Critics say a proposed S.E.C. rule would curb activists’ ambitions.

A bunch of unlikely allies, together with roughly 80 regulation and finance professors, in addition to hedge funds and labor activists — are pushing again on laws proposed by the Securities and Trade Fee round swaps, a sort of economic instrument that provides buyers a roundabout strategy to acquire entry to a inventory.

These teams are united by considerations that the proposed laws may chip away at the marketplace for activist buyers, the shareholders who agitate for modifications at publicly traded firms. Among the many critics are members of company boards who activists may agitate in opposition to.

A bunch together with regulation professors from Harvard College, Stanford College and Texas A&M College had been amongst those that submitted letters to the fee earlier than Monday, the deadline for feedback.

The fee proposed guidelines in December that might drive buyers to reveal swap positions they’ve amassed in firms inside at some point in the event that they exceed $300 million, 5 % of an organization or, in sure circumstances, as little as $150 million. The proposal adopted the collapse of Archegos Capital Administration, which utilized billions in swaps to make what turned out to be dangerous bets — a sudden failure that value world banks billions in losses and roiled the inventory market.

Swaps are esoteric monetary devices that get their identify from the best way they trade one stream of earnings for one more. They’re a central method by which activist buyers construct up positions in firms earlier than different buyers or the goal firm turns into conscious of their curiosity.

The one-day reporting requirement for swaps within the S.E.C.’s proposal is even shorter than the time through which chief executives should disclose their very own buying and selling of their firm’s inventory; chief executives have two enterprise days to reveal inventory purchases or gross sales.

The regulation professors and others argue that forcing activist buyers to so rapidly report their positions in swaps would make it uneconomical to take large positions in firms. They are saying different buyers may instantly commerce in opposition to them, or company boards may swiftly put in place defenses or different assaults in opposition to activists making an attempt to construct a large enough stake to drive modifications.

Even the critics of parts of shareholder activism amongst them, the professors wrote, acknowledge that “activism is usually a means to deal with company underperformance and malfeasance, and maintain administration and boards of administrators accountable to the final word house owners of focused firms.”

The professors argued that the S.E.C. may merely ask buyers to reveal these positions on to the fee, not most of the people. Activist buyers presently have a 10-day window to reveal that they’ve constructed a stake of greater than 5 % of an organization’s inventory, which the S.E.C. additionally lately proposed shortening to 5 days.

A lot of different teams are advocating in opposition to the principles or submitting their very own letters, together with the activist investor Elliott Administration, commerce business teams and different funding funds.

Jay Clayton, the previous S.E.C. chairman, stated he believed the worth of lively and activist investing must be thought-about within the proposed rule. “The advantages of passive investing are based mostly on a portfolio strategy that captures lively buyers throughout {the marketplace},” stated Mr. Clayton, now the lead impartial director of Apollo World Administration. “Activism has emerged as a key element of lively investing.”

The S.E.C. declined to remark.

Swaps had been a key mechanism by way of which Archegos, a little-known funding agency, quietly constructed large positions in firms, together with ViacomCBS and Uncover, and saddled banks all over the world with billions of {dollars} in losses final yr when the shares of firms in its portfolio declined.

After Archegos imploded, Gary Gensler, the S.E.C. chair, stated that he and his staff had been searching for new guidelines to convey extra transparency to the swaps market to forestall the same meltdown. Nevertheless, the S.E.C. did not point out Archegos within the proposed guidelines for swaps or specify how the disclosures would decrease the dangers to counterparties.

The swaps proposal is one in a flurry of guidelines from the fee, together with guidelines that hit on disclosures round short-selling exercise and hedge funds and private-equity companies.

Lauren Hirsch contributed reporting.