December 1, 2011 - Compliance Date For Large Traders To File Form 13H

On July 26, 2011, the Securities and Exchange Commission (the "SEC") adopted Rule 13h-1 (the "Rule") which requires "large traders" to provide the SEC with detailed trading information by filing Form 13H by December 1, 2011. The Rule defines a "large trader" as any person that directly or indirectly, including through other persons controlled by such person, exercises investment discretion over one or more accounts and effects transactions for the purchase or sale of any NMS security[1] 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 either: â–  two million shares or shares with a fair market value of $20 million during a calendar day; or

â–  twenty million shares or shares with a fair market value of $200 million during a calendar month.

After filing an initial Form 13H, large traders will be given a large trader identification number (LTID) to provide to registered broker-dealers who effect transactions on their behalf. Subsequent to the initial filing, large traders will have to file various periodic updates to Form 13H with the SEC. Registered broker-dealers will be required to keep records and report large trader transaction information to the SEC upon request. For those account holders who have not identified themselves as large traders, but that the broker-dealer knows or has reason to know are large traders, the broker-dealers must monitor their securities transactions and notify them of the requirement to register with the SEC. Registered broker-dealers will be required to comply with the recordkeeping, reporting and monitoring requirements starting on April 30, 2012. The compliance date to file an initial Form 13H is December 1, 2011.

We recommend that you review your current transactions in listed equity securities or exchange-traded options in light of these new requirements and contact us to discuss Form 13H filings. If you have any questions, please contact Daniel G. Viola at 212.573.8038 or dviola@sglawyers.com or Lance Friedler at 212.573.8030 or lfriedler @sglawyers.com.

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[1] An "NMS security" is "any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options." 17 CFR 242.600(b)(46).

Cheryl Spratt