Oct. 22, 2023
Dear Commissioners, I am writing to provide my public comment on the proposed rulemaking for "Safeguarding Advisory Client Assets" (File No. S7-08-20) issued by the Securities and Exchange Commission (SEC). I commend the SEC's efforts to enhance investor protection and address gaps in the custody rule. However, I have several concerns and issues regarding certain aspects of the rule proposal that I would like to address. Firstly, I would like to focus on the lack of clarity on the definition of digital assets in the proposed rule. As the digital asset landscape continues to evolve rapidly, it is imperative that regulators provide clear and comprehensive guidance on the definition and treatment of these assets. Without such clarity, there is a risk of confusion and potential misinterpretation, which could hinder investor protection and regulatory oversight. I urge the SEC to further refine the definition of digital assets to ensure consistency and certainty in their application within the proposed rule. Additionally, I have concerns regarding the privacy and safety associated with the proposed rule's requirement to disclose sensitive financial data and social security numbers to multiple third parties. While I understand the importance of enhancing transparency and regulatory oversight, it is equally important to protect the privacy and personal information of investors. I urge the SEC to consider more robust safeguards and measures to ensure the privacy and security of client information, especially when sharing such data with multiple entities. Striking the right balance between transparency and privacy is crucial to maintaining investor confidence and trust in the advisory industry. Furthermore, I would like to highlight the potential compliance costs and burdens faced by investment advisers, especially small entities, as a result of the proposed rule. While I recognize the importance of enhancing investor protections, it is essential to consider the economic impact on investment advisers, particularly the smaller firms. Excessive compliance costs could disproportionately burden small entities and potentially introduce barriers to entry, hindering competition and innovation in the advisory industry. I urge the SEC to conduct a thorough economic analysis, taking into account the specific challenges faced by small advisers, and consider reasonable alternatives that minimize unnecessary burdens without compromising investor protection. In conclusion, I appreciate the SEC's dedication to improving safeguarding measures for advisory client assets. However, it is crucial to address the concerns and issues raised to ensure a well-balanced and effective rule that provides robust investor protection while considering the practical challenges faced by investment advisers, especially small entities. I look forward to seeing the SEC's careful consideration of these matters and the implementation of a version of the rule that addresses these concerns. Thank you for the opportunity to express my views on this important proposed rulemaking. I kindly request that this comment, along with my identifying information, be publicly accessible on Regulations.gov. If there are any further areas of concern or questions I can help address, please do not hesitate to let me know. I appreciate your attention to these matters. Sincerely, Vincent Marciano