Aug. 17, 2020
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. Via Email August 17, 2020 Ms. Vanessa Countryman Secretary U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re: Reporting Threshold for Institutional Investment Managers, Release No. 34-89290; File No. S7-08-20 Dear Ms. Countryman: I hereby respectfully submit my comments on The Securities and Exchange Commission’s (the “Commission”) rule proposal that would increase the reporting threshold for Form 13F reports by institutional investment managers from $100 million to $3.5 billion. As an investor relations consultant for several publicly traded companies, I rely on 13F filings to aid in our shareholder engagement efforts – as it is the only accurate source of institutional holdings available. I believe that the proposed amendments would reduce transparency around holdings, significantly undermining issuer-investor engagement, particularly for small and mid-cap companies such as my clients. If the proposal were enacted, I would lose visibility on approximately 50% of our shareholders that are 13F filers, a significant loss of market transparency. I believe that this proposal would seriously jeopardize our shareholder engagement efforts by excluding more than 4,500 investment managers – or nearly 90% of all filers – from disclosure. While I welcome the Commission’s interest in modernizing 13F reporting, I believe that the proposed amendments would reduce transparency around hedge fund activism, significantly undermine issuer-investor engagement, and deprive retail investors of information they use to make investment decisions. I ask that the Commission withdraw this proposal and instead consider the common-sense reforms that were detailed in rulemaking petitions submitted by NIRI, the NYSE Group, the Society for Corporate Governance, and Nasdaq. Rather than allow 89 percent of current 13F filers to go dark, I ask the Commission to consider reducing the outdated 45-day reporting period, require 13F filers to disclose short positions, and support legislation to provide for monthly disclosure. It’s important to note that without 13F data, issuers may not realize that activist funds are plotting a proxy contest until one of those funds triggers the 13D disclosure threshold and surfaces with a 5 percent (or more) position. The long-term impact on the public markets could be detrimental to the U.S., as this proposal will deter private companies from going public, or prompt them to list on overseas exchanges that provide greater transparency around reporting disclosures. I ask that the Commission steps back to reconsider the implications of this proposed rule, and instead refocus its efforts on the modernization of the 13F disclosure regime to improve transparency. The need for effective shareholder engagement is clearer than ever, and this proposal would be a tremendous misstep at a time when shareholders are increasingly calling for greater transparency. As such, we urge the Commission to withdraw this proposal. Sincerely, Todd Kehrli President MKR Investor Relations, Inc.