Subject: S7-18-21: WebForm Comments from Gunner
From: Gunner
Affiliation: Lead Training Supervisor (UPS)

Oct. 08, 2022



October 8, 2022

 October 8th, 2022

Vanessa Countryman, Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-0609

Re: Reporting of Securities Loans (File No. S7-18-21)


Dear Secretary Countryman:

I am writing in strong support of rule 10c-1, Reporting of Securities Loans.

In order to have a truly fair and transparent market, we need to have clarity and full visibility on ALL positions held by large firms like Citadel, this includes short positions.

The current setup we have now via transaction-by-transaction reporting is heavily flawed, and it allows Citadel and others to hide within the aggregate. Secret short selling is massively harmful not just to the target companies, but also to the average retail investor, especially when retail doesn't have nearly the same information that firms like Citadel have.

I believe that a 15-minute reporting requirement solves many of these issues of lack of transparency. The cost and effort of this requirement are ABSOLUTELY necessary. With a 15-minute reporting requirement, market makers and hedge funds would be unable to hide within the loopholes around reporting requirements that they currently abuse massively.

As stated above, I fear that this harms retail investors and working-class investors the most. Firms like Citadel are able to route 99 percent of retail buy orders off-exchange onto a dark pool, where it has zero impact on the actual price of the stock. Without clear transparency, I fear that firms like Citadel will continue to abuse retail in order to continue to churn profits.

Companies must have a greater ability to defend themselves against these financial predators. Short selling in the dark completely ruins true and actual price discovery and competition. It's absolutely insane to me that the small number of short-selling hedge funds simply \"know best\" and can just hammer unsuspecting companies into the ground, without any consequence or reporting requirement. Short selling hurts and harms individual investors in the name of larger and bigger profits for hedge funds. As a working-class retail investor, this disgusts me and is one of the largest reasons I have very little faith in our markets.

Short sellers are NOT investors, very much the opposite. I'm flabbergasted that the SEC seems to be prioritizing and putting the needs of these short-selling hedge funds first, all while profiteering over investor protection and market transparency. Even if short hedge funds are afraid of a \"short squeeze\" that exposes the identification of their short-selling strategy,  this within itself is not a reason for the Commission to deny retail greater market transparency. If short selling is simply chilled, short squeezes and other forms of dangerous market volatility would become FAR less common. Individual \"sophisticated\" investors would quickly learn to avoid dangerous positions that would expose them to immense volatility.

Retail greatly benefits from increased market transparency. This is because we have a far better idea of the risks of our individual investments if we can simply see who is targeting which company. If hedge funds are allowed to continue to simply short in the dark, retail investors will remain dangerously unaware of any risks that we may be taking on when making a stock purchase. More timely reporting means more timely information for retail investors to utilize to make more sound investment decisions, alongside protecting themselves from abusive short-selling practices. Working families and individual retail investors need to be able to look both ways before they cross Wall Street, nobody wants working-class families to get run over in the name of a better return for a hedge fund or a market maker.

The public and retail/individual investors would be more than capable and willing to help in monitoring short-selling data for securities fraud, strengthening the SEC, and better enabling it to fulfill its mandate, at no cost. More timely, higher-resolution reporting would create a waterfall effect whereby some individual investors analyze the data and make that analysis publicly available for free, which is then disseminated widely and re-analyzed, spurring more activity. This allows individual investors to help each other and allows busy working families to be the recipient of aid for free. Working families do not have the resources to buy data and analysis, nor do they have the time to analyze data themselves. Greater transparency has positive effects on investor protection that go far beyond the obvious. The Commission must not remain ignorant of how social media facilitates a protective web of information sharing that protects investors. The Commission must not behave as though
 they are ignorant of how greater data provision empowers whistleblowers, who extend the Commissions reach and greater empower it to meet its strategic goals.

The true inherent dangers of long untracked lending chains can lead directly to market fragility and extreme market volatility. Securities lending activity also can hide massive destructive chains of obligations that can even go as far as being an actual threat to national security. This is why transparency to the regards of position reporting is so vital, more so than it ever has been before. The risks associated with reckless security lending and short selling (a la Jan 28, 2021,)go far beyond any theoretical benefits of secret short selling for \"superior returns.\" Investor protection, particularly for individual retail investors and working-class families needs to be the top priority. The protection of individual investors must remain the number one priority, otherwise, there never will be a fair or transparent market.

In the words of the SEC
the Commission, in proposed rule 13f-2, explicitly noted its awareness of the myriad ways in which short selling can be used to abuse individual investors and working families. In proposed rule 13f-2, the Commission said it is ...mindful of concerns that certain short selling activity can be carried out pursuant to potentially abusive or manipulative schemes. For instance, market manipulators may seek to spread false information about an issuer whose stock they sold short in order to profit from a resulting decline in the stocks price. The Commission has previously noted various other forms of manipulation that can be advanced by short sellers to illegally manipulate stock prices, such as bear raids.



Sincerely,

Gunner