Mar. 23, 2020
Comment on SEC Proposed Rule #S7-24-15: Reference: File Number S7-24-15 It would be counter to the SEC’s mission of ensuring efficient markets if it were to restrict or prohibit access to market products that provide positive returns when the market goes down. In fact, if the SEC were to implement such a rule, it would simply exacerbate the kind of market corrections we are now seeing as a result of the coronavirus outbreak. Does anyone doubt that the reason that the markets have corrected so significantly to the pandemic is that assets were extremely over-valued at the start of the crisis (S&P 500 P/E was 24 in December 2019, which is considered bubble territory). That’s because most investors have been sold on the ‘buy and hold” strategy, regardless of whether asset prices make economic sense. Instead of trying to remove or restrict retail investors’ access to investment vehicles that can help them hedge their portfolios, the SEC should be promoting these investment tools and educating retails investors how to effectively use them so that they don’t find themselves at the mercy of market corrections, like they do now. As such, the proposed rule is not appropriate in (or, with respect to the Investment Company Act, consistent with) the public interest. The Exchange Act and the Investment Company Act require the Commission to consider whether an action will promote efficiency, competition, and capital formation. As discussed herein, the proposed rule clearly does not and thus this action should be permanently withdrawn.