July 28, 2009
Elizabeth M. Murphy, Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-0609
I am writing to oppose the proposed rule that would deem any RIA whose clients give them authorization to deduct fees from their account as having custody of assets.
The existing safeguards around this arrangement evidently have prevented fraudulent fee transactions.
· The deduction of fees is done by the custodian-not the RIA- in accordance with a client signed agreement.
· Presently, clients receive an annual tax form disclosing fees and regular account statements from custodians (not their RIAs) detailing fee deductions.
· Any changes to these arrangements must be undertaken with client signed agreements.
· And finally, the existing audits of custodians would more quickly uncover fraudulent fee arrangements than self-arranged audits of innumerable RIAs.
The proposed rule attacks a non-problem. We should use our scarce regulatory resources to address the problems we have, not theorized ones.
Thank you for the opportunity to comment on the proposed rule.