Under SEC Rule 13h-1, you are a “large trader” if you exercise investment discretion over transactions in exchange-listed (NMS) securities that reach 2 million shares or $20 million in a single calendar day, or 20 million shares or $200 million in a calendar month. Once you cross that line, you must file Form 13H with the SEC promptly, receive a Large Trader Identification Number (LTID), give that number to your broker-dealers, and keep your filing current with annual and, when needed, quarterly amendments.
This rule tends to surprise founders, executives and family offices after a company goes public or after a large liquidity event. Someone who never thought of themselves as a “trader” may suddenly be selling or reallocating a concentrated position in very large blocks. Here is how the rule works and what you need to do.
Where the Large Trader Rule Comes From
Section 13(h) of the Securities Exchange Act of 1934 authorizes the SEC to require large traders to identify themselves, and the SEC implemented that authority through Rule 13h-1, adopted in 2011. The goal is to let the SEC identify significant market participants and reconstruct their trading activity when it investigates market events or possible misconduct. The rule does not limit what you can trade; it is an identification and reporting regime.
A “person” under the rule can be an individual or an entity, domestic or foreign. The test focuses on who exercises investment discretion over the accounts. A parent company or other control person can register on behalf of the affiliates it controls, and many institutional groups file at the top-level entity for that reason.
1. The Identifying Activity Level
You reach the “identifying activity level” when your aggregate transactions in NMS securities equal or exceed either of these thresholds:
- Daily: 2 million shares or $20 million in fair market value during any calendar day.
- Monthly: 20 million shares or $200 million in fair market value during any calendar month.
NMS securities generally include exchange-listed equities and listed options. Purchases and sales are added together, so buying and selling the same stock both count toward the total. Activity across all accounts over which you exercise investment discretion is aggregated, including accounts held at different brokers.
Certain transactions are excluded from the count. Under the rule, these generally include:
- Transactions that are part of an issuer’s offering, such as shares allocated in an IPO (other than offerings effected through an exchange).
- Gifts, transfers by a court-appointed fiduciary in distributing an estate, and transactions under a court order.
- Grants, awards and exercises under an issuer’s employee benefit or compensatory plan.
- Transactions to effect a merger, reclassification, tender offer or issuer buyback, plus securities lending and repurchase agreements.
For founders, the practical point is that receiving or exercising equity awards does not by itself make you a large trader. Selling a large block after the IPO lockup expires, whether through open-market sales, a block trade or a Rule 10b5-1 plan, can.
2. Form 13H Filing Requirements
Large traders identify themselves to the SEC by filing Form 13H electronically on EDGAR. There are several types of filings:
- Initial filing: Due promptly after you first reach the identifying activity level. The SEC has interpreted “promptly” to mean within 10 days under normal circumstances. You may also file voluntarily before reaching the threshold, which some active traders do to avoid tracking their volume.
- Annual filing: Required within 45 days after the end of each full calendar year, even if nothing has changed.
- Amended filing: Required promptly after the end of any calendar quarter in which the information in your most recent filing became inaccurate, for example after a change in address, control persons or broker-dealer relationships.
- Inactive, reactivation and termination filings: Discussed below.
The form asks for information about your business, your affiliates, the broker-dealers you trade through and the accounts covered. Because it is filed on EDGAR, you will need EDGAR access credentials. The SEC overhauled its EDGAR access and account management process in 2025 (often called EDGAR Next), so first-time filers should allow time to set up access before the deadline.
3. Your Large Trader Identification Number (LTID)
After your initial filing, the SEC assigns a unique LTID. You must:
- Disclose your LTID to every registered broker-dealer that effects transactions for you.
- Identify every account to which the LTID applies.
Broker-dealers then use the LTID in their recordkeeping and regulatory reporting, including reporting to the Consolidated Audit Trail (CAT). If you use several brokers, or trade through managed accounts or family entities, keeping this account list accurate is the part of compliance that most often slips.
4. Inactive Status, Reactivation and Termination
If you did not reach the identifying activity level during the previous full calendar year, you may file for inactive status, which relieves you of ongoing annual and amended filings while inactive. If your trading later reaches the threshold again, you must promptly file to reactivate your status. If the large trader entity ceases operations, a termination filing closes out its registration.
For a founder who sold a large block once and does not expect to repeat it, inactive status is often the right result the following year. It should be a deliberate filing, not an assumption.
How This Fits With Other Disclosure Rules
Large trader status is separate from other ownership and insider reporting regimes. A founder or director of a public company may also have obligations under Section 16 (Forms 3, 4 and 5), Schedules 13D or 13G for holders of more than 5% of a class, and Rule 144 (including Form 144). Each rule has its own trigger and deadline. Filing Form 13H does not satisfy any of them, and vice versa.
What Happens If You Do Not File?
Failing to file Form 13H, or failing to give your LTID to your brokers, is a violation of the Exchange Act. The SEC can bring enforcement actions that may involve penalties, and the issue frequently surfaces when a broker-dealer’s compliance team asks for an LTID or when the SEC reviews trading around a market event. If you realize you crossed a threshold without filing, the usual approach is to file promptly and get advice on whether anything else needs to be addressed.
The Takeaway
The Large Trader Rule is simple once you know it exists: watch the 2 million share/$20 million daily and 20 million share/$200 million monthly thresholds, file Form 13H promptly if you cross one, share your LTID with your brokers, and keep up with annual filings or move to inactive status. Founders planning post-IPO sales should build these steps into their liquidity planning, alongside Rule 144, Section 16 and 10b5-1 plan requirements. For background on how equity awards work before a liquidity event, see our post on restricted stock units vs. stock options.
Frequently Asked Questions
Does going public automatically make a founder a large trader?
No. Receiving shares in an IPO and grants or exercises under employee equity plans are excluded from the calculation. A founder typically becomes a large trader only by selling or buying NMS securities at or above the daily or monthly thresholds, for example in a large post-lockup sale.
How quickly do I have to file Form 13H?
The initial Form 13H must be filed promptly after you first reach the identifying activity level, which the SEC has interpreted to mean within 10 days under normal circumstances. Annual filings are due within 45 days after each calendar year ends.
Is Form 13H public?
No. The SEC treats Form 13H information as confidential under Section 13(h) of the Exchange Act. It can still be shared with other regulators and used in enforcement matters.
Can I stop filing if I no longer trade at those levels?
Yes. If you did not reach the identifying activity level in the previous full calendar year, you can file for inactive status. If your trading reaches the threshold again, you must promptly file to reactivate.
How Sutter Law Can Help
We advise founders, executives and investors on securities compliance before and after liquidity events, including Form 13H filings, inactive status and coordination with other SEC reporting obligations. Our startup law and outside general counsel teams can help you plan ahead rather than react. If you are approaching a large sale or have been asked for an LTID, contact us for a free consultation.
This article is general information, not legal advice. Reading it does not create an attorney-client relationship.
