Institute Comments on Proposed EU Reporting Rules for Institutional Investors

Washington, DC, July 8, 2002 - The Institute recently filed a second comment letter with the European Commission on its proposal to reduce the reporting threshold for securities ownership positions in issuers from 10 percent to 5 percent and to shorten the time for filing reports.

The Institute urged that the proposal to lower the reporting threshold include provisions to avoid imposing undue burdens on institutional investors-such as mutual funds, pension funds, and their investment managers-that do not invest for a change of control purpose. The Institute also recommended that the EU draft the reporting rules to balance the need for the market to learn promptly of an accumulation of securities by those who may seek to influence control over an issuer with the goal of not imposing unnecessary burdens on institutional investors with no change of control purpose. The Institute suggested that the Commission can accomplish this balance by:

retaining the 10 percent threshold for filings by investment managers,
reducing the frequency of filings by investment managers to permit them, for example, to file reports annually, or
including in the rule a provision that would not require affiliates of institutional investment managers to aggregate holdings if the affiliates exercise voting rights and investment decisions separately.