Jan. 12, 2024
This letter is from a template provided by a colleague and friend who was "in and around the capital markets (her) entire career. (She) owned her own broker-dealer at one point. (She has) advised on many IPOs and follow-on offerings in corporate finance. (And has) held various financial licenses." To all involved at the SEC: I am urging the SEC to NOT allow the NYSE to list “Natural Asset Companies” or NACs, pursuant to File No. SR-NYSE-2023-09. Believing in free markets, such as they are (as I do) requires some ground rules, which cannot and must not be manipulated to keep the playing feel level and fair and to engender positive outcomes. The continued efforts to financialize productive natural resources to subvert the legal system, to pervert the capital markets, and to cause harmful outcomes for both investors and the US alike must not be enabled. From an investor protection perspective, it's clear that NACs bastardize the capital markets for a political objective. NACs are not only a “new type of company," something that is highly irregular and should require much scrutiny, but also that they have employed their own type of accounting system. This comes directly from the creator of the “NACs,” IEG’s Chairman & CEO, who has said, “We created a new accounting system, which we called Statements of Ecological Performance, which account for the flow of ecosystem services in financial terms.” (Source: https://investinginregenerativeagriculture.com/2022/11/29/douglas-eger/…). Even if they use GAAP accounting within NAC financial reporting, their hubris that there are some separate accounting measures to be used within the financial markets raises too many red flags to count, and should be immediately disqualifying. NACs seek to use others’ money, including that obtained via the capital markets, to buy the ability to control or “manage” productive public and private land and other natural resources. Their stated purpose in doing so is not to make a profit or to be productive, but rather to protect, conserve, restore and preserve these natural “assets”, based on whatever their own definitions of those activities are. As you well know, there is a very clear reason that a company goes public. It is to broadly access capital to provide both funding for growth and liquidity for existing investors, providing opportunities for investors to participate in future growth for the risk they take on. Companies are supposed to have strong merits and provide a path to growth for public investors in exchange. It is a rigorous and costly process both to become public and to stay public, and it is not for every business. These NACs are anathema to that purpose. They aren’t seeking to manage resources to improve their earnings potential; rather they would often be seeking to remove the productivity of assets in the name of the abstract called 'climate justice.' Not only could this impact our ability to generate and access energy, critical minerals, water and food; but it could also put those decisions in the hands of institutions, such as foreign governments and their sovereign wealth funds, who could invest in these NACs and have de facto control over America’s resources. The mandate of the SEC is to protect investors. NACs allow investor money, particularly those deployed through entities that they may not control, such as pension funds, to be used to decommission resources and make them non-productive for political and ideological means. Americans and the SEC cannot allow that to happen. If you have any questions on whether this is a political tool meant to subvert the legal process, read the words of IEG’s Chairman, who said, “We were looking for a private-sector approach that wasn’t dependent on policy, it wasn’t dependent on traditional taxes, regulation or philanthropy to price in these assets and give investors the opportunity to invest directly in nature, whether that’s for climate or biodiversity.” (Source: https://eenews.net/articles/invest-in-nature-might-be-possible-with-natural-asset-companies/…). The bad outcomes here will include the subjugation of the fiduciary duty to do what is in the best interest of investors. Critical natural resources will be subject to the consolidation of a handful of wealthy and powerful individuals. And, even more frightening, control of productive resources- as well as our food supply, water, energy, tourism and more- could end up in the hands of foreign nations and their sovereign wealth funds or other bad actors. Wall Street often cultivates a bad reputation and the SEC is supposed to be a counterbalance to make sure the markets are free and fair for everyone and have the interests of all investors at heart. Please do the right thing, and not that which is politically-pushed and elite power-driven; do not allow NACs to access our capital markets via NYSE listings or otherwise. Thank you for your consideration, Emily Barsh -- Emily Barsh Los Angeles, CA