Subject: S7-32-10: Webform Comments from Cory
From: Cory
Affiliation:

Sep. 19, 2023

Safeguarding Financial Markets: A Case for Passing the
Proposal on Security-Based Swaps Regulation

The world of finance is a realm of immense complexity and potential
prosperity. However, it also harbors darker elements – fraudulent
schemes, manipulative practices, and deception that can cause
financial havoc. In response to these threats, regulatory bodies must
take action to protect investors and maintain the integrity of
financial markets. The "Prohibition Against Fraud, Manipulation,
or Deception in Connection with Security-Based Swaps; Prohibition
against Undue Influence over Chief Compliance Officers; Position
Reporting of Large Security-Based Swap Positions" proposal is a
necessary and vital step in this direction.

The Need for Market Integrity

Financial markets are the lifeblood of the global economy. They
facilitate investment, capital formation, and wealth creation.
However, they are not immune to criminal activity. One of the most
compelling reasons to pass this proposal is the imperative to protect
investors from market manipulation and deception. Here, we explore the
dire need for this regulation by examining real-world examples of
financial crimes that have wreaked havoc in the past.

1. **The Enron Scandal: A Case of Manipulation and Deception**

The Enron scandal is a stark reminder of how deceptive practices can
have catastrophic consequences. Enron, once a highly respected energy
company, used accounting tricks and manipulative practices to hide its
financial troubles. The result? Thousands of employees lost their
jobs, shareholders lost their investments, and the broader economy
suffered.

Passing the proposal would strengthen regulations against such
deception, making it harder for companies to hide their true financial
conditions, and thus protecting both investors and employees.

2. **Libor Manipulation: A Global Financial Scandal**

The London Interbank Offered Rate (Libor) scandal is a prime example
of market manipulation on a global scale. Major banks conspired to
manipulate Libor rates to benefit their own trading positions. This
manipulation had far-reaching consequences, affecting trillions of
dollars in financial contracts worldwide.

The proposal's emphasis on prohibiting fraud and manipulation
directly addresses the need to prevent such large-scale market
manipulation. Passing it would send a strong message that such
practices will not be tolerated.

3. **Pump and Dump Schemes: Fraudulent Stock Manipulation**

Pump and dump schemes involve artificially inflating the price of a
stock through false or misleading statements, only to sell off the
stock at the inflated price, leaving unsuspecting investors with
worthless shares. These schemes prey on investors' trust and can
lead to significant financial losses.

Passing the proposal would help curb these fraudulent practices by
imposing strict penalties on those attempting to deceive investors and
manipulate stock prices.

4. **Insider Trading: Undermining Fair Markets**

Insider trading occurs when individuals with non-public information
about a company's prospects use that information for personal
gain. This unethical practice undermines the fairness and transparency
of financial markets.

By implementing regulations that prohibit undue influence over Chief
Compliance Officers and enhance transparency through position
reporting, the proposal strengthens the barriers against insider
trading.

Conclusion

In conclusion, the "Prohibition Against Fraud, Manipulation, or
Deception in Connection with Security-Based Swaps; Prohibition against
Undue Influence over Chief Compliance Officers; Position Reporting of
Large Security-Based Swap Positions" proposal is a crucial and
necessary step toward safeguarding financial markets. Real-world
examples of financial crimes like the Enron scandal, Libor
manipulation, pump and dump schemes, and insider trading demonstrate
the urgent need for robust regulatory measures.

This proposal is not merely a matter of regulatory paperwork;
it's a shield against the dark forces that threaten market
integrity and investor trust. Passing it will protect investors,
preserve market integrity, and deter criminal behavior. It will
enhance transparency, support economic stability, and bolster global
competitiveness. For the sake of investors and the broader economy,
regulators must act swiftly to pass these vital regulations and
safeguard the future of our financial markets.