June 30, 2009
To Whom It May Concern:
I am an FPA member and SEC registered investment advisor. I am opposed to the requirement in the proposed amendments to the custody rule that would subject investment advisers to a surprise audit by an accounting firm. This appears to be a political reaction from public criticism of the SEC. The SEC has already resolved the loophole for certain accounting firms in the Madoff scandal. Bernie Madoff and other Ponzi schemes were a result of the SEC and FINRA ignoring warnings from the media and whistle blowers as well as lack of aggressive enforcement. These Ponzi schemes had nothing to do with fees collected by investment advisors. The cost of these surprise audits will add to the cost of doing business and ultimately be passed on to my clients. In order to enhance consumer protection, I would support Congress appropriating additional resources to the SEC to hire and train additional examination staff to increase the regular audit cycle of investment advisers. Please do not pass this legislation.