Jun. 26, 2023
Dear Sir/Madam, I am writing this letter to express my concerns regarding the proposed amendments to the rules governing beneficial ownership reporting, as outlined in the document titled "Modernization of Beneficial Ownership Reporting." While I appreciate the SEC's efforts to enhance transparency and efficiency in reporting, I believe that certain aspects of the proposal require careful reconsideration. Specifically, I would like to address the following points: 1. Support for Retail Investors and Reporting Deadlines: I am in support of the proposed revision of the reporting deadlines for Schedule 13D and Schedule 13G filings. Providing more reasonable and feasible deadlines will ensure that retail investors, who often face resource constraints, have adequate time to fulfill their reporting obligations. This change will contribute to a fairer and more accessible reporting process for all market participants. 2. Concerns Regarding Deeming Holders of Cash-Settled Derivative Securities as Beneficial Owners: I would like to emphasize that cash-settled derivative securities do not immediately convey ownership rights to the underlying securities. Granting beneficial ownership solely based on the holding of such derivatives without actual ownership of the underlying security can dilute shareholder rights. It is essential to ensure that beneficial ownership is only attributed when the underlying security is delivered, thereby preserving the integrity of the ownership structure and safeguarding the interests of true shareholders. 3. Opposition to Amendments to Rule 13d-3: I respectfully oppose the proposed amendments to Rule 13d-3, which would deem holders of certain cash-settled derivative securities as beneficial owners of the reference covered class. This amendment fails to account for the distinction between ownership and economic exposure. It is crucial to recognize that holders of cash-settled derivative securities may possess incentives and abilities to influence or control the issuer of the reference securities, but they do not hold enforceable rights or direct ownership of the underlying securities. Granting them the status of beneficial owners could potentially lead to an imbalance in corporate governance and dilution of shareholder rights. 4. Request for an Extended Comment Period: In light of the significant implications these proposed amendments could have on the market, I respectfully request an extension of the comment period. This extension would allow for further comprehensive analysis and consideration of the potential consequences of deeming holders of certain cash-settled derivative securities as beneficial owners. A thorough and inclusive evaluation will ensure that all stakeholders have an opportunity to express their concerns and provide valuable insights that can contribute to the development of more effective and balanced regulatory measures. In conclusion, I urge the Securities and Exchange Commission to carefully assess the impact of the proposed amendments on beneficial ownership reporting. While I support measures that promote transparency and protect the interests of retail investors, it is crucial to ensure that any changes made preserve the integrity of the ownership structure and maintain a fair and equitable playing field for all market participants. Thank you for your attention to this matter. I trust that you will carefully consider the points raised in this letter and take them into account during the rulemaking process. Sincerely, Noa Chayer