June 27, 2023
Thank you for opportunity to comment on Proposed Rule S7-06-22.
I totally agree with Dr Susanne Trimbath on this proposed rule so I am going to quote her here:
\"My comments are in regard only to the section of the subject proposed amendment that would include cash-settled derivatives holders under beneficial ownership. Specifically, where proposed new Rule 13d-3(e) would provide that a holder of a cash-settled derivative security will be deemed the beneficial owner of the reference equity securities if the derivative is held with the purpose or effect of changing or influencing the control of the issuer of the reference securities.
Currently, the concept of beneficial owner encompasses those who, directly or indirectly, acquire voting rights or the right to dispose of the issuers securities. Those who hold derivatives entitling them to the economic exposure to a covered class should not be considered beneficial owners for the purpose of voting rights.
I understand the importance of the rule change for reporting purposes and agree with the several commenters that eloquently expressed that view. However, any action conferring voting rights on derivatives holders undermines the right of bona fide shareholders to have a say in corporate governance.
This part of the rule change would only worsen the already chaotic process of shareholder voting in matters of corporate governance. Despite pleas from the Senate, House of Representatives and Council of Institutional Investors, fixing the proxy plumbing remains on the SECs long-term agenda, as a nonsignificant priority.
https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202204RIN=3235-AM16.....
...If derivative holders want to vote on matters of corporate governance, they should be required to exercise that right through and only through direct beneficial ownership of the underlying security.\" Dr. Susanne Trimbath
I also want to personally add that as a relatively new Household Investor, I am overwhelmed by the 180 plus page documents supplied with a new rule proposal. I don't understand most of what I am reading in addition to finding the time to read them all and figure out what is really being proposed. I'm upset that the complexity is deliberate. If I buy 1 stock, I expect to have 1 vote no matter if it is traded, swapped, borrowed, loaned, or whatever other words fit here. When I vote my Proxy with my Broker, I am always suspicious if I am really being heard or not. Please don't make it even more complex or create any addition loopholes by calling those who hold derivatives the beneficial owner. I feel like this part of the rule is just creating one more dark corner for companies to be controlled by Wall Street and me and millions like me to be ripped off.
Thank you for listening. Thank you Dr. Trimbath for your well-articulated viewpoint. I do hope you don't mind me quoting you.
Cathy