Sep. 28, 2020
Vanessa A. Countryman Secretary Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-1090 RE: File Number S7-08-20 Dear Ms. Countryman: With this letter we are offering comments opposing the proposed plan by the Commission’s division of Investment Management to raise the 13(f) reporting requirement asset-threshold to $3.5 billion and exempt more than 4,500 current reporting firms. ARC Document Solutions (NYSE:ARC) is a micro-cap company in the industrials space that has been listed in the public market since 2005. As issuers of public equity, we are compelled to spend more than a million dollars annually to comply with SEC disclosure requirements that benefit our investors and potential investors. At the same time, we are made ignorant of whom our investors are, how much of our company they own, or how they trade our stock due to the lack of timeliness and transparency in the current, and arguably outdated, 13(f) process. The current SEC 13(f) filings are issued 97 days after the end of each quarter by a limited subset of public investors who trade in a market that is astonishingly efficient and operates in milliseconds. Given the gross latency of reporting inherent in the process, issuers are forced to infer or guess who their owners are and how much they own at any given time. If an investor’s trading activity is their “vote” on whether they approve of the financial performance and business operations we so painstakingly describe in our mandatory quarterly and annual reports, we feel we should be able to “count the ballots” to determine whether we are acting in accordance with their wishes. We feel the current proposal would make this already difficult task nearly impossible to accomplish, and significantly diminish its value. In 1975, when the information contained in the 13(f) was transmitted via the U.S. Postal Service, it made sense to trade off some small portion of transparency to reduce the compliance burdens on less capable investors. Today, thanks to the ease with which we can collect and transmit trading data via digital means, there is no need to throttle transparency at all; to the contrary, there is every reason to increase it. In our opinion, the current proposal by the SEC is one-sided, restrictive, and increases the potential of abuse by further limiting reporting requirements by investors. At the same time, it decreases the transparency public companies rely on for capital formation and to align themselves with the interests of their public owners. We thank the Commission for its willingness to open its proposal to public review, and for the opportunity it created to voice our opinion on whether it serves the purpose of improving the reporting process for everyone. As noted, we don’t think it does. Sincerely, Jorge Avalos Chief Financial Officer ARC O (925) 949-5100 e-arc.com / ir.e-arc.com