Jun. 26, 2023
Dear Securities and Exchange Commission, I am writing to provide my feedback regarding the proposed rule S7-06-22, which aims to modernize the reporting of beneficial ownership and enhance transparency and fairness in our financial markets. Here are my comments and requests: Safeguarding Shareholder Rights: The proposed rule's requirement for beneficial ownership to be granted upon delivery of the underlying security protects the interests of existing shareholders and ensures their voting power. This measure is crucial in preventing dilution and maintaining fair representation. Promoting Fair and Equal Voting: I oppose including derivative holders as beneficial owners to preserve fair and equal voting rights for directly registered shareholders. By doing so, we prevent undue influence from derivative holders who may not have actual ownership of the underlying securities, thereby ensuring a balanced and representative voting process. Accurate Ownership Calculation: The proposed examination of the delta concept for ownership calculation ensures accuracy. Ownership should be based on the actual delivery of the underlying security to avoid distortions that could arise from including derivative holders. Maintaining accuracy is essential for upholding market integrity. Enhancing Transparency: The proposed rule should enhance transparency by mandating hedge funds to disclose their short positions and activities. This transparency makes it harder for hedge funds to conceal their positions and provides investors with a clearer understanding of market dynamics. It ensures that all market participants have access to relevant information. Timely Reporting: Requiring prompt reporting of changes in short positions, as outlined in the rule, prevents the accumulation of undisclosed short positions. Timely reporting ensures that investors have access to up-to-date information about market activities, reducing the potential for market manipulation. Improved Oversight: The use of structured data, as mandated by the rule, enables better monitoring of ownership data. This enhanced oversight empowers regulatory bodies to identify potential risks and take appropriate actions to maintain market integrity. It significantly strengthens market surveillance capabilities. Deterrence against Market Manipulation: The increased transparency and reporting requirements serve as a deterrent against coordinated actions aimed at manipulating stock prices. By discouraging market manipulation tactics employed by certain entities, the proposed rule promotes a more level playing field for all market participants. Establishing a Level Playing Field: The transparency and accountability fostered by this rule contribute to a fairer market environment. By ensuring that all investors have access to relevant information, it promotes fair competition and prevents unfair advantages for specific market participants. It upholds the principles of equity and fairness. In conclusion, it is crucial to focus on provisions that protect shareholder rights, ensure fair and equal voting, accurately calculate ownership, enhance transparency, facilitate timely reporting, improve oversight, deter market manipulation, and establish a level playing field. These measures are vital for maintaining the integrity and fairness of our financial markets. Thank you for your attention to this matter. I trust that you will carefully consider the importance of transparency, fairness, and the preservation of shareholder rights in our financial system. Sincerely, David S. Kraft