Subject: File No. S7-09-09
From: Sean Sebold
Affiliation: CFA, CFP,

June 30, 2009

I have several questions about the proposed rule that I would ask the SEC to consider.

What is the proposed rule expected to accomplish? Is its only intent to prevent fraud? If so, will having an outside auditor prevent someone intent on committing fraud? Have we had experiences in the past of companies that have had outside auditors that still committed fraud?

What is the cost of the proposed regulation? As I understand it, it would average approximately $8,000 per advisor to fully comply with this proposal. Who would ultimately pay for this cost? Would it not be the consumer? Wouldnt their investment returns suffer as a result of increased expenses? Hasnt the entire investment world been trying to reduce expenses for the benefit of the consumer? Couldnt a client request an audit of their investment advisor? If the advisor wouldnt comply, would a potential customer still want to do business with that advisor?

Is there some massive overbilling problem in the investment advisor arena that investment advisors are not aware of? If so, dont current SEC rules and regulations give the agency the ability to investigate and enforce these rules? If the current rules arent being enforced, why would you expect a newer, costlier rule would be? And then, how much would it cost the SEC to enforce the new rule? Who would pay for that? Ultimately the consumer?

It is clear to me that, although well intentioned, the current proposal will do more harm to the consumer, than good. This proposal provides additional costs that will be borne by all clients of advisors, whether they like it or not. This also shows the SECs willingness to outsource its regulatory obligations to accounting firms. It is my opinion that an outside regulatory organization that is not paid for its work will do a more diligent job of monitoring regulations, than an accounting firm that will compete for business on price and their ability to cover the regulatory bases.

This proposed regulation will not prevent a Madoff, or a Stanford. Audits are not immune to malfeasance as we have seen through Enron, Worldcom, and the demise of Arthur Andersen. We cannot expect that adding costs on the 98% that get it right, will prevent the 2% from doing wrong.

I do not support the current proposed regulation.