Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While I appreciate the SEC's aim to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the proposed rule may exceed the SEC's regulatory authority and encroach upon areas that are better regulated by other agencies. One area of concern is the potential privacy and safety risks associated with allowing numerous third parties access to sensitive financial data and personal information, such as social security numbers. The proposed rule requires investment advisers to provide custodian information and custodial account numbers to their clients. While the intention behind this requirement is to enhance transparency and client empowerment, we must also consider the potential risks of data breaches and identity theft. Safeguarding client privacy should be of utmost importance, and I encourage the SEC to thoroughly assess the privacy implications of the proposed rule. Furthermore, the scope of the proposed rule raises questions about potential overreach of the SEC's regulatory authority. It is essential to consider whether the SEC has the appropriate jurisdiction to regulate certain aspects covered by the rule, especially those that pertain to crypto assets. Given the evolving nature of this area and the involvement of other regulatory bodies, the SEC must carefully consider the potential duplication or overlap of regulations. I urge the SEC to engage in thorough consultation with relevant agencies to ensure a cohesive and coordinated approach to safeguarding client assets. In addition, the economic analysis included in the proposal raises certain concerns. While the SEC acknowledges the challenge of estimating economic effects due to varying practices among investment advisers, it is essential to conduct a comprehensive analysis to fully understand the costs and benefits of the proposed rule. Transparency and efficiency are important goals, but we must also consider the potential impacts on advisory services, competition, and compliance costs for qualified custodians. As the proposed rule may have far-reaching implications, the SEC should strive to strike a balance between investor protections and minimizing unintended consequences that could adversely affect market participants. To address these concerns, I suggest that the SEC conducts further review and engagement with industry participants, consumer advocacy groups, and other relevant stakeholders. This would provide an opportunity for input from diverse perspectives and help ensure that any proposed rule strikes the appropriate balance between protecting investors and preserving the efficient functioning of the advisory industry. In conclusion, I appreciate the SEC's efforts to enhance investor protections through the proposed rule on safeguarding advisory client assets. However, it is crucial to consider potential privacy risks, evaluate the regulatory authority of the SEC, and conduct a comprehensive economic analysis to enable well-informed decision-making. I encourage the SEC to prioritize collaboration with stakeholders to shape a final rule that effectively achieves its intended goals and benefits all market participants. Thank you for considering my concerns and for providing the opportunity for public comment on this important matter. Sincerely, Pawel Mojzeszek,