Mar. 23, 2023
March 23, 2023 I am writing to express my concerns about the proposed rule to implement Section 27B of the Securities Act of 1933, a provision added by Section 621 of the Dodd-Frank Act. After a thorough review of the proposed rule, I believe that it will harm retail investors and leave room for manipulative hedge funds to do as they please. The proposed rule creates an exemption from registration under the Securities Act for certain offerings of securities by issuers that are not reporting companies, provided that the securities are sold exclusively to accredited investors. This exemption may sound reasonable on the surface, but it is flawed in several significant ways. Firstly, the proposed rule fails to protect retail investors adequately. By exempting certain offerings from registration, the rule reduces the information available to investors. Retail investors will not have access to the same information as accredited investors, making it more challenging for them to make informed investment decisions. This reduced transparency may result in retail investors investing in securities that are not appropriate for them, leading to potential losses. Secondly, the proposed rule provides an opportunity for manipulative hedge funds to exploit the exemption. Hedge funds have a history of engaging in manipulative behavior in the securities market, and this proposed rule would provide them with a new avenue to do so. By creating an exemption that is available only to accredited investors, the proposed rule would create an opportunity for hedge funds to create fake accredited investor accounts and engage in manipulative behavior while avoiding regulatory scrutiny. In light of these concerns, I urge you to reconsider the proposed rule and take steps to address the issues I have raised. I believe that it is essential to protect retail investors from potential losses and prevent manipulative hedge funds from exploiting loopholes in the regulations.