding after the phrase ``Asset Data File (as defined in Sec.
232.11),'' the phrase ``or a Schedule 13D or Schedule 13G (Sec. Sec.
240.13d-101 and 240.13d-102 of this chapter),''.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

0
4. The authority citation for part 240 continues to read, in part, as
follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o,
78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll,
78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et
seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C.
1350; and Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L.
112-106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise
noted.
* * * * *
    Section 240.13d-3 is also issued under Public Law 111-203 Sec.
766, 124 Stat. 1799 (2010).
* * * * *

0
5. Amend Sec.  240.13d-1 by revising paragraphs (a), (b)(1)(i) and
(iii), (b)(2), (c) introductory text, (d), (e)(1) introductory text,
(e)(1)(ii), (f)(1), (g), (i), and (j) to read as follows:

Sec.  240.13d-1   Filing of Schedules 13D and 13G.

    (a) Any person who, after acquiring directly or indirectly the
beneficial ownership of any equity security of a class which is
specified in paragraph (i)(1) of this section, is directly or
indirectly the beneficial owner of more than five percent of the class
shall, within five business days after the date of the acquisition,
file with the Commission, a statement containing the information
required by Schedule 13D (Sec.  240.13d-101).
    (b) * * *
    (1) * * *
    (i) Such person has acquired such securities in the ordinary course
of the person's business and not with the purpose nor with the effect
of changing or influencing the control of the issuer, nor in connection
with or as a

participant in any transaction having such purpose or effect, including
any transaction subject to Sec.  240.13d-3(b), other than activities
solely in connection with a nomination under Sec.  240.14a-11; and
* * * * *
    (iii) Such person has promptly notified any other person (or group
within the meaning of section 13(d)(3) of the Act) on whose behalf it
holds, on a discretionary basis, securities exceeding five percent of
the class, of any acquisition or transaction on behalf of such other
person which might be reportable by that person under section 13(d) of
the Act. This paragraph (b)(1)(iii) only requires notice to the account
owner of information which the filing person reasonably should be
expected to know and which would advise the account owner of an
obligation such account owner may have to file a statement, or an
amendment thereto, pursuant to section 13(d) of the Act.
* * * * *
    (2) The Schedule 13G filed pursuant to paragraph (b)(1) of this
section shall be filed within 45 days after the end of the calendar
quarter in which the person became obligated under paragraph (b)(1) of
this section to report the person's beneficial ownership as of the last
day of the calendar quarter, provided, that it shall not be necessary
to file a Schedule 13G unless the percentage of the class of equity
security specified in paragraph (i)(1) of this section beneficially
owned as of the end of the calendar quarter is more than five percent;
however, if the person's direct or indirect beneficial ownership
exceeds 10 percent of the class of equity securities prior to the end
of the calendar quarter, the initial Schedule 13G shall be filed within
five business days after the end of the first month in which the
person's direct or indirect beneficial ownership exceeds 10 percent of
the class of equity securities, computed as of the last day of the
month.
    (c) A person who would otherwise be obligated under paragraph (a)
of this section to file a statement on Schedule 13D (Sec.  240.13d-101)
may, in lieu thereof, file with the Commission, within five business
days after the date of an acquisition described in paragraph (a) of
this section, a short-form statement on Schedule 13G (Sec.  240.13d-
102). Provided, that the person:
* * * * *
    (d) Any person who, as of the end of any calendar quarter, is or
becomes directly or indirectly the beneficial owner of more than five
percent of any equity security of a class specified in paragraph (i)(1)
of this section and who is not required to file a statement under
paragraph (a) of this section by virtue of the exemption provided by
section 13(d)(6)(A) or (B) of the Act (15 U.S.C. 78m(d)(6)(A) or
78m(d)(6)(B)), or because the beneficial ownership was acquired prior
to December 22, 1970, or because the person otherwise (except for the
exemption provided by section 13(d)(6)(C) of the Act (15 U.S.C.
78m(d)(6)(C))) is not required to file a statement, shall file with the
Commission, within 45 days after the end of the calendar quarter in
which the person became obligated to report under this paragraph (d), a
statement containing the information required by Schedule 13G (Sec.
240.13d-102).
    (e)(1) Notwithstanding paragraphs (b) and (c) of this section and
Sec.  240.13d-2(b), a person that has reported that it is the
beneficial owner of more than five percent of a class of equity
securities in a statement on Schedule 13G (Sec.  240.13d-102) pursuant
to paragraph (b) or (c) of this section, or is required to report the
acquisition but has not yet filed the schedule, shall immediately
become subject to paragraph (a) of this section and Sec.  240.13d-2(a)
and shall file a statement on Schedule 13D (Sec.  240.13d-101) within
five business days if, and shall remain subject to those requirements
for so long as, the person:
* * * * *
    (ii) Is at that time the beneficial owner of more than five percent
of a class of equity securities described in paragraph (i)(1) of this
section.
* * * * *
    (f)(1) Notwithstanding paragraph (c) of this section and Sec.
240.13d-2(b), persons reporting on Schedule 13G (Sec.  240.13d-102)
pursuant to paragraph (c) of this section shall immediately become
subject to paragraph (a) of this section and Sec.  240.13d-2(a) and
shall remain subject to those requirements for so long as, and shall
file a statement on Schedule 13D (Sec.  240.13d-101) within five
business days after the date on which the person's beneficial ownership
equals or exceeds 20 percent of the class of equity securities.
* * * * *
    (g) Any person who has reported an acquisition of securities in a
statement on Schedule 13G (Sec.  240.13d-102) pursuant to paragraph (b)
of this section, or has become obligated to report on Schedule 13G
(Sec.  240.13d-102) but has not yet filed the Schedule, and thereafter
ceases to be a person specified in paragraph (b)(1)(ii) of this section
or determines that it no longer has acquired or holds the securities in
the ordinary course of business shall immediately become subject to
paragraph (a) or (c) of this section (if the person satisfies the
requirements specified in paragraph (c)) and Sec.  240.13d-2(a), (b),
or (d), and shall file, within five business days thereafter, a
statement on Schedule 13D (Sec.  240.13d-101) or amendment to Schedule
13G, as applicable, if the person is a beneficial owner at that time of
more than five percent of the class of equity securities.
* * * * *
    (i)(1) For the purpose of this section, the term equity security
means any equity security of a class which is registered pursuant to
section 12 of the Act, or any equity security of any insurance company
which would have been required to be so registered except for the
exemption contained in section 12(g)(2)(G) of the Act, or any equity
security issued by a closed-end investment company registered under the
Investment Company Act of 1940; provided, such term shall not include
securities of a class of non-voting securities.
    (2) For the purpose of this section, the term business day means
any day, other than Saturday, Sunday, or a Federal holiday, from 12
a.m. to 11:59 p.m., Eastern Time.
    (j) For the purpose of sections 13(d) and 13(g) of the Act, any
person, in determining the amount of outstanding securities of a class
of equity securities, may rely upon information set forth in the
issuer's most recent quarterly or annual report, and any current report
subsequent thereto, filed with the Commission pursuant to the Act,
unless such person knows or has reason to believe that the information
contained therein is inaccurate.
* * * * *

0
6. Amend Sec.  240.13d-2 by:
0
a. Revising paragraphs (a) through (d); and
0
b. Removing the sectional authority citation from the end of the
section.
    The revisions read as follows:

Sec.  240.13d-2   Filing of amendments to Schedules 13D or 13G.

    (a) If any material change occurs in the facts set forth in the
Schedule 13D (Sec.  240.13d-101) required by Sec.  240.13d-1(a),
including, but not limited to, any material increase or decrease in the
percentage of the class beneficially owned, the person or persons who
were required to file the statement shall file or cause to be filed
with the Commission an amendment disclosing that change within two
business days after the date of such change. An

acquisition or disposition of beneficial ownership of securities in an
amount equal to one percent or more of the class of securities shall be
deemed ``material'' for purposes of this section; acquisitions or
dispositions of less than those amounts may be material, depending upon
the facts and circumstances.
    (b) Notwithstanding paragraph (a) of this section, and provided
that the person filing a Schedule 13G (Sec.  240.13d-102) pursuant to
Sec.  240.13d-1(b) or (c) continues to meet the requirements set forth
therein, any person who has filed a Schedule 13G (Sec.  240.13d-102)
pursuant to Sec.  240.13d-1(b), (c), or (d) shall amend the statement
within 45 days after the end of each calendar quarter if, as of the end
of the calendar quarter, there are any material changes in the
information reported in the previous filing on that Schedule; provided,
however, that an amendment need not be filed with respect to a change
in the percent of the class outstanding previously reported if the
change results solely from a change in the aggregate number of
securities outstanding. Once an amendment has been filed reflecting
beneficial ownership of five percent or less of the class of
securities, no additional filings are required unless the person
thereafter becomes the beneficial owner of more than five percent of
the class and is required to file pursuant to Sec.  240.13d-1.
    (c) Any person relying on Sec.  240.13d-1(b) that has filed its
initial Schedule 13G (Sec.  240.13d-102) pursuant to Sec.  240.13d-1(b)
shall, in addition to filing any amendments pursuant to paragraph (b)
of this section, file an amendment on Schedule 13G (Sec.  240.13d-102)
within five business days after the end of the first month in which the
person's direct or indirect beneficial ownership, computed as of the
last day of the month, exceeds 10 percent of the class of equity
securities. Thereafter, that person shall, in addition to filing any
amendments pursuant to paragraph (b) of this section, file an amendment