Jun. 27, 2023
To Whom it May Concern, Please accept this comment as a letter in support of S7-06-22. Under current SEC rules, institutional investors purchasing shares through brokers and banks (called “beneficial owners”) are required to disclose any ownership interest they may have in a public company once such ownership interest exceeds 5% of outstanding shares. This disclosure is accomplished by filing a beneficial ownership interest report with the SEC on Schedule 13D. This report is required to be filed within 10 calendar days after a beneficial owner crosses the 5% threshold. This 10-day deadline has been in effect and unchanged since 1968. Acquiring large blocks of shares secretly for such a long period of time allows these investors to trade on asymmetric price information and continue accumulating shares from unwitting investors for almost two weeks after the 5% threshold is reached. As we saw with Archegos, cash-settled derivatives are exempted from disclosure requirements because the holders of these derivatives are not considered 'beneficial owners.' When home offices and institutional investors utilize total return swaps and other shadowy cash-settled derivatives, material risks to all markets and to all investors are concealed unnecessarily. Therefore, it makes sense that these risks should be visible to all investors. To modernize this disclosure framework and prevent another Archegos from happening, it appears that what has been proposed is an important rule update that requires more consistent and transparent reporting in accordance with being what the law says a 'beneficial owner' must disclose. Since the intent here is to bring more transparency to markets, I urge the SEC to adopt S7-06-22. Best regards, Jefferson Rich