How Law Firms File A 13H: A Comprehensive Guide

Form 13H is a confidential SEC form that must be filed by a Large Trader, which is a person or entity that meets certain transaction thresholds. A Large Trader must have their attorney file its initial Form 13H with the SEC promptly after meeting the Large Trader threshold. This form is more than just a regulatory formality—it’s a crucial component of financial compliance and tax planning. Typically, a securities attorney or a CPA can help with filing Form 13H.

Large Trader Status

The U.S. Securities and Exchange Commission (SEC) defines a "large trader" as an investor or organization whose trades exceed a specific volume and dollar amount threshold. Specifically, a large trader is one whose transactions in National Market System (NMS) securities equal or exceed two million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month. This definition includes both regulated and unregulated entities, as well as domestic and foreign persons.

Large traders are typically professional market participants and large institutional investors, such as mutual funds, pension funds, hedge funds, banks, and insurance companies. These entities have the ability to buy and sell large blocks of securities, such as stocks and bonds. The SEC requires large traders to register with them via Form 13H and obtain a Large Trader Identification Number (LTID). This form must be filed "promptly" after the end of the calendar quarter in which the large trader threshold is met. Additionally, large traders are required to submit annual filings within 45 days after the end of each full calendar year.

If a large trader becomes inactive, they must file an amendment to Form 13H to report the termination of their status. Reactivation also requires an immediate update. A large trader who has not conducted a significant amount of trading activity may file for inactive status and remain exempt from filing requirements. To terminate their status, a large trader must report the termination of its operations on Form 13H during the next filing period.

It is important to note that the responsibility for Form 13H filing lies with the trader, even if they use a broker. The form includes personal information such as the trader's name, business address, and contact details, as well as business affiliations and trading activities. Understanding and correctly managing this form is crucial for financial compliance and tax planning.

Annual Filing Requirements

Large traders are required to submit an annual filing within 45 days after the end of each full calendar year. This is done on a 13H form, the same form used in the initial filing. The SEC defines a large trader as any trader whose transactions in National Market Securities (NMS) equal or exceed two million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month.

Large traders are investors or organisations with trades that are equal to or exceed certain amounts as specified by the Securities and Exchange Commission (SEC). Typically, large traders are professional market participants and institutional investors with the ability to buy and sell large blocks of securities. Mutual funds, pension funds, hedge funds, banks, and insurance companies often fall into the category of large traders.

The annual filing is a crucial component of financial compliance and tax planning. It helps maintain a transparent profile in the eyes of regulatory bodies and contributes to the overall health and integrity of financial markets. The SEC assigns each large trader an identification number, known as the Large Trader Identification Number (LTID), which must be furnished to their respective broker-dealers. The large trader must also identify which accounts the LTID applies to.

The 13H form can be filed by a securities attorney or a CPA. However, it is important to note that the ultimate responsibility for Form 13H filing lies with the trader.

Amended Filings

Large Traders must submit an Amended Filing no later than the end of the calendar quarter in which the information became inaccurate. Filers may submit an amended fourth-quarter filing jointly with an annual filing by checking the appropriate box on the cover page of the 13H-A form. While not required by the Rule, a Large Trader may voluntarily file an amended filing more frequently than quarterly at its discretion.

A Large Trader on "Inactive Status" is not required to file any Amended Filings while inactive. However, if a Large Trader on Inactive Status meets or exceeds the Identifying Activity Level, it must file for Reactivated Status promptly, generally within 10 days. This is done by filing a "Reactivated Status" Form 13H.

It is important to note that compliance with Form 13H is crucial for financial compliance and tax planning. Understanding and correctly managing this form can significantly influence an entity's financial success.

Reactivated Status

SEC Form 13H is a critical document for large traders and investors to maintain legal compliance and financial transparency. It is used by the SEC to identify large traders, defined as entities that engage in substantial trading volumes in national securities.

Large traders are required to file Form 13H with the SEC promptly after meeting the large trader threshold. This typically means filing within 10 days of effecting aggregate transactions at least equal to the identifying activity level.

If a large trader becomes inactive, they must file an amendment to Form 13H to report the termination of their status. To achieve inactive status, a large trader must file Form 13H and request it. While on Inactive Status, a large trader is not required to make Amended Filings.

However, if a person or entity on Inactive Status subsequently resumes trading activity and effects aggregate transactions equal to or greater than the identifying activity threshold, they must file a "Reactivated Status" Form 13H promptly after such transactions. This means that the person or entity would once again be subject to the filing requirements of Rule 13h-1 and must inform their broker-dealers of their Reactivated Status.

It is important to note that compliance with Rule 13h-1 is generally not complicated and requires an annual filing unless there are significant information changes or the person or entity no longer qualifies as a large trader.

Termination Filing

A Form 13H is a filing requirement for "Large Traders" whose transactions in "NMS securities" are equal to or exceed certain thresholds. A "Large Trader" is generally defined as a person, including a firm or individual, that exercises investment discretion over one or more accounts and effects transactions for the purchase or sale of any NMS security for or on behalf of such accounts, by or through one or more registered broker-dealers, in an aggregate amount equal to or greater than the "Identifying Activity Level".

The Identifying Activity Level is defined as transactions in NMS securities that equal or exceed 2 million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month. A Large Trader must have their attorney file its initial Form 13H with the SEC promptly, generally within 10 days, after first achieving the Identifying Activity Level.

Now, coming to the concept of "Termination Filing" in the context of Form 13H:

A "Termination Filing" (also known as Form 13H-T) is a filing that allows a Large Trader to terminate their status as a Large Trader. This filing is primarily designed to inform the SEC that the trader has terminated operations and will not requalify for Large Trader status in the future. For example, if a person ceases operations, dissolves, or is acquired, they may be able to file a Termination Filing.

To achieve Inactive Status, a Large Trader who has not effected aggregate transactions over the threshold during the previous full calendar year may file Form 13H and request Inactive Status. This status becomes effective upon such a filing. A person or entity on Inactive Status who subsequently affects aggregate transactions equal to or greater than the Identifying Activity Level must file for "Reactivated Status" by submitting Form 13H promptly, generally within 10 days.

It is important to note that a Termination Filing can be complex, and one may require assistance from an experienced securities attorney to determine if a filing needs to be completed and what information is necessary to comply with the requirements.

In the context of terminations and reinstatements in Texas, there are a few FAQs that address common issues. For example, when terminating an entity, it is important to file the correct certificate, which in this case, is a Certificate of Account Status stating that the entity has paid all taxes and indicating that the certificate must be filed with the secretary of state to legally end the entity's existence. Additionally, Texas law requires a filing entity to file an instrument with the secretary of state for terminations. It is also worth noting that there is no longer a three-year deadline to reinstate a voluntarily terminated Texas entity as of September 1, 2023.

Frequently asked questions