Jun. 26, 2023
To the SEC, I am writing to express my concerns regarding the issue of derivatives ownership and its potential implications for shareholder rights. It is crucial to recognize that derivatives, by their nature, do not immediately confer ownership of the underlying securities. Consequently, I strongly advocate for the careful consideration of beneficial ownership only when the underlying security is delivered. Failing to do so can result in a dilution of shareholder rights, as derivatives holders may never take actual ownership of the underlying security while still exerting significant influence. Moreover, it is essential to highlight the potential for massive abuse and the inherent risks associated with derivatives ownership. Allowing the unchecked proliferation of derivative holdings can undermine the value of ownership for retail shareholders and can disrupt the integrity of a company's capital structure. The issuance of derivatives that exceed the actual ownership of a company erodes its intrinsic value and raises concerns about market manipulation and distorted market perceptions. In light of these concerns, I urge the SEC to implement measures that safeguard shareholder rights and address the risks associated with derivatives ownership. Stricter regulations, transparency requirements, and robust enforcement mechanisms are needed to ensure the integrity of the securities market and protect the interests of all stakeholders. By doing so, we can promote fairness, maintain the value of ownership, and foster a healthy and sustainable investment ecosystem. Lastly, it is imperative to request an extension of the comment period, either for the entire proposal (S7-06-22) or specifically for the amendments to Rule 13d-3, which aim to classify holders of certain cash-settled derivative securities as beneficial owners of the reference covered class. Thank you for your attention to this matter. Sincerely, Daniel Abad Jr