July 27, 2009
As a registered investment advisor, Optimum Investment Advisors(Optimum) would like to express how strongly we oppose the surprise audit proposal(amendments to rule 206(4)-2). We don't dispute the need for firms who self custody to have more oversite. However, a firm like ours who has all their assets at independent qualified custodians should not be subject to this amendment just because we debit management fees. Debited fees show up on the client statement that they receive directly from their custodian. We also send the client a copy of their fee bill. Any fraudulent transactions in regards to debiting fees would be noticed by the client. Some custodians will even question you when the fee is over a certain percentage of assets in the account. My point is there are checks and balances in place with fee deductions so I don't see the benefit of a surprise audit. Optimum already performs an annual audit by an independent accounting firm. We do it as good practice. But we don't see the need to have to change that to a surprise audit and have the auditor submit all kinds of paperwork to the SEC. Optimum is already doing our part to make sure there is no fraudulent behavior going on. During these tough economic times adding additional costs to RIAs of an audit that produces very little benefit to investors is not a wise decision. We strongly urge you to reconsider this amendment and withdraw the surprise audit requirement for RIAs who are deemed to have custody based soley because they can withdraw fees.