Jun. 27, 2023
Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 File Number S7-06-22 - Modernization of Beneficial Ownership Reporting Dear Commissioners, I am writing to express my deep concerns regarding the proposed rule under File Number S7-06-22, pertaining to the modernization of beneficial ownership reporting. Specifically, I would like to address the proposal to grant voting rights to short positions and swap holders. While I understand the need for modernization in this area, I firmly believe that allowing such entities to have voting rights would be an absolute terrible idea for several reasons. First and foremost, granting voting rights to short positions and swap holders presents a significant risk of enabling individuals or entities with malicious intent to manipulate and control companies for their own gain. The potential for these entities to profit from short-selling or engaging in speculative trading strategies is well-known. By allowing them to influence the decision-making process within a company, we are essentially handing over control to those who may have vested interests in its downfall. This undermines the fundamental principles of corporate governance, fairness, and accountability. Furthermore, the inclusion of short positions and swap holders in the voting process would create an inherent conflict of interest. These entities often take positions that benefit from a decline in the value of a company's stock or other financial instruments. Allowing them to participate in voting decisions opens the door for them to advance their own agenda, which may not align with the long-term interests of the company or its shareholders. This conflict could result in decisions that prioritize short-term gains at the expense of sustainable growth and shareholder value. In addition, granting voting rights to short positions and swap holders could have detrimental effects on the stability and integrity of the financial markets. These entities frequently operate in a speculative manner, taking advantage of market fluctuations for short-term profits. Allowing them to exercise voting rights could introduce significant volatility and uncertainty into the decision-making processes of companies. Such disruptions may hinder the ability of companies to make informed and strategic decisions, ultimately undermining market efficiency and investor confidence. It is essential that corporate governance structures prioritize the interests of long-term shareholders and foster an environment of trust, transparency, and stability. Granting voting rights to short positions and swap holders would have the opposite effect, enabling those who seek to profit from a company's decline to exert undue influence over its affairs. This would undermine the principles that underpin fair and responsible corporate management. I strongly urge the Securities and Exchange Commission to reconsider the proposal to grant voting rights to short positions and swap holders. Instead, I encourage the SEC to focus on modernization efforts that enhance transparency, accountability, and long-term value creation for all shareholders. These goals can be achieved through measures that promote shareholder engagement, ensure accurate and timely disclosure of beneficial ownership, and protect against potential conflicts of interest. Thank you for considering my perspective on this matter. I trust that the Securities and Exchange Commission will carefully evaluate the potential risks and implications associated with granting voting rights to short positions and swap holders. Your commitment to fostering a fair and well-regulated market is of utmost importance to investors and the integrity of our financial system. Yours sincerely, Micah