Every position on your Form 13F information table requires two separate classifications: the type of investment discretion you have over the holding, and the type of voting authority you hold. These two dimensions are independent — your discretion over a position and your voting rights for that same position can (and often do) differ. Getting these classifications wrong doesn’t just create a technically inaccurate filing — it can misrepresent your firm’s actual authority to the SEC.
Part One: Investment Discretion
Investment discretion refers to your authority — as the filer — to determine which securities are bought, sold, or held in an account. The SEC defines it broadly: you exercise investment discretion if you have the power to determine what trades to make, or if you make trading decisions even if ultimate investment responsibility lies elsewhere.
Sole Discretion (Type 01): You, the reporting manager, have exclusive, unilateral authority over the investment decisions for this position. No other manager or entity shares that authority.
Shared — Defined (Type 02): Discretion is shared between you and another entity you control, or an entity that controls you. This covers affiliated manager structures and parent-subsidiary relationships.
Shared — Other (Type 03): Any shared discretion arrangement that doesn’t fit the defined category — for example, two unaffiliated co-managers with joint authority over a position.
A key nuance: a single CUSIP position can require more than one discretion classification. If you hold 50,000 shares of a security with sole discretion and another 25,000 shares under a co-management agreement, both tranches must be reported separately on the information table.
Part Two: Voting Authority
Voting authority is entirely separate from investment discretion. It refers to your right to vote shares at annual meetings, on corporate resolutions, mergers, and other shareholder matters. The fact that you manage a position doesn’t automatically mean you vote it — many custodial arrangements retain voting authority with the client.
Sole Voting: You have full, unilateral authority to vote the shares. Your vote is not subject to override or co-determination by another party.
Shared Voting: Voting authority is shared with one or more other parties — a co-manager, affiliated entity, or client — who must concur on how shares are voted.
None: You have no voting rights over this position whatsoever. The right to vote belongs entirely to another party, typically the underlying client.
Common Real-World Scenarios
Standard SMA with full authority: An RIA manages a client’s equity portfolio on a fully discretionary basis, and the client has also granted proxy voting authority to the RIA. Classification: Sole Discretion / Sole Voting.
Discretion granted, voting retained: The same RIA manages a different client’s account on a fully discretionary basis, but this client’s investment management agreement retains proxy voting authority with the client. Classification: Sole Discretion / None.
Co-managed institutional account: Two unaffiliated managers jointly oversee a large pension fund’s equity allocation. Both must agree on trading decisions, and the fund’s trustees retain proxy voting. Each manager classifies shared positions as Shared-Other Discretion / None.
Same security, two tranches: An RIA manages Apple shares across two accounts — one with sole discretion and sole voting, another as a co-managed account with shared discretion and shared voting. The Apple CUSIP must appear twice on the 13F with different classifications.
When Multiple Managers Must File the Same Position
When investment discretion over a position is shared, each manager who exercises discretion must report it independently on their own 13F filing. This means the same CUSIP and share count can legitimately appear on multiple managers’ 13F filings for the same quarter. The SEC expects this overlap — it is not an error.
If you’re uncertain how to classify a particular position, the answer is almost always in your investment management agreement or custodial documentation. Review the governing agreements, not just the data. Questions? Reach out to our team — we’re happy to help you think through your account structures.