Jun. 27, 2023
Dear Ms. Countryman, We appreciate the chance to comment on the SEC's Proposed Rule to modernize beneficial ownership reporting. The rule aims to update reporting requirements and improve market transparency and efficiency. We, as We The Investors, prioritize transparency and simplicity/fairness, as outlined in our Investors' Bill of Rights. In this letter, we will focus on these two principles. Currently, institutional investors are required to disclose ownership exceeding 5% of outstanding shares through a beneficial ownership report filed with the SEC. This filing deadline of 10 calendar days has remained unchanged since 1968. However, this prolonged reporting window has faced criticism for allowing hedge funds and activist investors to accumulate large positions and trade with an unfair advantage. The SEC proposes to reduce the reporting window to 5 calendar days, which would enhance price discovery and provide more timely notice of a 5% ownership position. The SEC's staff memorandum on beneficial ownership reporting analyzed data from 2011-2021 and concluded that shortening the reporting window would reduce information asymmetry and the unfair advantages held by activist investors. We believe that a two (2) business day reporting deadline would be even more beneficial. This aligns with the SEC's Form 4 disclosure requirements for executive stock transactions, ensuring consistency and fairness. Additionally, the possession of material non-public information should be minimized, further supporting a shorter reporting window. Expanding the definition of beneficial ownership is another crucial aspect. Currently, economic interests in securities are not considered beneficial ownership. We support the SEC's proposal to include the underlying reference shares in calculating the 5% ownership threshold for cash-settled equity swaps. This would enhance transparency and accelerate disclosure. It's important to clarify that the SEC's rule on cash-settled equity swaps does not transfer voting rights or investment powers. These swaps only involve economic exposure to securities. Furthermore, we reiterate our position on short position reporting. The SEC should address the lack of transparency in short positions and adopt the changes outlined in our previous comment letter on Proposed Rule 13f-2. In conclusion, We The Investors value the opportunity to provide comments on this rulemaking and the Staff Memorandum. We thank you for considering our input and are available to answer any questions or provide further clarification. Later Gator, Matthew Miller Richard Bennett Tailors 95 N. Moorland Road Unit C-23 Brookfield, WI 53005