July 28, 2009
We are a small SEC-registered investment advisory firm. We do not hold custody of client assets, except in the most technical definition of custody by deducting authorized management fees by client agreement from client accounts. Our independent third-party custodian holds custody of the assets that we manage for clients, and the custodian provides account statements directly to our clients as its customers. We also provide account statements, fee statements and reporting directly to our clients. The safeguards are already in place to assure a high degree of transparency to protect client assets and, as such, we strongly oppose a Surprise Audit requirement. Such an audit would be prohibitively costly, without consideration given to the simplicity and size of our advisory business, and arguably of no benefit to clients who have authorized us to deduct management fees from their accounts. With only distinct and documented authority to deduct fees, in practice, our advisory firm and thousands like us are not true custodians or valid candidates for such an overly broad Surprise Audit requirement.