Subject: File No. S7-22-19
From: Robert R. Kaplan, Jr.

January 31, 2020

Ms. Countryman:

I am the founding partner of the law firm of Kaplan Voekler Cunningham Frank, PLC, located in Richmond, Virginia. Our practice focuses heavily on representing clients across the country in securities/capital markets transactions, both registered and exempt. For purposes of clarification, I am not writing on behalf of my firm today, and my viewpoints are entirely my own and do not necessarily represent those of my colleagues. I am writing to express my support for S7-22-19, and specifically the initiatives contained in the proposed rule for the disclosure of conflicts of interest on the part of investment advisory firms, opportunities for issuer response to such recommendations and disclosure of the same.

Investment funds typically account for the majority of outstanding shares of most publicly traded companies. At the same time, regulatory precedent developed over the almost two preceding decades has put further fiduciary burdens on the advisors to these funds that have resulted in a frequent lock-step voting in accordance with the recommendations of proxy advisory firms on the premise that (rightly or wrongly) doing what the advisory firm recommends comports with their fiduciary duties.

The proxy advisory space is dominated by a very small number of firms. As such, they wield an enormous amount of power to influence shareholder voting and, in turn, policies of issuers. The policies they influence can often focus on priorities other than shareholder value and/or return the classic example being the trend of voting pursuant to environmental, sustainability and governance (ESG) policies promoted by the proxy advisory firm. Unless a particular fund is offered based on stated objectives other than wealth preservation, value creation and maximized return, the presumption should be that the VAST majority of investors have invested with the expectation that the chief priority of the fund will be these considerations.

At the heart of the protections afforded by the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as well as the regulations propagated pursuant thereto, is disclosure and transparency. Once again, the need for such disclosure and transparency is necessary to strike the right balance between the utility of third-party advisory firms and the fiduciary duties of fund managers to their investors.

I dont mean to imply that third party advisors do not play a useful role in the public markets in distilling the large amounts of information and management considerations that are often implicated by proxy solicitations. Nor do I mean to imply that other considerations than pecuniary ones could not enter into the calculus of shareholder voting. But understanding the context and variables at play in making the voting recommendations conflicts of interest of the proxy advisor and viewpoints of the issuer especially would be critical in light of the influence these firms yield and would empower and demand that fund managers objectively assess recommendations to insure that those recommendations are aligned with maximizing value to their investors.

Thank you for your consideration.