Jun. 25, 2023
Dear Sir/Madam, I am writing to express my strong opposition to the proposed rule regarding derivative holders' voting rights, as outlined in the recent consultation document S7-06-22. As an informed investor and advocate for fair and transparent corporate governance practices, I believe that granting voting rights to derivative holders would have detrimental effects on the integrity and stability of our financial markets. I kindly request that you consider my concerns before making any final decisions regarding this matter. First and foremost, allowing derivative holders voting rights would significantly undermine the principle of shareholder democracy. The foundation of our corporate governance system is built upon the notion that voting rights should be directly tied to economic ownership. By extending voting rights to derivative holders, who do not have a direct economic interest in the underlying assets, we risk diluting the influence of genuine shareholders who have committed capital and bear the risks associated with their investments. This dilution could enable speculators and short-term traders to exert disproportionate influence over corporate decision-making, potentially at the expense of long-term investors who have a vested interest in sustainable growth and value creation. Furthermore, the inclusion of derivative holders in the voting process would introduce complexities and potential conflicts of interest that could harm market integrity. Derivative instruments are designed to provide hedging and risk management tools, and their primary purpose is not to confer voting rights. Allowing derivative holders to vote on corporate matters could create a misalignment between economic incentives and voting decisions. For instance, speculative derivative positions could be used to influence voting outcomes in favor of short-term gains, irrespective of the long-term health and stability of the company. This misalignment of interests threatens the stability and fairness of our capital markets. Moreover, granting voting rights to derivative holders would introduce significant practical challenges in terms of vote tabulation and verification. Derivatives often involve complex ownership structures, multiple layers of intermediaries, and swift transferability. Determining and verifying the eligibility of derivative holders for voting rights would require additional administrative burdens and potential errors, further compromising the accuracy and efficiency of the voting process. In light of these concerns, I strongly urge the Securities and Exchange Commission to reconsider the proposed rule and maintain the longstanding principle that voting rights should be tied to direct economic ownership. Preserving the integrity and fairness of our financial markets should be of paramount importance, and allowing derivative holders voting rights would create an imbalanced and uncertain environment that could undermine investor confidence. Thank you for considering my perspective on this matter. I trust that you will carefully evaluate the potential implications and make a decision that upholds the principles of transparency, accountability, and fairness that are integral to our capital markets. Yours sincerely, Jason Karkiewicz