October 28, 2019
Dear Chairman Clayton - I appreciate the work you are doing as chairman of the SEC to protect investors from harm. In today’s rapidly changing investing landscape, you have an unenviable but critically important job! Thank you for your service. I am writing in regards File No. S7-14-19. While I understand that the intentions behind this suggested rule are pure, I believe that the unintended negative consequences will vastly outweigh the positives if File No. S7-14-19 is put into effect. From a practical standpoint, myself and many fellow “deep value” fund managers have large percentages of our portfolios in names that would be impacted by this rule. If put into effect, there will be a stampede to the exit in OTC companies impacted by this rule. This will result in large losses for investors that specialize in these types of companies. This will be an immediate and painful consequence for existing investors. A secondary consequence is that many of the companies that will be impacted by the rule have entrenched management teams that already may not be working in the best interest of shareholders. Many of these management teams will purposely NOT comply with the regulations as it is in their best interest to make the stock as undesirable to own as possible (which is exactly what would occur were live quotations to be abolished). This will put minority shareholders at an even deeper disadvantage as we push for improved corporate governance. This is not in the public’s best interest. My suggestion is that the SEC leave the existing rule as is due to (a) the devastating losses that existing shareholders of legitimate OTC-listed companies will face if rule is enacted and (b) the longer term consequences of unethical management teams gaining leverage over minority shareholders who already face an uphill battle in pushing for improved corporate governance. I implore you to consider these consequences before enacting the rule. Best Regards, Matt Geiger Managing Partner MJG Capital Fund, LP