Subject: Custody Rule s7-09-09

July 23, 2009

I am writing to express my opinion regarding the proposed amendments to Rule 206(4)-2, the Custody Rule. Like many Investment Advisory Firms, my firm custodies its assets at qualified custodians, and has access to the funds only through our ability to debit authorized fees directly from client accounts. Our clients receive statements directly from the custodian, and those statements fully disclose the deduction of the advisory fee.

The cost to small business firms such as mine of paying for an independent surprise audit not only adds an unreasonable financial burden but will do nothing to enhance investor confidence or the safety of investor funds. When advisors have no access to client funds except through third-party fee custodian collection the client is already protected from advisor abuse targeted by this amendment. I suggest that this aspect of the current proposal be revised to exempt this scenario. I, along with many of my peers in the industry, work hard to build ethical businesses with high compliance standards, and I think that a false sense of security will be created along with undue burden to advisors if we are required to provide this audit.


Larry McDonald
Tricord Investment Advisors, Inc.