July 2, 2009
Dear SEC Administrator,
Recently, I received an email from the FPA indicating that the newly proposed legislation regarding a surprise audit may cost my firm approximately $8,000 if this legislation is implemented. I would like to make a comment, if I could. Currently we use TD Ameritrade as our independent custodian and use a mutual fund allocation process to invest for our clients. I believe that we would be categorized as a low risk type of RIA Investment manager. We have TD Ameritrade deduct our fees directly from our client’s accounts. This saves collection costs that would be very large. However, we would fall under the category of needing a surprise audit each year.
I would like to point out that TD Ameritrade has controls on all of the accounts on which we deduct fees. We can only deduct a limited amount (maximum of 2%) each period without having the client to sign a new form. The client has already signed a form indicating that they wish to have fees deducted directly. It seems to me that we have good controls installed and do not need an audit. If necessary we could have the client sign something else to give more satisfaction for the regulators. A cost of $8,000 for an audit would appear to me to be over-kill for this type of issue.
Your consideration to this matter would be appreciated.
Alan Locke,
President,
Locke Financial Services, Inc.