Oct. 10, 2022
I am an individual investor and write today to comment on the SEC's proposed rule S7-18-21 for Reporting of Securities Loans. A number of large institutions have submitted comments on this rule suggesting it is withdrawn or amended to a more watered down version. An attempt from those who operate and profit from working in the darkness (DARK POOLS) and away from transparency to maintain their highly lucrative and monetized approach of operating in the dark. Some have even gone as far as suggesting that this would have a negative impact on retail investors, which is blatantly false. It is clear these institutions are simply parroting false statements to try to maintain their profit levels, rather than do what is best for the market and retail investors. The proposed rule in its current form would benefit retail investors, pension funds and faith in the stock market by providing increased transparency. The rule would provide a better idea of the risks involved with the investments. When short selling practices occur in the dark and 'current' short sale information is provided long after a position has been entered into, retail investors cannot be aware of the risks that they take on when buying securities. This lack of information would represent a problem for all investors, who are expected to invest on incomplete and dated short sale information. I support the intraday 15 minute reporting requirement. The cost and effort involved with this is justified to help in early identification of abusive shorting practices, to reduce the ability of toxic market participants to hide behind loopholes and to attempt to prevent such fraud occurring in the capital markets. Even the SEC agrees as they have addressed this is the past as ““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 stock’s 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.’” The new rule would provide victimized companies a greater ability to defend themselves against predatory short selling, as short selling in the dark harms true competition and price discovery. The enactment of this rule would also introduce the ability for the general public as well as public companies to serve as watchdogs for the SEC as an initial line of defense against abusive practices, by being able to monitor short selling for securities fraud for those securities they are invested in, helping and strengthening the SEC's ability to fulfil its mandate and to help weed out market participants that are working against SEC rules, all at no additional cost to the SEC. I am a strong supporter of transaction by transaction reporting. It is clear that aggregated reporting is not transparent and provides opportunities where fraud can be hidden. Why should one individual or entity have to suffer a worse execution while another individual or entity benefits from a better execution, just because it is more convenient for institutions to report their short selling practices in the aggregate? It is unfair and contrary to the requirement of best execution and so it should be a mandated requirement for transaction by transaction reporting. I support the Short Sale Reporting rule in its current format and recommend that this should be enacted in its current format to help all manner of investors better understand the risks involved with the investments they are making. Kelly D. Dennis, MBA, ACS-AN, CANPC, CHCA, CPMA, CPC, CPC-I