[Federal Register Volume 59, Number 33 (Thursday, February 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3427]


[[Page Unknown]]

[Federal Register: February 17, 1994]



 

General Instructions for Form 13h

    The following instructions are intended for guidance in 
completing form 13H and do not provide the full text of the 
applicable federal laws and regulations. See section 13(h) of the 
Securities Exchange Act of 1934 [15 U.S.C. Sec. 78m(h)], rule 13h-1 
[17 CFR 240.13h-1], and form 13H [17 CFR 249.327] for the full text 
of the applicable statutes and rules.

A. Persons Required to File Form 13H.

    Every person that is a Large Trader must file Form 13H with the 
U.S. Securities and Exchange Commission (Commission). Upon filing 
Form 13H, a Large Trader will be assigned a large trader 
identification number (LTID) by the Commission.
    Definition of a Large Trader. The term ``Large Trader'' means 
every person who owns or controls an account, that effects 
transactions for the purchase or sale of a publicly traded 
securities, by use of any means or instrumentality of interstate 
commerce or the mails, or any facility of a national securities 
exchange, directly or indirectly by or through a registered broker 
or dealer, in an aggregate amount equal to or in excess of the 
identifying activity level. The term ``Person'' includes any natural 
person, trustee, company, government, political subdivision, agency, 
or instrumentality of a government, except foreign central banks, 
and also includes two or more persons acting as a partnership, 
limited partnership, syndicate, or other group. Persons that may be 
Large Traders include individuals, broker-dealers, mutual funds, 
private and public pension funds, hedge funds, investment advisers, 
insurance companies, banks, and trust companies.
    Large Trader Accounts. The purpose of Form 13H is to provide a 
system through which the Commission may efficiently identify large 
trading accounts and the person or group of persons that own and 
control large trading accounts. The term ``Account'' means each 
proprietary and customer account maintained or carried on the books 
and records of a registered broker-dealer.
    Ownership of Accounts. An account of a person is deemed to be 
owned or under common ownership of the natural person, company, 
limited partnership, partnership, and trustee in whose name an 
account is maintained, or custodian or nominee that maintains an 
omnibus account or account otherwise undisclosed as to ownership, 
and any other person who has more than a 10 percent financial 
interest in the equity in the accounts of the person.
    Control of Accounts. An account of a person is deemed to be 
controlled or under the common control of the owner of the account, 
and any other person that has received from or been assigned by the 
owner of an account, full or limited investment discretion or 
authority to direct transactions for the account. The term ``Full 
Discretionary Investment Authority'' means the discretion to enter 
an order or orders for the account of another of any size, at any 
time or price, without the prior instruction or approval of the 
owner of the account.
    The term ``Limited Discretionary Investment Authority'' means 
the discretion to enter an order or orders for the account of 
another, limited to time or price only, upon the express prior 
instruction or approval of the owner of the account.
    Large Trader Transactions. The term ``Transaction'' means all 
transactions in publicly traded securities, including cancellations, 
corrections, and exercises or assignments of option contracts, 
except for certain specific transactions. The excluded transactions, 
include: journal or bookkeeping entries; offerings of securities 
under the Securities Act of 1933; gifts; transactions effected under 
a court order of appointment or distribution of property in a 
decedents estate or divorce proceeding; a qualified rollover of 
retirement plan assets; or transactions between employees and 
employers that are part of an employer benefit or compensatory 
arrangement. The term ``Publicly Traded Securities'' includes all 
exchange listed and other national market system securities that are 
subject to an effective real-time transaction reporting plan.
    Identifying Activity Level. The term ``Identifying Activity 
Level'' means aggregate transactions of 150,000 shares or fair 
market value of $7.5 million, effected during any calendar day where 
the large trader's account is located, or any transactions that 
constitute program trading. The term ``program trading'' means index 
arbitrage or any strategy involving the related purchase or sale 15 
or more securities with a total value of $1 million or more.
    Aggregation of Accounts. A person or group of persons may 
aggregate those accounts that are directly or indirectly owned or 
controlled, or under common ownership or control of a person or 
group of persons that independently would be large traders. A person 
or group of persons, however, must aggregate those accounts that are 
directly or indirectly owned or controlled, or under common 
ownership or control of a person or group of persons that 
independently would not be large traders. An aggregated Form 13H for 
a group of persons may be filed by any of the commonly owned or 
controlled persons within the group that independently would be a 
large trader.
    For example, diverse financial service holding companies or 
partnerships may have divisions, subsidiaries, or affiliated 
companies or partnerships, which independently are large traders, 
based on transactions effected by or for the accounts of the 
division, subsidiary, affiliate, or partner. These companies and 
partnerships would be permitted, but are not required, to aggregate 
into a single Form 13H all accounts owned or controlled by each 
division, subsidiary, affiliate, or partner. Conversely, the 
accounts of any division, subsidiary, affiliate, or partner that 
independently would not be a large trader would be required to be 
aggregated into the Form 13H filing of a parent, subsidiary, 
affiliate, or partner.
    Large Traders and authorized persons preparing and filing Form 
13H should note that a person, or group of persons acting in concert 
toward a common investment objective, are prohibited from using the 
flexibility afforded by these rules to avoid filing Form 13H or to 
otherwise avoid the identification requirements of Rule 13h-1. 
Additionally, a person or group of persons that choose to aggregate 
accounts of persons that independently would be large traders should 
note that requests for disaggregation may be received from the 
Commission.
    Aggregation of Transactions. All transactions in publicly traded 
equity and option securities must be aggregated among or within 
aggregated accounts, without offsetting or netting purchase and sale 
transactions, and based upon the gross, un-hedged, or absolute value 
of all purchase and sale transactions. The ``gross value of an 
individual equity option'' is either: (i) the number of shares 
underlying the contract multiplied by the number of contracts 
purchased and sold; or (ii) the strike price of the contract 
multiplied by the applicable multiplier and the number of contracts 
purchased and sold. The ``gross value of options on a group or index 
of equity securities'' is the strike price of the contract 
multiplied by the applicable multiplier and the number of contracts 
purchased and sold. Transactions in index options are not required 
to be ``burst'' into share equivalents for each of the underlying 
component equities.
    The determination of ``who'' is a large trader and ``what'' 
information is to be included on form 13H are dependent upon the 
accounts or group of accounts that a large trader chooses to 
aggregate into a particular form 13H. Persons authorized to file 
form 13H should carefully review all general and special 
instructions regarding aggregation or disaggregation of accounts 
before filing form 13H. See special instructions to form 13H--item-
5--for further instructions regarding aggregation or disaggregation 
of accounts by a large trader.

B. Form and Schedules Required to be Filed.

    Form 13H and Schedules may be filed manually or electronically 
in accordance with the rules and regulations the Commission may 
prescribe. If the filing is submitted manually, the filing shall 
include three (3) copies of Form 13H and Schedules.
    All Large Traders must complete and submit Form 13H and one or 
more of the Schedules to Items 6, 7, or 8. In addition, all Large 
Traders that check ``NO'' in Item 2, because they are not registered 
by or otherwise required to file information with the Commission, 
must complete Item 4 and submit one of the following three 
Schedules:
    (1) Individuals: Schedule 4a.
    (2) Joint Tenants or Partnerships: Schedule 4b.
    (3) Corporations or Trustees: Schedule 4c.
    All Large Traders that check ``YES'' in Item 2, and provide the 
applicable information regarding other registrations or filings with 
the Commission, are not required to complete Item 4 or any of the 
corresponding Schedules.
    See special instructions to form 13H--items 2 and 4--for further 
instructions regarding commission registrations or filings and the 
applicability of schedules 4a through 4c.

C. Time Required for Filing Form 13H.

    Initial Filing. Form 13H and Schedules must be filed with the 
Commission within 10 business days after a person first effects 
transactions that reach the identifying activity level.
    Annual Filing. Form 13H and Schedules must be filed with the 
Commission within 60 calendar days after the end of each full 
calendar-year.
    Inactive Filing. A Large Trader may become inactive, thus exempt 
from the annual filing and disclosure requirements, upon filing its 
annual Form 13H for the previous full calendar year in which it has 
not effected: (1) aggregate transactions that equal or exceed the 
Identifying Activity Level; and (2) an aggregate calendar year total 
of 2,000,000 shares or fair market value of $30,000,000. Any 
inactive large trader that subsequently effects transactions that 
again reach the identifying activity level must make an initial 
filing within 10 business days after it effects the ``re-identifying 
transactions.''

D. Confidentiality.

    All information disclosed on Form 13H may not be compelled to be 
disclosed under the Freedom of Information Act (``FOIA'') because 
the information is specifically exempted from disclosure by Section 
13(h)(7) of the Securities Exchange Act of 1934, and the statute 
establishes particular criteria for withholding or refers to 
particular types of information to be withheld. The Commission, 
however, is not authorized to withhold information from Congress, or 
any other federal department or agency requesting information for 
purposes within the scope of its jurisdiction, or complying with an 
order of a court of the United States in an action brought by the 
United States or the Commission.

Special Instructions for Form 13H and schedules

A. Instructions for Form 13H--Cover Page.

    Type of Filing. Indicate the type of Form 13H filing by checking 
the appropriate box at the top of the cover page to Form 13H.
    If the filing is an ``Initial Filing'' indicate the first date 
on which transactions were effected that reached the identifying 
activity level. An initial filing must include a manually signed 
Form 13H and all applicable Schedules.
    If the filing is an ``Annual Filing'' indicate the ending date 
of the appropriate calendar year and list the specific Items or 
Schedules that are amended or changed. An annual filing must only 
include a manually signed cover page and those pages of Form 13H or 
Schedules that have been amended or changed. If no Items or 
Schedules to Form 13H have been amended or changed, indicate 
``NONE'' in the space provided and only file a manually signed cover 
page to Form 13H.
    If the filing is an ``Inactive Filing'' indicate the date that 
the Large Trader last effected aggregate transactions that reached 
the identifying activity level. A Large Trader shall become 
inactive, and exempt from the annual filing and LTID disclosure 
requirements, upon filing.
    If the filing is a ``Corrected Filing'' indicate the type and 
date of the filing that is being corrected. This type of filing is 
not required but may be made to correct a previous filing.
    All filings should indicate the applicable LTID assigned by the 
Commission and the Taxpayer Identification Number(s) of the Large 
Trader. Initial filings will not be required to include a LTID. In 
addition, all filings should disclose the Depository Trust Company 
(``DTC'') Institutional Delivery System (``ID System'') number(s) of 
the Large Trader that are applicable to the accounts identified in 
the specific Form 13H. An inactive large trader that effects re-
identifying transactions will retain the LTID initially assigned to 
it by the Commission.
    The unchanged or unamended portions of a large trader's form 13H 
and schedules need not be filed annually.

B. Instructions for Form 13H--Items 1 Through 5.

    Item 1. Business of the Large Trader. Specify the type of 
business of the Large Trader by checking one or more of the listed 
business types. If the Large Trader is an individual, check 
``Other'' and specify the occupation of such individual. Large 
Trader banks, trust companies and thrift institutions should check 
``Other Financial Institution.'' If the Large Trader is engaged in 
more than one type of business, check each type that applies to the 
Large Trader.
    The types of businesses checked should reflect the businesses of 
other large traders whose accounts are aggregated into the Form 13H 
by the Large Trader. For example, if the aggregated accounts of the 
Large Trader are accounts owned by other persons but controlled by 
the Large Trader only as an investment adviser, check only 
``Investment Adviser,'' even though the Large Trader may be a 
division, subsidiary, or affiliate of a broker-dealer that has 
independently filed Form 13H.
    Item 2. SEC Registrations. Indicate whether the Large Trader is 
an issuer of securities under the Securities Act of 1933, or 
registered under the Securities Exchange Act of 1934, the Investment 
Company Act of 1940, the Investment Advisers Act of 1940, or 
otherwise is required to file or report information to the 
Commission that is substantially similar to the information required 
in the Schedules to Item 4 (e.g., name, location and nature of the 
business of individual owners, partners, executive officers, 
directors, and trustees of the Large Trader). If ``Yes'' is checked, 
provide the applicable types of registrations and SEC or Central 
Registration Depository (``CRD'') file numbers.
    The types of registrations or filings listed should reflect the 
registrations of other large traders and persons whose accounts are 
aggregated into the Form 13H of the Large Trader. Therefore, if all 
of the persons whose accounts are aggregated into the Form 13H are 
covered by one of the listed registrations or filings, then the 
Large Trader is not required to complete Item 4 or any of the 
corresponding Schedules. However, if any person whose accounts are 
aggregated into the Form 13H of the Large Trader is not covered by 
one of the listed registrations or filings, then the Large Trader is 
required to complete Item 4 and the corresponding Schedule for the 
``un-registered'' person.
    SEC file numbers may be obtained by calling the commission's 
public reference room and CRD number may be obtained by calling the 
member services office of the National Association of Securities 
Dealers (NASD), during normal business hours.
    Item 3. CFTC Registrations. Indicate whether the Large Trader is 
registered with the Commodity Futures Trading Commission (CFTC) as a 
``Reporting Trader'' pursuant to Sections 4i and 9 of the Commodity 
Exchange Act of 1974, or otherwise is registered under the Commodity 
Exchange Act of 1974. If ``Yes'' is checked, specify the number and 
type of registration.
    Item 4. Type of Large Trader. If the Large Trader checked ``NO'' 
in Item 2, then check one of the listed organization types and 
complete the applicable Schedule. If any other large traders whose 
accounts are aggregated into the Form 13H of the Large Trader are 
not covered by one of the registrations or filings listed in Item 2, 
then check one of the listed organization types and complete the 
applicable Schedules for these un-registered persons. The Schedules 
to Item 4 capture information about the following types of un-
registered Large Traders whose accounts are aggregated into Form 
13H:
    Schedule 4a. Individuals.
    Schedule 4b. Joint Tenants or general partners, and in the case 
of limited partners, each limited partner that is the owner of more 
than a 10 percent financial interest in the accounts of the Large 
Trader.
    Schedule 4c. Executive officers or directors of a corporation, 
and all trustees for a private or public trust.
    The Large Trader must provide full names, addresses, and all 
other information required on these Schedules.
    Item 5. Aggregation of accounts by the Large Trader.
    Aggregated Accounts. Indicate in Item 5(a) whether the Large 
Trader has aggregated accounts of other persons in its Form 13H, 
which independently would be large traders. If the Large Trader has 
aggregated the accounts of other persons, list the name of the other 
person and its relationship to the Large Trader (e.g., division, 
subsidiary, affiliate, or partner).
    Disaggregated Accounts. Indicate in Item 5(b) whether other 
Large Traders that are owned or controlled by or under common 
ownership or control with the Large Trader have independently filed 
a Form 13H and been assigned LTIDs. If the Large Trader has not 
aggregated the accounts of other Large Traders, list the name of 
each other large trader, its LTID, and its relationship to the Large 
Trader (e.g., division, subsidiary, affiliate, or partner). If the 
Large Trader does not know the LTIDs of the other large traders at 
the time of filing, it must provide all of these numbers in its next 
Annual Filing.
    Form 13h--Items 1 Through 5--Must Reflect the Large Trader's 
Choice for Aggregation or Disaggregation of Accounts of Other 
Persons and Large Traders. See Special Instructions to Form 13h--
Items 6 Through 8--For Further Instructions Regarding Disaggregation 
By a Large Trader.

C. Instructions for Form 13H--Items 6 Through 8

    Lists of Large Trader Accounts. Items 6 through 8 are organized 
along the three capacities in which a Large Trader may act with 
respect to a single account (i.e., owner, controller, or custodian). 
The Schedules correspond to Items 6 through 8 and are organized to 
capture different combinations of these capacities, based upon the 
Large Trader's knowledge of information about accounts and the 
disclosure of ownership to the broker-dealer carrying the account. 
The Schedules to Items 6 through 8 require a Large Trader to list 
information about the following types of accounts:
    Schedule 6a. Accounts that are owned and controlled by the Large 
Trader, in whole or in part.
    Schedule 6b. Accounts that are owned but not controlled by the 
Large Trader, in whole or in part, which are controlled by others.
    Schedule 7a. Accounts that are not owned but are controlled by 
the Large Trader, in whole or in part, which are fully disclosed as 
to ownership.
    Schedule 7b. Accounts that are not owned but are controlled by 
the Large Trader, in whole or in part, which are undisclosed as to 
ownership.
    Schedule 8. Accounts maintained by the Large Trader as custodian 
or nominee only, which are undisclosed as to ownership.
    Depending on a Large Trader's choice for aggregation of 
accounts, one or more of these schedules must be filed with Form 
13H. The schedules attached to Form 13H must reflect the types of 
accounts that the Large Trader has chosen to aggregate into its Form 
13H.
    Information Required in the Schedules. The Large Trader must 
provide full names, addresses, and all other information required on 
Schedules 6a through 8. Large Traders may attach internally produced 
lists of accounts to the Schedules provided that such lists capture 
all required information in a format substantially similar to each 
of the Schedules. If the Large Trader does not know the LTID or DTC 
ID System number of other Large Traders at the time of filing, it 
must provide all of such numbers in its next Annual Filing.
    Qualifications of the Designated Contact Person. The Large 
Trader is required to designate a contact person for information 
regarding the accounts listed on each Schedule. The designated 
contact person must: (i) be a natural person; (ii) be employed by or 
otherwise affiliated with the Large Trader; (iii) be authorized by 
the Large Trader to respond to any inquiries or requests from the 
Commission; (iv) have personal knowledge of all orders and 
transactions in the accounts listed on the Schedule or be in a 
position to obtain this information promptly from other persons who 
have such personal knowledge; and (v) have the authority to provide 
prompt assistance with the disaggregation of the listed accounts.
    Disaggregation of Aggregated and Undisclosed Accounts. In the 
event that the Commission requests, all broker-dealers or large 
traders that carry or maintain aggregated or undisclosed accounts 
may be required to assist in the disaggregation of transactions or 
accounts. The Commission may request disaggregation in any 
reasonable manner considering the operational capabilities of each 
broker-dealer or large trader. For example, the Commission may 
require the Large Trader to disaggregate accounts or transactions of 
the other persons and Large Traders listed in Form 13H--Item 5(a). 
The Commission also may require the Large Trader to disaggregate 
accounts or transactions of the other Large Traders listed in 
Schedules 7b and 8.
    All Large Traders That Control or Maintain Omnibus or Otherwise 
Undisclosed Accounts Have a Duty to Supervise These Accounts to 
Assure that Persons Effecting Transactions Through These accounts 
Comply with the Identification Requirements of Rule 13h-1 and to 
Assure That the Information Contained in Schedules 7b AND 8 is 
Accurate and Complete.

[FR Doc. 94-3427 Filed 2-16-94; 8:45 am]
BILLING CODE 8010-01-P