July 23, 2009
I am a FPA member and SEC-registered investment advisor. All of our accounts are held at Charles Schwab & Co and SEI Trust company. We are opposed to the requirement in the proposed amendment to the custody rule that would subject my firm to a surprise audit by an accounting firm. The new surprise audit will add additional costs to my business that we will ultimately be passed on to our clients. We deal with many senior citizens and currently our fees are below market to enhance the returns to these clients.
This requirement will add an additional compliance burden and will detract from us servicing our clients unless we raise their fee and hire another employee to handle these audits. As it is we get audited by FINRA and the SEC and when we get audited we spend countless hours with the regulators. This new audit will only continue to detract from the reason we are in business, which is to provide advice to our clients. Our broker dealer must provide certified audits to FINRA as well. Out accounting costs are unreasonably high relative to our income. This new burden only adds to these costs.
I do not believe that the Ponzi schemes uncovered by the SEC had anything to do with fees deducted by investment advisers. We know of no systemic problems in this area. If the public was defrauded it was the result from a lack of enforcement by the SEC and FINRA, not a result of fees being deducted. I believe I heard a comment from Ms. Schapiro saying that maybe the SEC should hire investigative reporters to assist them. Obviously they do not have the wherewithal to do the job they are mandated to do. I am all for additional consumer protection and we support congress to hire and train additional examination staff, but I do not believe that forcing firms to hire an outside auditor to examine fee deduction is the solution to Ponzi schemes. The issue is the SEC doing its job when they audit firms such as ours. I oppose his proposed amendment.
Lawrence E. May, Certified Financial Planner
May Financial Group, Ltd, established 1979
Strategic Wealth Management Group, a Registered Investment Advisor
Securities offered through May Capital Group, LLC member of FINRA/SIPC and
Gerson Horowitz Green Securities Corp. member of FINRA