Private Equity Investment Adviser Full Value Advisors, L.L.C., Loses Appeal to D.C. Circuit in Bid to Avoid Filing Disclosures of Stock Positions Under Section 13(f) of the Securities Exchange Act of 1934
Hedge Fund Law Report
Section 13(f) of the Securities Exchange Act of 1934 requires institutional investment managers to disclose their investment positions to the Securities and Exchange Commission (SEC). That information is then made public unless an exemption from disclosure applies. In applying for an exemption, the investment manager must submit detailed information to the SEC, including the information that the manager desires to avoid disclosing, to enable the SEC to consider the application. Appellant investment adviser Full Value Advisors, L.L.C. (Full Value) submitted an incomplete Form 13F disclosure form to the SEC and requested an exemption from disclosure. The SEC denied the application on the ground that Full Value had failed to provide sufficient information on which to base a decision. Full Value appealed the SEC’s determination, claiming that the disclosure requirements constituted an impermissible regulatory taking of property under the Fifth Amendment and violated its free speech rights under the First Amendment. The U.S. Court of Appeals for the D.C. Circuit held that mandatory disclosure to the SEC did not violate either Amendment. It also dismissed the appeal as unripe for consideration in so far as it related to Full Value’s claims regarding the potential disclosure of its Form 13F information to the public. We summarize the Court’s decision.