Subject: Surprise audit for advisors

July 8, 2009


While we whole-heartedly agree with providing greater scrutiny of custody situations, we also recognize that the major frauds and Ponzi schemes have come from firms outside the SEC regulation. Further, there is a big difference between a small advisor who is only empowered to deduct his fees from accounts he manages and advisors who have actual possession of client funds and securities.

One might also view this regulation as another attempt on the part of regulators and the large advisors to shackle the smaller firms with debilitating expenses.

Therefore, we suggest that you remove any audit requirements of the proposed new regulations for those advisors who only are empowered by their clients to deduct their agreed upon fees from their accounts. Please also recognize that the brokerage firms where such advisors custody their accounts already police the fee deductions.


Arthur Zaske

Art Zaske
Arthur Zaske & Associates