Subject: File No. S7-09-09

July 23, 2009

To whom it may concern,

We hope that this letter finds you doing well. I am a Certified Financial Planner, an FPA member, and SEC registered investment advisor. We are writing to let you know that we are opposed to the requirement in the proposed amendments to the custody rule that would subject investment advisers to a surprise audit by an accounting firm.

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. The Madoff and other Ponzi schemes 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 Ponzi schemes uncovered by the SEC had nothing to do with fees deducted by investment advisers. As far as we are aware, there have been no systemic problems in this area, and the changes would be unnecessary, costly and burdensome, particularly for small, independent investment adviser businesses. Our independent, third party custodians conduct their own audits of our management fees and already have procedures in place to monitor the fees deducted. The new surprise audit requirement will add additional costs to my business that will ultimately be passed on to my clients, including taking away time needed to assist clients during the ongoing financial crisis. In order to enhance consumer protection, I would support Congress appropriating additional resources to the SEC to hire and train additional examination staff to increase the regular audit cycle of investment advisers.

Thank you for your assistance.


Robby T. Bryant, CFP, CEA
Magnolia Financial Planning Services, Inc.