September 1, 2011
While further review of the exact details of your File is need prior to the submission of a full set of comments by myself, my initial comments are set forth below.
REITS, specifically mReits, provide no more risk to the individual or institutional investor than that of any other SEC registrant. While technical in nature, transparency is evident in the filings of all of the mortgage reits I have reviewed. Should there be any transparency issues encountered these are company-specific not industry-specific. Corporate governance issues have not been noted in such mReits either. No individual investor has been harmed by investing in a mREIT in recent years because of the underlying operations of the mREIT but rather than that of bad or ignorant decision making. This ignorance stems not from ample and transparent public materials on the mREIT. The concern that mREITs might be confused with a traditional investment company is not a threat in way shape or form to any individual or institutional investor. The various SEC filings of each mREIT provide more than adequate information concerning the the specific mREIT, its' operations and its' risks.
While I certainly can understand the commission's desire to review mREITS because such a review has not been performed in 50 years, I am convinced that any material changes to the environment and legislation related to mREITS would be a major mistake and is not warranted. In layman's terms - "if it ain't broken don't fix it" - mREITs provide absolutely no additional risk to investors other than that of the inherent risk and company-specific risk of the individual mREIT. Such risks are clearly defined in Form 10-K and Form 10-Q risk factors.
In my opinion, the commission should focus on the real risks to the individual investor, specifically fraud and misinformation provided by foreign (namely China-based) companies trading on US exchanges as well as the lack of regulation and oversight over high frequency trading and leave mReits alone as they are a non-issue.
Charles A. Minanno CPA, CISA