Jan. 09, 2023
January 9, 2023 Dear Secretary Countryman, This comment is regarding S7-08-22 'Short Position and Short Activity Reporting by Institutional Investment Managers'. The SEC must very urgently reconsider changing Rule 4560 in a way to also include in the reporting requirements short interest positions in securities of U.S. entities that are held overseas at a separate legal entity but are still connected to the ultimate beneficial owner or owners of the FINRA member. According to the FINRA website: Q8. Is a firm required to report short interest positions that are held overseas at a separate legal entity and are not reflected on the firms books and records? A8. No. FINRA member firms only are required to report all short positions that are held in each individual firm or customer account, including the account of a broker-dealer, that are reflected on the firms books and records, as described in Rule 4560. Financial institutions and investment managers that are FINRA members can simply circumvent the short-selling reporting requirements imposed on said FINRA members by creating an overseas Special Purpose Vehicle (SPV) solely for the purpose of short-selling stocks in U.S. companies. Since, according to Rule 4560, non-U.S. entities are NOT required to report short positions, this allows hedge funds, investment advisors, and certain market makers to circumvent an important requirement that contributes to market transparency, investors' risk assessment abilities, and systemic financial stability. Therefore, Rule 4560 must explicitly include non-FINRA members short positions. Sincerely, Giorgio Seloni, Professional Investor and Motorist