October 16, 2019
Dear Securities and Exchange Commission, Please reconsider your proposed rule change S7-14-19. While the proposal may be intended to reduce fraud in dark companies, it reaches too broadly and will also reduce access to capital for many legitimate small companies that have chosen to go dark to reduce SEC compliance costs, and also reduce access to the opportunities in their equities for many small investors. The stock market has provided equal opportunity to small investors and allowed people like Benjamin Graham, Warren Buffet, and countless others to find equal opportunity as investors, or even an advantage of scale in the equity of small companies, that proved to be a great economic equalizer in the 20th century. Small companies are the engine of innovation in our country, but many small public companies have found the cost of complying with onerous Sarbanes-Oxley audit requirements, quarterly reporting, and XRBL requirements too expensive at their small scale. This has already driven several dozen small US based businesses to list their company stock in Canada like Assure Holdings Corp. (IOM.v) developing innovative neurological monitoring technology in Devner, CO, Boardwalktech Software Corp. (BWLK.v) employing 70 in Blockchain software development in Cupertino, CA, Hamilton-Thorne (HTL.v) developing innovative fertility technology in Beverly, MA as well as dozens of other biotech, tech, energy and mineral exploration companies with operations in the US. One recent success story of this strategy is Xpel, Inc. (XPEL) based in San Antonio, TX, who was founded in October 2003 and listed in Canada for the reduced compliance costs, successfully grew their business organically under the lower cost structure in Canada, built the best brand in their industry of paint protection film for automobiles, and recently reached scale of $100 million in annual revenues where they felt the costs of listing on NASDAQ were finally justifiable. They could not have executed their growth strategy while needing to pay public company compliance costs in excess of $500,000 annually in their infancy. The opportunity in US markets for small companies and investors is growing further out of reach every day. The SEC compliance costs are driving legitimate and fiscally sound companies into the dark so they can actually literally afford to keep the lights on, into foreign markets where compliance costs are more measured and reasonable, or into private equity markets where only wealthy "accredited investors" are allowed to participate. Please consider a more nuanced approach to this regulation, perhaps allowing quotation of all companies that are in compliance with OTC Markets alternative reporting standards, or adopt similar standards for small companies with less than $50 million in revenue, which provide a more reasonable cost basis than full blown quarterly XRBL SO compliant SEC reporting. Yours Truly, Paul Lucot