From: Chris Jackson |
To Whom it May Concern: I have two separate comments for your consideration pertaining to the implementation of SEC rule 22c-2. 1.) As a financial intermediary currently being asked to sign new agreements with the mutual fund families, it is clear that while the intent of the SEC rule 22c-2 is to provide for tracking of those who make redemption from a fund within 7 days of a purchase, the mutual fund families are omitting this intent and instead stating in their proposed agreements that they can at any time request shareholder names and tax identification numbers from the intermediary. This practice on the part of the fund families is granting them far too much power to request underlying account owner information, rather than limiting it to those situations where a redemption has been made within 7 days of a purchase. I would request that the SEC require the mutual fund families to use language within their agreements that limits their authority to request shareholder information to only those situations where short-term trading appears to have taken place. (Abuses by mutual fund families will occur if they obtain the authority to request privacy related information at any time, lawsuits will result, and privacy rights will be violated. Unfair competition could also result if mutual fund families obtain and abuse this information as well.) 2.) As a financial intermediary committed to serving the financial needs and goals of a wide variety of clients, we have a long-standing agreement and privacy policy already in effect with the clients we serve. In the cost analysis of the implementation of SEC rule 22c-2, I did not see an estimation of the cost of time, money, and lost business that will result when we as intermediaries must develop, publish, and mail out new privacy policies to each of our current clients, and the cost of having new agreements signed by each of these clients as well. As we are a medium-sized intermediary with just over 1,400 clients, we will have to publish 1,400 new privacy policies that explain the new rules and instances where their personal information may be shared. Once this new policy is developed and approved by our Board of Directors, we will have to mail these to each client, answer the many questions that will be asked, and then also request that each clients signs a new agreement with us giving their consent for us to share personal information with the fund families at their request as our current agreement has then opting out. The cost for us to implement all these changes, and the loss of business we will experience due to upset clients who do not want us to reveal their personal information and tax id numbers to third parties will be significant. (The limitation of powers recommended in 1.) above ay also alleviate the loss of business somewhat as at least we would explain that their information will only be shared when a 7-day transaction period is violated.) Please take these two issues under consideration as you continue to look at amendments to the ruling. The abuses that are likely by mutual fund families and the costs of this new rule as is are sure to outweigh the abuses and costs associated with limited enforcement to those investors and intermediaries who engage in short-term trading. Sincerely, Chris Jackson, AFIM (717)-530-2655
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