Mar. 10, 2023
March 10, 2023 SEC rules should be designed to mitigate a known financial harm. The SEC's proposal to retroactively force employees, no matter their role at the Commission, to sell pre-existing holdings and to prevent SEC employees from buying financial sector exchange traded funds (\"ETFs\") isn't mitigating any known risk. To the extent there is any conflict of interest with owning financial sector ETFs, the Commission already mitigates this potential harm by putting a low cap on the amount of sector ETFs, including financial sector ETFs, that an employee can hold. There has been no publicly known problem associated with SEC employees diversifying their portfolio to hold a small percentage of financial sector ETFs. This is about so-called \"optics\", plain and simple. Optics isn't an appropriate rationale for a rule that was proposed without employee engagement and input. Adding insult to injury this rule is overly broad and forces SEC employees with gains to incur a taxable event with the possibility that with the assistance of an accountant, which the SEC won't pay for, they can get an exemption and avoid taxes by putting their money into a broader ETF. While the Office of Ethics informed me that the union was consulted on this proposal, the union isn't the sole representative for employees, especially the 30% of employees who have chosen not to join the union nor did the union contact affected employees who own financial ETFs, and would be forced to sell these holdings, to solicit their feedback. The Office of Ethics, estimated at least 100 employees would be affected by this portion of the proposal, not an insignificant portion of the SEC. This portion of the proposal should not be adopted and to the extent it does, should not apply retroactively.