Aug. 14, 2023
Dear Gary Gensler, This comment is regarding proposal S7-06-22. The proposed rule doesn't net the overall positions when counting shares. Only the longs are counted so even though someone is hugely net short, they can hold a relatively small long position and gain beneficial ownership status which allows them to vote. From a reporting perspective, what's the use of reporting the long positions without the shorts? We get to see someone long 1M when an unreported 10M short really puts them at a net short 9M? That's a useless number to report. How about reporting the long, short and net position separately? I must emphasize derivatives are not shares and do not make someone a beneficial owner. If someone wants to vote, they can buy shares before the record date just like everyone else. If you want to beneficially own shares, then own the shares. There's a much larger derivatives market riding on the underlying so this would very likely grossly inflate the number of votes. We should handle the problem of someone arm twisting a shareholder, but letting them vote directly isn't the right way to do it. No removal of corresponding ownership from the counter-party. While this proposal would deem the derivatives owner with beneficial ownership, there's no corresponding reduction of beneficial ownership elsewhere. Which likely means the counterparty holding shares will still get to vote their shares. We already see a similar problem already where more people vote their entitlements to shares than there are underlying shares. This would make it significantly worse as now the counterparty is still arm twisted into voting the same way; allowing the arm twister to stuff the ballot box twice. Please make adjustments to your proposal considering the points I wrote here. Let's make a better market together. Thank you. Charles Kim