From: []
Sent: Tuesday, March 30, 2004 11:50 AM
Subject: S7-19-03

One thing that strikes me in all this is the clash in values no one wants to discuss and the resulting side-show which has nothing to do with anything.

For example, there is the ridiculous notion that someone would risk money in order to infiltrate and disable a publicly-traded company. If we first accept the idea that participation in company ownership has more to do with making money than anything else, then there had better be a good payoff at the end in order to justify the massive investment required to invoke the rule. Second, and even more important, it would be virtually impossible to infiltrate a company that was producing a decent return on investment for its owners. What is the incentive and who would follow?

As I see it, the only real question is, "Will the gain for owners compensate for the loss of management autonomy?" If management autonomy consists of maintaining control of the bridge as the ship sinks, without regard for the nameless, faceless throng of investors crammed into the lower decks, then something should be done about such childish behavior on the part of the stewards of our investments. If, on the other hand, the ship is not sinking, then it is, again, unlikely that anyone would want to wrest control.

The ideal approach to ownership of a publicly traded company is to check the figures now and again, vote the proxy and watch the investment multiply in value. If management is so flighty or self-serving that an investor cannot comfortably take a hands-off approach to ownership, then management bears close watching, and so let it be watched closely. If management needs to be replaced or brought under control, then allow a mechanism for replacement or control.

Which brings us to one final point. The chief purpose of regulation is to maintain public confidence in the system, and so maintain liquidity in the markets. If government regulators can effectively keep tabs on over six thousand publicly traded companies and uncounted mutual funds, bonds, options and derivatives, then so be it. But I know better and so do you. The best anyone can hope for is an occasional high-profile smack across the chops, la Martha, but even this will eventually lose its influence.

The last thing anyone needs is public perception that the markest are a zero-sum game in which the last holders of any publicly traded investment will always be cheated out of their investment. The best way to avoid this is to delegate real regulatory power to people with a strong interest in regulating. Or more precisely, to restore that private regulatory power eliminated by existing regulation.

David G. Harding
Attorney & Counselor
100 North LaSalle Street
Suite 1107
Chicago, Illinois 60602
Telephone - (312) 782-3039
Facsimile - (312) 236-0678
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