June 25, 2023
Dear Sir/Madam,
I am writing to express my strong opposition to the provision that would deem holders of certain cash-settled derivative securities as beneficial owners of the reference equity securities.
Specifically, I am deeply concerned about the potential repercussions of granting derivative security holders, whether cash-settled or not, the same level of ownership and voting rights as the holders of the actual underlying securities. Such a measure would undermine the principle of a level playing field and expose households to predatory actions by wealthy entities.
The ownership and value of derivatives do not reflect the true ownership and economic interest in the underlying securities. By conferring equivalent rights through derivative instruments at a fraction of the cost, the proposal creates an unfair advantage for those who can exploit the derivative market to influence and control the companies issuing the underlying securities. This scenario not only distorts the fundamental principles of fair market participation but also poses a significant risk to the financial security of household investors.
Furthermore, the current mechanisms for soliciting votes from beneficially-owned securities and directly registered securities are already complex and opaque. Expanding these processes to include solicitation of derivative securities votes would exacerbate the existing imbalances and create an avenue for predatory entities to manipulate the market in their favor. Such actions could result in the erosion of household savings and investments, disproportionately impacting those who rely on these investments for their financial well-being and future stability.
In order to safeguard the interests of households and promote a fair and transparent market, it is imperative that the Securities and Exchange Commission reevaluates the proposed amendments outlined in File Number S7-06-22. The focus should be on preserving the integrity of the financial system, leveling the playing field, and protecting individual investors from the predatory actions of wealthier entities.
I respectfully urge the Commission to consider the potential consequences of these proposed amendments carefully. By ensuring a robust regulatory framework that addresses the concerns raised, we can maintain investor confidence, protect the financial interests of households, and foster an equitable and thriving market environment.
Thank you for your attention to this matter. I kindly request that my comments be given utmost consideration during the public consultation process.
Yours sincerely,
Willing to stay anonymous, a Household Investor