November 23, 2019
Dear SEC,
Id like to voice my concern with and opposition to the proposed rule File No S7-14-19. While I do not doubt the intentions of the SEC to protect retail investors, reduce fraud, and encourage transparency, I believe the proposed rule will have severe unintended consequences.
Mainly, I find it unlikely broker-dealers will go through the effort and cost to verify whether issuer information is public and current in places that arent centralized and easily accessible. Consequently, I expect the quotations of many legitimate small companies (who are happy to provide financials on their websites, in press releases, or directly to shareholders) would disappear, having disastrous effects on current shareholderslikely to the tune of hundreds of millions of dollars in value, if not substantially more.
Many of these issuers at risk are simply small, family-run businesses seeking to avoid the costs associated with filing with the SEC. I believe a combination of several other ideas may better help remedy the issue currently at hand:
1. The SEC should avoid this proposal from the broker- dealer end and instead simply require that companies publish their annual financials on any number of various of acceptable avenues if their securities are traded over the counter.
2. Require investors wishing to invest in the affected companies to sign a waiver prior to investing. This could be implemented at the brokerage level.
3. Fix the issue of shares held in street name where an issuer may only have to recognize dozens of shareholders (since the stocks are usually held at major brokerages) when in fact there may be thousands of actual beneficial owners. This loophole allows companies to go dark in the first place.
4. Provide a low-cost alternative for companies who cannot afford the full costs of registration and filing with regulatory authorities.
Please do not implement File No S7-14-19 as proposed, without further iterations improving this crucial rule, or without seeking investor commentary again. Thank you.