Jun. 27, 2023
I appreciate the opportunity as a retail investor to comment on S7-06-22 entitled "Modernization of Beneficial Ownership Reporting". While I rely on other experts and paypeople to help me decipher these complicated rules, I can easily understand that there are many componenets here , some of which are beneficial to individual investors like myself and some which are detrimental. It seems the crux of what I am against in this rule proposal is with the amendments to Rule 13d-3. My understanding is this is what the vast majority of the financial world uses to define beneficial owners. There are real worl consequences to modifying and amending this rule the least of which is buying voting rights via hedged positions. I am all for more tranparency and disclosures, but rather than a convoluted rule that amends Rule 13d-3, why not simply propose reporting of large long and short deriative positions that can be made publicly available? Regarding this proposal, I am over all against it as it is written. However, I support proposed amendments to revise filing deadlines as technological improvements have increased the speed information is disseminated where shorter deadlines improve disclosures, reduce delays, and narrow information asymmetries that may harm investors. The public and all market participants deserve adequate and timely disclosures of material information, including accumulation of and significant equity ownership. I am AGAINST the proposed amendments to Rule 13d-3 regulating the use of cash-settled derivative securities; especially the proposal to add new paragraph (e) to Rule 13d-3. As noted in the background, "holding derivatives that, by their terms, entitle the holder to nothing more than economic exposure to a covered class historically has not been considered sufficient to constitute beneficial ownership". This rule proposal exists because, under certain circumstances, "holders of such derivative securities may have both the incentive and ability to influence or control the issuer of the reference securities" so "the proposed amendment would “deem” holders of such derivative securities to beneficially own the reference securities just as if they held such securities directly". As noted by Dr. Susanne Trimbath (https://twitter.com/susannetrimbath/status/1672708011167739904), this proposed rule appears to give derivatives holders voting rights. As the SEC understands Rule 13d-3 determines who are beneficial owners with the right to vote (see, e.g., https://www.sec.gov/corpfin/divisionscorpfinguidancereg13d-interphtm), this proposed rule for amending Rule 13d-3 has farther reaching implications that are not publicly disclosed in the rule proposal; which is sufficient basis on its own to reject the proposed amendments to Rule 13d-3. I am AGAINST the proposed amendment to Rule 13d-3(e) for determining the number of equity securities that a holder of a cash-settled derivative security will be deemed to beneficially own. Finally, I am AGAINST the proposed amendment to Rule 13d-3 for deeming holders of certain cash-settled derivative securities to be the beneficial owners. If the purpose is transparency, just report the positions - no need to over complicate things. I hope the SEC will take into serious account he detrimental effect this rule as a whole could possibly have on retail investors and re-write the rule to create better clarity and tranparencey for all maket participants. Sent with Proton Mail secure email.