Large Trader Reporting: SEC Order Temporarily Extends Compliance Date for Registered Broker-Dealers and Exempts Certain Transactions from Determination of Large Trader Reporting Status

Sullivan & Cromwell LLP - May 4, 2012
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On April 20, 2012, the SEC announced a temporary exemption from its large trader recordkeeping, reporting and monitoring rules for registered broker-dealers. The SEC order extends the compliance date of the so-called “large trader rule” for registered broker-dealers as follows:

  • all broker-dealers are exempt from the monitoring requirements of Rule 13h-1 until May 1, 2013;
  • clearing broker-dealers for a large trader that is either a registered broker-dealer or trades through a sponsored access arrangement are exempt from the recordkeeping and reporting provisions of Rule 13h-1 until November 30, 2012; and
  • all other broker-dealers are exempt from the recordkeeping and reporting provisions of Rule 13h-1 until May 1, 2013.

Simultaneously, the SEC announced an exemption for certain transactions from the type of transactions that a person must measure to determine whether it is a “large trader” under the large trader rule. The exemption covers offerings by or on behalf of an issuer executed through a national securities exchange and offerings by selling shareholders in an initial public offering or registered secondary offering of securities received as compensation from an issuer.