Feb. 7, 2022
To The Securities and Exchange Commission, Please accept and consider this public comment with regard to Proposed Rule: S7-32-10, which is entitled: "Prohibition Against Fraud, Manipulation, or Deception With Security-Based Swaps; Prohibition Against Undue Influence Over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions" I'm a retail investor with over 10 years of trading experience and I'm a concerned citizen, whose long believed that leverage and opacity are going to be the ruin of our markets. These proposed rules are a step in the right direction and I ask you to enact each of them, without revisions. Regarding re-proposed Rule 9J-1: it is absolutely incumbent that fraud and manipulation be rooted out of markets. If a citizen of the United States can not defraud other citizens, businesses, et al., then why would it ever be allowable for market participants, market makers, or broker-dealers to engage in such activity? The fact that this even needs to be re-proposed makes clear that there is, indeed, a fraud problem in our markets. It must be rooted out. If fraud and manipulation are allowable, can you even call something a market at that point? As stated in the proposed rule, on page 50: "Although the Commission generally believes that a situation where a person uses material non-public information in a security in connection with the purchase and sale of a security-based swap would be subject to the existing antifraud authority under the Federal securities laws, particularly Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, the Commission also believes that market participants would benefit from a clarified interpretation of that statutory provision in this rulemaking." I unequivocally agree. With regard to Proposed rule 15Fh-4(c), it is stated: "In addition to proposing rules to prevent fraudulent, manipulative, or deceptive conduct in connection with security-based swaps, the Commission also is proposing a rule aimed at protecting the independence and objectivity of an SBS Entity’s CCO by preventing the personnel of an SBS Entity from taking actions to coerce, mislead, or otherwise interfere with the CCO. Specifically, new Rule 15Fh-4(c) would make it unlawful for any officer, director, supervised person, or employee of an SBS Entity, or any person acting under such person’s direction, to directly or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence the SBS Entity’s CCO in the performance of their duties under the Federal securities laws or the rules and regulations thereunder." There's not much to unpack here, is there? But I will quickly comment about the fact that it was deemed necessary to protect a SBS Entity's CCO from being coerced, interfered with, extorted, or otherwise threatened, while performing their duties, doesn't exactly inspire confidence about the market environment. This should tell other citizens a lot about the state of our financial institutions. When I was in elementary school, the principal very easily could've made a rule saying, you can't threaten another student and force them to do your homework for you... but it wasn't needed. How could a person possibly argue that doing something like that, prior to the rule existing, was a misunderstanding of some sort? It just seems silly that it would even need to be known and written as a rule for the record. OF COURSE coercion of a Chief Compliance Officer for the purposes of defrauding is against the rules. And yet, apparently we need a specific rule that states this. Pretty troubling stuff to me that this seemed necessary, but, better to have the rule on the books. I completely agree with the spirit of this rule change. Lastly, with regard to Proposed Rule 10B-1: Position Reporting of Large Security-Based Swap Positions. I strongly urge the Commission to approve and implement this rule with no changes at all. In particular, from page 80 of the proposed rule: "Accordingly, proposed Rule 10B-1(b)(1)(iii)(B) would provide that once a Security-Based Swap Equivalent Position represents more than 2.5% of a class of equity securities, the calculation of the Security-Based Swap Equivalent Position shall also include in the numerator all of the underlying equity securities owned by the holder of the Security-Based Swap Position, as well as the number of shares attributable to any options." I can not stress enough how important this is. Because now what we're looking at are over-leveraged institutions that have been using swaps to manipulate the options markets. This introduces systematic, asymmetrical risks to all markets and poses great problems for future economic health. We should all want healthy markets and an economy that isn't hostage to leverage. Yet, there are market participants who are too greedy, and they simply don't care. Whoever would be opposed to this rule change would only want one thing: to defraud others. Transparency of leveraged swaps is the only way to know just how rotten different markets and exchanges have become. We've turned a blind eye to this for too long. If a person has cancer, but does not go to a doctor, this does not mean that the person is cancer-free. Only with the transparency of diagnostics like a blood test or a CT-scan can a person find out if he/she has cancer or not. The longer the person waits, the higher the risk of death. These large, leveraged SBS positions MUST BE REPORTED. At the very least, they should be reported on the hour. Had this rule been in effect for family offices, hedge funds, broker-dealers, a calamity like the Archegos Capital situation could have been avoided, because transparency in that matter would've sent clear signals to systemically important counter-parties that they themselves were being put at-risk due to Archegos' over-leveraging their swaps. I urge the commission to please enact all of these proposed rule changes. Best regards, Jefferson Rich Retail Investor and Concerned Citizen