When attempting to purchase what percentage of a company's stock must you notify the SEC?

When an individual or entity attempts to purchase 5% or more of a company's stock, they are required to notify the Securities and Exchange Commission (SEC). This regulation is stipulated under Section 13(d) of the Securities Exchange Act of 1934, which aims to increase transparency in the financial markets and ensure that potential buyers disclose their ownership interests in publicly traded companies.

The requirement for notifying the SEC at this threshold is significant because it serves to inform the market and existing shareholders about any changes in ownership that could potentially influence control or decision-making within the company. By requiring disclosure at 5%, the SEC monitors significant accumulations of stock that could lead to tender offers, proxy contests, or other actions that might impact the company and its shareholders.

The other percentages mentioned in the choices pertain to different regulatory requirements, but the 5% threshold is the specific one tied to the initial notification obligation with the SEC. This makes it a critical point of understanding for those engaged in equity investing and corporate governance.