Subject: File Number S7-09-09

July 26, 2009

Dartmouth Advisory Services Inc. is an independent investment adviser registered with the Securities & Exchange Commission. We are submitting our comments regarding proposed amendments to Rule 206(4)-2.

The proposed amendments will deem us to have custody of client funds solely because we have the authority to deduct advisory fees from client accounts held by our independent custodian, T.D. Ameritrade. We disagree and further, believe that the portion of the proposed Rule, which would require advisers with this form of custody to undergo an annual surprise audit, is not warranted and will not benefit the publicís interest.

Presently, our custodian delivers account statements directly to each client on a monthly basis, reporting all individual holdings as well as activity transacted during the period. Further, our custodian offers internet access for all its accountholders in order that they may monitor their accounts online on a continuous basis. We believe each of these features provides our clients with the ability to easily supervise our activities and sufficiently identify and detect erroneous or fraudulent transactions, should they occur.

Presently, our clients agree, in writing, that our advisory fees can be deducted directly from their advisory accounts. In addition, our custodian has certain safeguards in place to monitor and prevent issues like excessive or duplicative invoicing, each helping to deter fraudulent conduct. While the recent decline in the financial markets has revealed a wide range of illegal activities within the investment community (mostly Ponzi schemes), we believe that the abuses in our industry are not the result of issues such as adviser authority to deduct fees from accounts maintained at independent custodians.

The key feature of this proposed amendment is the requirement of surprise annual audits. Like many in our industry, we are a small organization and the cost associated with an annual surprise audit would cause a significant financial strain on us. It is likely that this cost would be passed on to our clients in the form of higher advisory fees, which is clearly not in their best interest.

Should we instead decide to eliminate the direct debit of fees and instead require clients to pay our advisory fees directly, we would have to completely revamp our operations, resulting in increased overhead costs. As simple as this issue seems, this kind of change would confuse most of our clients and require them to make tedious adjustments to their finances and individual recordkeeping responsibilities. Our clients have responded favorably to the convenience of direct debiting of advisory fees.

Given that existing safeguards in place are adequate and considering the adverse effects of a mandatory surprise audit on advisers as well as clients, we respectfully request that the Commission leave current Rule 206(4)-2 unchanged with respect to advisers who have custody solely because they have the authority to deduct advisory fees from client accounts.

Respectfully submitted,

Jim McGurren
Dartmouth Advisory Services