Sep. 03, 2020
Ms. Vanessa Countryman Secretary U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re: Comment in Opposition to Proposed Rule Change on For 13F Reporting Threshold for Institutional Investment Managers, Release No. 34-89290; File No. S7-08-20 Dear Ms. Countryman, On July 10, 2020, the U. S. Securities and Exchange Commission voted to propose amendments to its Form 13F disclosure rules, which would dramatically reduce the number of investment managers and hedge funds required to report their holdings quarterly. Under the proposal, the minimum threshold for 13F disclosure would increase by 35 times from $100 million in U.S. equities under management to $3.5 billion. An analysis by the New York Stock Exchange concludes that this rule change would have a serious impact on transparency that would disproportionately impact public companies with market capitalizations under $250 million, the level the SEC refers to as "smaller public companies". Sequans is one such public company with a current market cap of around $190 million. Since our IPO in April 2011, we have been listed on the New York Stock Exchange and have relied on 13F filing data as our only reliable source of ownership information to inform our board of directors, guide our shareholder outreach program, help us set appropriate priorities in allocating management's time in response to requests for meetings, and to help us follow up on voting to assure a quorum at our Annual General Meeting. An analysis of our current 13-F data indicates that, under the proposed rule change, 6 of our 10 largest institutional 13F filers, representing 62% of our total institutional ownership, would no longer be required to make these quarterly filings. Furthermore, 9 of our 15 largest institutional 13F positions, representing 29.9% of our total outstanding ADSs, would no longer be required to file. Under the current rule, we struggle to maintain an accurate picture of our institutional ownership because family offices and funds with equity assets below the current threshold represent a significant portion of our institutional ownership. The proposed rule change would severely limit our visibility to a group of large institutions that would be apt to include mainly brokerage firms and index or other passively-managed funds, the least relevant filers in terms of maintaining a strong ongoing dialogue with the company's institutional investor base. For the foregoing reasons, we urge the Commission not to adopt a 35-times increase in the 13F threshold and instead implement common-sense reforms designed to increase market transparency, such as those detailed in rule-making petitions submitted by the National Investor Relations Institute, the NYSE, the Society for Corporate Governance and Nasdaq. Sincerely, Deborah Choate, Chief Financial Officer Sequans Communications