Sep. 5, 2025
To: rule-comments@sec.gov Subject: S7-2025-02 – Request to Remove Preferred Stocks from the Expert Market Dear Secretary, I am writing in response to the SEC’s Spring 2025 Regulatory Flexibility Agenda (File No. S7-2025-02) regarding the treatment of certain preferred stocks that have been placed on the expert market. I respectfully urge the Commission to remove preferred stocks from the expert market and return them to public trading venues. Many of these securities are issued by well-established companies with regular financial reporting and robust market oversight. Preferred stocks serve as a critical investment option for retail investors who seek income, stability, and transparent price discovery. They are fundamentally different from thinly traded penny stocks and are supported by reliable disclosures and market information. Restricting these securities to the expert market has created several significant issues: Severely reduced liquidity: Limiting trading to a narrow pool of expert investors increases bid-ask spreads, impairs marketability, and undermines efficient price discovery. Exclusion of retail investors: Ordinary investors—including retirees and others who rely on preferred stocks for income—are unfairly denied access to these investments. Reduced transparency: Expert markets provide limited visibility into trading activity and pricing, weakening investor confidence and protection. Impaired price discovery: Thin, restricted trading leads to inaccurate valuations, which harms both existing holders and prospective investors. Market fragmentation: Segregating these securities creates a two-tier system that discourages participation and disrupts overall market integrity. Harm to income-focused investors: Many preferred stockholders depend on steady dividend payments. Restricting these securities disproportionately impacts those seeking reliable income. Given these concerns, I strongly urge the Commission to reconsider the current expert market designation for preferred stocks and restore them to public markets where transparency, liquidity, and fair access can be maintained. Thank you for your attention to this matter and for considering the interests of all investors. Sincerely, Mike Draper