June 27, 2023
Subject: Comment on Proposed Rule: Modernization of Beneficial Ownership Reporting File No. S7-06-22
Dear Ms. Vanessa A. Countryman, Secretary, Securities and Exchange Commission,
I am writing to express my views on the proposed amendments to the beneficial ownership reporting rules, as outlined in the \"Modernization of Beneficial Ownership Reporting\" proposal Release No. 33-11030.
Firstly, I commend the Commission's efforts to modernize the filing deadlines for initial and amended beneficial ownership reports filed on Schedules 13D and 13G. The move towards a structured, machine-readable data language is a significant step towards increased transparency and efficiency in the reporting process. This will undoubtedly aid in the timely dissemination of information to all stakeholders, thereby promoting fair and efficient markets.
However, I would like to express my concern regarding the proposal to deem holders of certain cash-settled derivative securities as beneficial owners of the reference equity securities. While I understand the rationale behind this proposal, I believe it could potentially confer voting rights to derivative holders, which may not align with the principles of equity and fairness.
Derivatives are financial instruments whose value is derived from underlying assets, and holders of these instruments do not own the underlying assets. Therefore, granting them voting rights could disrupt the balance of power in corporations and potentially lead to decisions that do not reflect the interests of the actual shareholders.
I urge the Commission to consider these potential implications and to ensure that any changes to the beneficial ownership reporting rules do not inadvertently compromise the rights of actual shareholders.
Thank you for considering my comments. I appreciate the opportunity to contribute to this important discussion.
Sincerely,
Michael Kyriacou