1/ Dear
@SECPaulSAtkins and Commissioner
@HesterPeirce @SECGov
Regarding your posts earlier today I think there are important questions arising especially in context with a related FSB report.
I will be discussing below the Operational Classification vs. Legal Classification of
#MMTLP, specifically:
The divergence between LEGAL classification and OPERATIONAL handling of MMTLP, and how this mismatch may have contributed to:
1. supervisory fragmentation,
2. regulatory blind spots, and
3. OTC’s ultimate settlement failure.
Key Findings:
While MMTLP was publicly characterized as an OTC equity preferred security, evidence indicates that at least one major broker-dealer (
@Fidelity) processed buy-side activity through a fixed income desk, suggesting a MATERIAL divergence between legal classification and operational treatment.
This divergence is NOT merely administrative, it has direct implications for:
1. supervisory responsibility
2. compliance rule application
3. surveillance coverage and
4. settlement risk management
MMTLP wasn’t just an “equity” security that went wrong, it became a cross-system instrument processed through equity, derivatives, and “fixed-income” infrastructure simultaneously, and that fragmentation created a supervisory and settlement blind spot that no single regulator or broker fully controlled, in my opinion.