Mar. 30, 2023
March 30, 2023 I support this proposal because the current preclearing requirements are discriminatory, ambiguous and over burdensome. They are outdated and lack common sense. 1) The current set of rules requiring preclearing every transaction and holding even the broad market index funds and ETFs for at least 30 days is discriminatory because it effectively prohibits SEC employees from utilizing robo-advisors. Robo-advisors utilize broad market index ETFs in their portfolios but because they can rebalance at any time w/o giving the customer prior notice, their services are not permitted b/c SEC employee wouldnt be able to preclear such transactions. The alternatives to utilizing robo-advisors are either: (1) more expensive and generally worse performing target funds or allocation funds that may not even match well employees investment objective, or (2) self-managing route which assumes that all employees have the time and the financial acumen to do it on their own or have the resources to hire a financial adviser but still submit trades on their own. Why can the public benefit from the technological advancements resulting in lower investment fees, time a nd potential tax savings but the SEC employees are forced to pay higher costs and accept lower returns? 2) The current set of rules also discourages employees from periodic investing by limiting automatic investing to mutual funds only, which on average carry much higher fees than ETFs. Where is the potential risk in an employee wanting to save few dollars every paycheck into a diversified portfolio of broad ETFs? 3) The current set of rules is outdated, lack common sense and is very ambiguous resulting in frequently having to ask the Ethics Department about their interpretation of the rules. 4) Why do 529 account investments need to be precleared? They only offer broad-market funds? 5) Why Money Market Funds need to be precleared? What risk to the public can there potentially be from an employee wanting to buy or sell or simply switch money market fund? 6) The proposed rules dont go far enough: a. There should be a nominal threshold for the position value (say $5 or $10) below which an employee can liquidate a position regardless if its on a watch list or not, to lessen the ongoing reporting requirements. b. There needs to be more transparency with regards to when and why a company is put on a watch list prohibiting employee from selling or buying the companys stock when there is no official announcement of SEC looking into a companys practices.