Beneficial Ownership Reporting Exemptions for Passive Investors

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Tightens rules for “stealth acquisitions” (think Twitter deal)

AKA “Protect American Investors from Secret Takeovers”


Which agency/agencies promulgated the regulation? *
Securities and Exchange Commission (SEC)
Which title, parts, and/or sections of the Code of Federal Regulations (C.F.R.) should be rescinded? *
17 CFR §240.13d-1(b) and (c) — “passive investor” and “exempt investor” reporting exemptions under SEC Schedule 13D/13G rules
What is your name?
—OPTIONAL--
Is your proposed rescission a notice of proposed rulemaking, final rule, direct final rule, interim final rule, or interpretive rule? *
Notice of Proposed Rulemaking
What is the name of the regulation being rescinded, if applicable? *
Beneficial Ownership Reporting Exemptions for Passive Investors
Please provide a short summary of the justifications for the rescission. *
Rescinding passive investor exemptions from early disclosure requirements would restore transparency, protect American investors from stealth acquisitions, and prevent market manipulation by high-net-worth actors using regulatory blind spots to consolidate control without scrutiny.
Please insert the address of the agency. [NPRM, DFR, and IFR only]
Securities and Exchange Commission 100 F Street NE Washington, DC 20549
Please insert the contact information for the agency. *
(202) 551-5870
What is the background for the regulation being rescinded? *
Under Section 13(d) of the Securities Exchange Act, investors acquiring 5% or more of a company’s stock must disclose their stake. However, exemptions under 17 CFR §240.13d-1(b) and (c) allow certain “passive investors” or institutions to delay disclosure. These exemptions were designed to accommodate non-controlling institutional holdings, but in practice, they have been exploited by wealthy individuals and private equity firms to orchestrate stealth takeovers, influence governance decisions, and avoid public accountability. High-profile cases—including acquisitions of public platforms—demonstrate how billionaires can quietly accumulate power without triggering timely regulatory or market responses.
Explain the reasons for the rescission. *
Eliminating or tightening these exemptions will: Prevent stealth control accumulations that mislead the market and disadvantage retail investors Ensure full and timely disclosure of significant share ownership regardless of stated intent Restore confidence in U.S. capital markets by closing regulatory blind spots that benefit only the ultra-wealthy Reduce opportunities for activist billionaires to manipulate public companies while avoiding transparency Realign the 13D/13G regime with its original purpose: protecting the investing public from undisclosed control If a full rescission is not feasible, the SEC should revise the thresholds and shorten the allowable disclosure windows to no more than 24–48 hours for any >5% ownership, regardless of investor classification.
Describe the text of the relevant C.F.R. provisions as it will exist after the rescission. *
All exemptions to Schedule 13D reporting under 17 CFR §240.13d-1(b) and (c) shall be rescinded or substantially narrowed. All beneficial owners acquiring more than 5% of a registered equity security shall be required to file a complete Schedule 13D no later than 48 hours after the acquisition. Classifications as 'passive' or 'exempt' investors shall no longer be grounds for delayed or short-form disclosure.
Please insert the name of the current agency head. *
Mark T Uyeda
Please insert the title of the agency head. *
Acting Chairman of the SEC

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