June 26, 2023
Dear Securities and Exchange Commission,
I am writing to express my strong opposition to the proposed rule on the Modernization of Beneficial Ownership Reporting. After carefully reviewing the document and considering its implications, I find the proposed amendments to be deeply flawed and fundamentally misguided.
First and foremost, the compressed filing deadlines for initial and amended beneficial ownership reports on Schedules 13D and 13G raise serious concerns. By reducing the time available for accurate and thorough reporting, these deadlines risk compromising the quality and reliability of the information disclosed. Instead of enhancing transparency, this change may lead to incomplete or erroneous data, ultimately undermining the very purpose of beneficial ownership reporting.
Moreover, the proposal's inclusion of cash-settled derivative securities as beneficial ownership raises significant red flags. By deeming holders of such securities as beneficial owners of the reference equity securities, the proposed amendments ignore the fundamental distinction between ownership and economic exposure. This blurring of lines creates confusion and undermines the integrity of beneficial ownership reporting, allowing for potential manipulation and obfuscation of ownership structures.
Additionally, the provisions allowing certain persons to communicate and consult with each other without being subject to regulation as a group raise concerns about potential collusion and anti-competitive behavior. Granting exemptions that enable joint engagement and execution of transactions without adequate oversight can lead to market distortions and harm the interests of individual investors.
Furthermore, the requirement to file Schedules 13D and 13G using a structured, machine-readable data language may seem beneficial on the surface. However, without proper implementation and guidance, this mandate may impose undue burdens on market participants, especially smaller entities with limited resources. The transition to a new data language requires careful planning and consideration to ensure its effectiveness and minimize disruptions.
In conclusion, I strongly urge the Securities and Exchange Commission to reconsider and withdraw the proposed rule on the Modernization of Beneficial Ownership Reporting. The amendments, as currently outlined, present serious risks to market transparency, investor protection, and fair market competition. I implore the SEC to engage in a more extensive and inclusive dialogue with stakeholders to develop a more balanced and effective approach to beneficial ownership reporting.
Thank you for considering my comments.