On September 4, 2014, the SEC denied new requests made by Brooklyn Capital Management, LLC (“Brooklyn”), for confidential treatment of information contained in its Form 13F filings. Form 13F is a quarterly report required under Section 13(f) of the Exchange Act for registered investment advisers and other “institutional investment managers” with over $100 million in qualifying assets and potentially contains information about recent investment holdings. Brooklyn, which was formerly known as Full Value Advisors LLC, initially requested confidential treatment when it passed the $100 million reporting threshold for purposes of Section 13(f), and in 2011 had its petition for a writ of certiorari on the matter denied by the U.S. Supreme Court.
In seeking confidential treatment, Brooklyn argued that Congress’s intent was that the SEC should grant confidential treatment to an investment manager’s Form 13F reports in every instance in which confidentiality is in the public interest or for the protection of investors. Brooklyn asserted that confidential treatment was appropriate here to protect its clients from price fluctuations that typically follow disclosure of Brooklyn’s ownership of a particular security and to avoid potential harm to investors that may seek to invest based on available information about Brooklyn’s holdings. Brooklyn also argued that confidential treatment was warranted because it was a value-oriented activist investor, and any revelation of its investment strategies through its Form 13F holdings reports was likely to increase Brooklyn’s cost of further acquisitions and dampen the investment returns of Brooklyn’s clients.
In denying Brooklyn’s request, the SEC stated that Brooklyn had failed to sufficiently detail the alleged harms of disclosure and had repeated earlier allegations without offering any new arguments for relief. The SEC noted that, in enacting disclosure requirements under the Exchange Act, Congress had determined that public disclosure under Section 13(f) would contribute to the transparency and integrity of the U.S. equity markets, and thus to investor protection, and stated that Brooklyn had provided no basis to question Congress’s determination.