April 11, 2022
Vanessa Countryman, Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549-1090
Re: Notice of Proposed Rulemaking on Modernization of Beneficial Ownership Reporting (File No. S7-06-22)
Dear Ms. Countryman:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on the Securities and Exchange Commission’s (the “Commission’s”) Modernization of Beneficial Ownership Reporting proposal (the “Proposed Rule”).2
We support transparency reforms that are properly calibrated to make markets more efficient and competitive and to give the Commission and other regulatory authorities the information necessary to monitor for risks to financial stability or market integrity. We understand that the Proposed Rule reflects the Commission’s desire to “modernize” Schedule 13D/G reporting. We appreciate that it may be reasonable to consider, for example, whether changes in technology and market practices warrant accelerated filing deadlines in certain circumstances.
The Proposed Rule would go much further than this, however, making sweeping changes to a regulation that has historically functioned well to implement the relevant statutory provisions of Section 13 of the Securities Exchange Act of 1934 (the “Exchange Act”). These sweeping changes would be complicated and costly, yet the reasoning behind many of them involves highly speculative and thinly supported theories of market participants’ behavior. The Proposing Release justifies some proposed changes by references to past acts of misconduct by persons who sought to evade reporting requirements, but it is far from clear that any of the new
1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global FinancialMarkets Association (GFMA). For more information, visit http://www.sifma.org.
2 Modernization of Beneficial Ownership, 87 Fed. Reg. 13846 (Feb. 10, 2022). We also refer to the preamble of the Proposed Rule (i.e., the material other than the proposed textual amendments to Regulation 13D-G) as the “Proposing Release.”