July 2, 2009
My name is James E. Kearney, CFP(R), CTFA, a member of the Financial Planning Association (FPA) and National Association of Personal Financial Advisors (NAPFA), and a principal in an SEC-registered investment adviser (Quadrant Capital Management). I am also a past Chairman and President of the New Jersey Chapter of the Financial Planning Association.
I am opposed to the requirement in the proposed amendments to the custody rule that would subject RIAs to a surprise audit by an accounting firm. We already allocate sizable funds in our budget for ongoing regulatory/compliance matters, and feel strongly that the additional costs of a surprise audit will be excessive. In addition, the time required to get through the audit would be costly. Instead, 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.
Accordingly, please reconsider the proposed amendment, or at least waive it for investment advisers that are only considered to have "custody" because they have the ability to debit fees.
Thank you in advance for any consideration you give this matter.