June 27, 2023
regarding the proposed S7-06-22 rule, which aims to provide voting rights to derivative holders in publicly traded firms. While I acknowledge the advantages of inclusivity and representation, I believe that allowing derivative holders to vote on company matters poses significant risks, particularly with regards to speculative voting, conflicts of interest, and dilution of voting power. Additionally, the rule may give rise to increased voting power with less capital and potential for abuse. Even as a non-US citizen investor in US capital markets. Currently, an investor must file a Schedule 13d when they have accumulated a 5% or greater stake in a company and have ten days to file, during which time they can continue purchasing shares. The proposed rule would shorten this post-5% accumulation period to five days. The SEC cites two justifications for this change, one being that early public disclosure of the investor's stake would improve the informational efficiency of securities markets, and the other being that an \"asymmetric information\" situation exists between the activist investor and any seller during the accumulation period, which could lead to unfairness to the selling side.
These are the three example that are the problem to our American Stock Exchange Market.
-Volatility of stocks during ownership filings resembles a \"pump and dump\" strategy, leading to significant profits for filers.
-Chair Gensler highlights that the majority of trades made by household investors bypass transparent exchanges, hindering genuine price discovery.
-Regulatory filing of derivative positions can expose fraudulent activities and prevent incidents like the Archegos incident.
It is crucial for the Securities and Exchange Commission to thoroughly evaluate the potential risks and unintended outcomes that may arise from granting voting rights to derivative holders. It is important to find a balance between inclusivity and the stability and long-term interests of publicly traded companies and their shareholders. Therefore, I strongly urge the SEC to consider these factors before making a decision.