Subject: File Number S7-09-09

July 9, 2009

Dear Sirs:

As a NAPFA member and the Chief Executive Officer of Lesesne Capital Management, an SEC-registered investment adviser, I would like to express my opposition to the SEC’s proposed amendment to the custody rule that would subject investment advisers to a surprise audit by an accounting firm.

The amendment aimed toward federally registered investment advisors is misdirected and does not address the true cause of the Madoff scandal. The Madoff and other Ponzi schemes had nothing to do with fees deducted by investment advisors but rather resulted from a lack of aggressive enforcement by the SEC and FINRA of current rules and ignoring repeated warnings from the media and whistle blowers. The SEC should hold FINRA accountable for its shared oversight of Bernie Madoff in conducting the Ponzi scheme for decades as a broker-dealer before registering two years ago as an investment adviser.

The proposed surprise audit appears to be more of a political reaction to public criticism of the SEC and congressional pressure after the Madoff scandal than an effective regulatory response. The SEC already resolved one of the major problems with the custody rule, which was eliminating a loophole from registration for certain accounting firms with the PCAOB that Madoff’s accountant used to avoid detection of its phony auditing practices.

As far as we are aware, there have been no systematic problems in this area, and the new surprise audit requirement is unnecessary, costly, and burdensome, particularly for small, independent investment advisers such as ourselves. I implore you to resist the urge to contribute to the economic hardship that so many legitimate investment advisers have already experienced during the past year.


Warren W. Wick, II
Lesesne Capital Management