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In re S7-27-15 (Transfer Agent Regulations) |
Originator: John Wooten <@JFWooten4>
Discussion: https://github.com/WhyDRS/SEC-Comments/discussions/14
Status: Draft
live: 28 Jan 2025
file: S7-27-15
href: SEC_URL # for when submitted
Federal Holiday Regarding Questionable Custodianship Operations
3 option "negotiation" layout:
breaking up DTCC as immense concentration of power; reintroducing competition to the sector
independent audit from Government Accountability Office, reporting to the House Comm. Fin. Servs.
momentary market incentive sandboxing session where clearinghouses pay fines for any failures
Ms. Vanessa Countryman
c/o U.S. Securities and Exchange Commission
100 F Street NE
Washington, DC 20549
Dear Ms. Countryman and Mr. (Chair?) Atkins,
When I was a boy in high school, I began researching the stock market. At the time, I was working a minimum-wage job at Subway every spare weeknight or weekend double. I'd walk about half an hour to and from the store in the latter case when my mom was caught up at work. In the fleeting moments I had between classes and later athletics, I turned all my spare attention to our great investing industry because it promised a way out of the daily servitude.
In just one brief lifetime, we've seen our great nation's market system attract and expand to households from all ends of society. While only the affluent and wealthy might have had access to the securities of a distant physical past, today's most meager investors can trade on a fair playing ground with the same opportunities for growth.1
Or at least, it's supposed to be a fair equivalency. Because I was only 16 after months of researching the market, brokers wouldn't extend an account under my name. It was these early trades outside my own control that shaped my underlying passion for efficient securities markets. But an investor's portfolio shouldn't be outside of their control. Indeed, I expect quite reasonably that a stock be registered and owned outright in my name when I pay good money to its seller. Do you agree that one's portfolio should be their own property?
Unfortunately, this is not the case of today's market functions, no matter your age. Indeed, it hasn't been the case since the unstructured monopolization of the clearing and settlement market many decades ago, despite both the Commission and Congress' best efforts.2 For decades this reality has narrowly averted public catastrophe.3 But we can no longer ignore the pressing realities of these systemic idiosyncratic risks.
System is dangerously close to complete collapse CNBC quote — CEO guy
{{Eight}} /Check with Don on the official number here/ American States have introduced legislation undermining the conceit and constructions DTCC's agents introduced into the 1994 Universal Commercial Code.4 Quite soon, a select few States reconstitute the right of investors to their own portfolios as a due property law. When this happens, I am extremely concerned with the solvency of Cede & Co. should any number of institutional custodians relocate to such jurisdictions to reap the enhanced protections promised by our shared ideologies.
I am writing to you on behalf of WhyDRS, a decentralized unincorporated nonprofit association of thousands of individual investors. We are both the first American DUNA and a recently-approved public 501(c)(3) charitable organization. Our Association stemmed largely from the unprecedented shutdown of market operations of 28 Jan 2021.5 Four years later, our great financial system still faces a well-known sweltering threat able to subvert even the most prudent rules set by this great Commission.
We sincerely appreciate staff's diligent efforts over the past few years of our collective outreach.6 Your response to our pressing concerns directly shaped the XYZ growth of our decentralized market of blockchain transfer agents XYZABC.7 We respectfully submit to the Commission that now is the time to take action on the years of work industry innovators have built since the advent of widespread blockchain technologies in the past decade.
Sharing and collectively informing on the Rube Goldberg machine the Commission highlighted in the concept release at 45:
Appreciate the staff's perpetual diligent efforts to explain these nuances to the investing public (ref immediate sec IV thereafter)
I understand that ten years may not compare to the legacy present in our most concentrated financial institutions.8
16 Jan 2025: email System issue impacting deposits, payments and transfers "began experiencing a disruption impacting the processing of some deposits, payments and transfers, which is due to a technical issue with one of our service providers.
Implicates the 400k monthly chat from May 2024 (most likely on the 28th without checking calendar) (spanned into June 12) "Specifically this has delayed processing of some transactions including direct deposits and Early Pay credit for direct deposits, as well as electronic payments and transfers (ACH)" [emphasis added]
As with the Coinbase interface, other private markets, we can harp here on the identity flaws and inefficiencies by means of the
16 Jan 2025: At least third request to submit ID to "activate crypto transfers" which started as requisite to login despite material existing Roth assets which of course can't even link to main bank account....
Adjustment to account letter dated January 6, 2025, stated the savings bond "was redeemed for an incorrect amount."
The actual amount was 40% less, with $100 being redeemed as $59.76.
The account was debited into overdraft due to human error discrepancy. The message was signed "SSS" from the bank's "Centralized Operations."
Remove any ticker reference per: https://discordapp.com/channels/1102309240145707049/1122936843537764352/1329454851150581852
6 Nov 2024 email: "Login to your account to avoid a $25 inactivity fee" stated, "Our records show that it has been approximately six months since you have logged into your SoFi Investment account(s). Please log in by end of day 11/15/2024 to avoid a $25 inactivity fee."
A $25 fee was charged on 20 Nov 2024, effected by selling 0.1 shares of the account on 21 Nov. The remainder was sold, and the account was closed on 25 Nov.
Email dated 6 Dec 2023 indicated, "Crypto services ending soon" and "SoFi will be discontinuing crypto services on December 19, 2023."
"You have until January 28, 2024, to sell your crypto holdings and close your crypto account."
This resulted in the disposition of Lumens bought at or about the price level on June 17, 2022. They were sold and credited to the broker account on 29 Jan 2024 (~20 x 51).
This was originally framed around the ./pending/S7-DC-25.md content, which provides the full scope of reference material. That said, the departure of Gensler and the appointment of Atkins presents an opportune moment to refresh this content, given the emergence of a TAD after the rule's publication. It also offers a stellar place to insert arguments against central intermediation of the transfer process.9 Hopefully, these and additional emotional arguments around the last FOIA in OCC (24-01211-E) and more recently 25-00185-FOIA will push the Commission toward the 501(c)(3)'s side. :)
- Stellar is one of the few platforms that accounts for liquidity at scale without a centralized party (as associated with the grease-in-the-wheels argument and implicated larger-scale issues).
- The Stellar network takes a crowdsourced approach to liquidity. The SDEX gives all users equal access to a global decentralized order book for any pair of assets on the network. Since its genesis in 2014, the SDEX has processed over 4.6 billion trades worth upwards of $26 billion. [fn]
[fn]
Line here on the overallocation with Cede [fbn].
Compare shares outstanding vs. those held at CCP/CSD [as per FAST implicating centralization of declarative ownership data]:
Cede: 776,404,408
https://restructuring.ra.kroll.com/bbby/Home-DownloadPDF?id1=MTQ5Nzg4MA==&id2=-1
Schematically, we have May 5, 2023, above and May 9, 2023, below, filed on June 14, 2023:
Outstanding: 739,056,836
SEC Accession No. 0000886158-23-000059 (EntityCommonStockSharesOutstanding shows 739,056,836)
https://www.sec.gov/ix?doc=/Archives/edgar/data/886158/000088615823000059/bbby-20230225.htm
https://www.sec.gov/Archives/edgar/data/886158/000088615823000059/bbby-20230225.htm
These shoudn't need to be direct quoted.
1994 UCC Article 8 revision
The Code Title... varies
UCC 8-503 and UCC 8-511.
8-503 mentions the 2 exceptions giving certain secured creditors priority over entitlement holders in 8-511 so we strike that reference to 8-511.
in 8-511 we strike the 2 exceptions (b) and (c).
We also suggest addressing the jurisdiction/choice of law provisions usually found in 8-110 (and a conforming change to UCC 9-305).
[don-dict-fn-pending]: Namely, leading advocates promote [doing XYZ above]. These legal experts also endorse [509*11 cross-ref].
File No. SR-DTC-2006-1610
https://www.sec.gov/comments/sr-dtc-2006-16/dtc200616-42.pdf
"The DTC ... [is] attempting to make... rules... for transfer agent non-members... [who] are direct competitors of DTC."
https://www.reddit.com/r/Superstonk/comments/pw0opj/computershare_is_a_competitor_to_the_dtc_comment/ (likely won't be cited but interesting to note).
Modern context at 13 in File No. SR-DTC-2020-017.
https://doi.org/10.21033/pdp-2021-02
Implicates chiefly as a prerequisite the self-custody arguments made here.11
Ideated to segue into the no-action, pending 144a(e).
- Comments suggested for the most transparent due process.
- No comments on DEX trading.
- Introduce routing conundrum from FxDAO discussion at wooten.link/1558.
- Discuss mandated execution paths and central intermediaries named in Reg SHO, NMS.
- Limited transactions effecting ATS.
- Commodities not in 15c3-3 (dodged interoperability).
- "Digital asset security definition is controversial."12
- Traditional TA ledger vs. TA blockchain distinctions remain unclear or uncovered.
- Statement generalized but fact-specific on applications over written questions.
Minimize investor exposure to:
- "risk loss/theft"
- "broker financial losses"
Further Correspondence Documented in Email Around ID's Timeframe13
No distinguishing between type of digital asset securities given "truly securities"
Email on Oct 14: "Coinbase takes several steps to keep your account safe, and we actively monitor for unusual activity and scams that may affect our customers. Based on this monitoring, we are concerned you may have sent, or are trying to send, crypto to a fraudulent person or platform. Out of an abundance of caution and to protect you against potential losses, we have temporarily limited your ability to send additional crypto until November 14, 2024. This restriction will be removed automatically after the set time period elapses."
Original restriction on Oct 15: "As a precautionary measure, to protect you against potential loss, we have limited your ability to send crypto until November 14, 2024. Please try again after this date."
Email on Oct 23: "We have completed your account review, and buy/send/deposit services remain disabled at this time." This complements the debanking sentiments at this video.
After submitting KYC for at least the third time, a message on Oct 24, 2024, stated: "As a precautionary measure, to protect you against potential loss, we have limited your ability to send crypto."
On Nov 29, 2024: "We are reviewing your account. This process can take up to 3 days."
Still restricted. Attempts at transferring reminiscent digital assets were made on or after Dec 15.
Initiated Dec 18, 2024, from CB. Still awaiting KYC. To WF due to no support for LR via either manual or Plaid as the only option. Estimated standard 2-day transfer.
On Dec 20, 2024, WF performed an RTP instant transfer to LR. Placed on hold until Dec 27, 2024.
Received at least three calls from LR and a compliance email mandating a call by Dec 26, 2024, at 3 PM ET: "Please give us a call today 12/26 before 3 PM EST," stated in virtual 'secure' webmail at 10:49 AM ET. "We are reaching out to ask for your help verifying some information."
Similar power track as running validators, which we should introduce on a single-entity basis with triad implications.
^Should include a footnote related to setting a reorganization record so other nations can follow jurisprudence on TAs implementing TAD3 and investors uncovering government roles.
This will obv.s need to lie somewhere else as we expand our Association relations wiht industry participants. Nothwirhtading, I'm inking down any live throughs from the cold calls
Point at (631) 254-7446 (no extension)
Unreachable at 9:17a ET
"I don't know who would be in control of that" when asking about technology oiperations. Time on hold extensively while operator tried to connect. Couldn't determine a person at the org assocaited with technology modernization or operaitons.
could just be a rep fluke; will see on reply in at least T+5
no contact point, but given tech email and will follow up
No public phone, but reached out via Pacific subsidiary eail cc to: info@secutizie
have a software for book-entry
"wouldn't be soemthing we would work with"
"we use a very basic softare that" helps trasnfer between the investor and the broker and the DTC
"Not interested, thank you anyways."
callback scheduled
"techniogy dept" (888) 999-0032
Sedvan:
"dont have a department for this" "dpn't have email access"
"don;t have any concerned departmetn for this" "only seperate line for employee stock" "no other "...
Presumes a transitory framing of collaborating with brokers by positioning as replacing the DTCC and empowering them with a more efficient clearing and settlement system.
- Received a legal document from WF authorizing signatures with wet signatures.
- Did not require medallions or ID certifications.
- As commonplace in past chats, they rely on obtaining a "[legal] opinion from a big law firm, and if something goes wrong, they just sue the big law firm."
Emailed DTC only. Did not conduct a call for that offering. (Implications of past TA email fraud on a 9M wire item.)
Bank DWAC'd it out and can DWAC back to own custody via physical certificate.
"I've been trying to get this done for a week. It's really stressing me out."
Trustee may hold bond proceeds until project milestones. Interest paid post-bulk fundraising.
These can be subverted in a footnote based on leadership actions that "jeopardized the safety, soundness, and stability of the United States financial system" per H.Res. 1574, as referenced in this video.
- Margining methodologies
- Broker charge methods
- Emergency adjustment processes
- Certificate issuance custody processes
- Insurance and transfer operations
- Red teaming and cyber resilience
We would greatly appreciate it if the Commission could kindly put this subject up for review in a new proposed rule by the second quarter. (## Careful here)
Footnotes
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Cite Robinhood triplicate from discussion on fractionalized share pushback from industry. I know we all know the truth here, but there isn't a better way to introduce the narrative imo. ↩
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Cite the 1975 competition promotion info at https://www.congress.gov/94/statute/STATUTE-89/STATUTE-89-Pg97.pdf which mentions competition as a positive position item twenty times,
Naturalpath to Monopoly Paper, and BASIC replies promoting competition from the Commission staff at https://www.sec.gov/news/speech/1975/111875loomis.pdf ↩ -
Cite the Lehman cases on a protected class. ↩
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I want direct quotes here focused by and large on the agent part. The legislative reform should stay in the main argument. https://fmlc.org/wp-content/uploads/2018/02/Issue-3-Background-paper-on-Article-8-of-the-Uniform-Commercial-Code.pdf#page=8 "security entitlements" ↩
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Cite the two hearings and the Congressional study with tenor-deep ethos ↩
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Let's carefully cite a range from the NSCC petition to OCC withdrawal to EDGART modern to things from the other side of the hall with deference to scrutinizing TAR at n/16 (_see Id) ↩
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Cite explicitly and prominently the Gensler interview and anything else major, but largely the stemming function which gets set up in Id's hall circa ↩
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Indeed, even my laundry machine is older than that. ↩
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I will insert a story of how recent administrative procedures of an unreliable central broker cost me and my partner $100k in the last couple of months. ↩
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See also and an alteration on retail individual support for rescission in comment https://www.sec.gov/comments/s7-05-22/s70522-20120580-272764.pdf#page=8, which states, "The restriction that transfer agents may not effect the transfer of a security outside of the DTCC system is a legalization of a monopoly." ↩
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Chief arguments to address are in this repository's issues; the remainder likely flows into TAR2. ↩
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Implicates previous n.132, which probably shouldn’t be explicitly hyperlinked. ↩
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See names referenced as 2-chat; 3 mimic. SEP 26, 2024, 9:47 AM.14 ↩
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Comments should CC all relevant parties. Content body should include the question of recording meetings related to rule change proposals. When referencing "community" (required), hyperlink to meep6. IBR note 16 in previous correspondence by replying to the joint request from Sep 27. ↩