The SEC Doesn't Like It When Hedge Funds Talk to Each Other

So what is this story about?

The relevant rule is that if you acquire more than 5 percent of a company's stock, you need to disclose your ownership and plans on Schedule 13D, so everyone can know how much you own and what you're up to. But also, if you and someone else "agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer," then you have to add your ownership together for the 13D rules. So if Hedge Fund A buys 3 percent of a company's stock, and Hedge Fund B buys 2 percent, and Hedge Fund C buys 1 percent, then none of them needs to do any 13D disclosure.1433517997949 But if they have an agreement with one another about "acquiring, holding, voting or disposing of" those shares, then they all need to disclose their ownership and purchase history and plans for the company and the fact that they're working together.1433518020511