Jun. 21, 2022
June 21, 2022 The Honorable Gary Gensler Chair U.S. Securities and Exchange Commission 100 F Street N.E. Washington, DC 20549 SEC Office of Investor Advocate Adam Anicich Adam Moore SEC Head of Trading and Markets SEC Division of Corporation Finance RE: Exchange Act Rule 15c2-11 and Rule 144A of the Securities Act Dear Chair Gensler: The Credit Roundtable[1] finds it necessary to raise our concerns regarding the application of Rule 15c2-11 to Rule 144A securities issued by private companies and asset-backed issuers directly with the Securities and Exchange Commission (“the Commission”). While we respect and support the Commission’s investor protection goals broadly, we are very concerned that the consequences of this new interpretation of Rule 15c2-11 may run counter to those goals by overturning decades of new issuance, as well as well-functioning, transparent, and liquid secondary trading of fixed income securities issued pursuant to Rule 144A of the Securities Act. We share the concerns outlined in SIFMA’s June 10, 2022 letter [2] and fully support the organization’s recommendation that the application of Rule 15c2-11 to fixed income securities be abandoned. As buyside market participants, Credit Roundtable member firms hold hundreds of billions in par value of 144A securities on behalf of our clients. As fiduciaries, our willingness to invest in this segment of the market requires a certain level of ongoing diligence review of issuer fundamentals and, importantly, a high degree of conviction that the securities will be actively quoted and traded. Rule 144A, as it has been applied and followed since its inception, supports both of these priorities. Credit Roundtable members do not have any issues obtaining access to financial reporting to make informed investment decisions regarding issuers accessing fixed income financing pursuant to Rule 144A and are unaware of significant examples of investors having been harmed by a lack of information access. There is, however, a very high likelihood that the valuation of, and our ability to trade, these securities will be negatively impacted as we near the expiration of the No-Action letter. We believe that illiquidity in these securities will increase materially and as such, the buyside may not be able to continue to hold them and could become forced sellers, which would further reinforce the negative consequences of this proposed rule. In short, the Credit Roundtable agrees with SIFMA and many other industry participants and joins them in their call for reconsideration of this shift in the Commission’s interpretation of Exchange Act Rule 15c2-11 and the unintended consequences it could lead to, given the likely adverse impact on investors. We welcome the opportunity to discuss our concerns, opinions, and recommendations at your convenience. Please direct any questions to Kelly Byrne Skarupa of The Credit Roundtable at Sincerely, The Credit Roundtable Website: www.thecreditroundtable.org LinkedIn: The Credit Roundtable 1 Formed in 2007, The Credit Roundtable (“CRT”) is a group of large institutional fixed income managers including investment advisors, insurance companies, pension funds, and mutual fund firms, responsible for investing more than $4 trillion of assets. The Credit Roundtable advocates for creditor rights through education and outreach and works to improve fixed income corporate actions, ineffective covenants, and the underwriting and distribution of corporate debt. Its mission is to improve risk assessment and management through education and seeks to benefit all bond market participants through increasing transparency, market efficiency and liquidity. [1] https://www.sifma.org/resources/submissions/sec-rule-15c2-11/ 1 Formed in 2007, The Credit Roundtable (“CRT”) is a group of large institutional fixed income managers including investment advisors, insurance companies, pension funds, and mutual fund firms, responsible for investing more than $4 trillion of assets. The Credit Roundtable advocates for creditor rights through education and outreach and works to improve fixed income corporate actions, ineffective covenants, and the underwriting and distribution of corporate debt. Its mission is to improve risk assessment and management through education and seeks to benefit all bond market participants through increasing transparency, market efficiency and liquidity. [2] https://www.sifma.org/resources/submissions/sec-rule-15c2-11/