Oct. 25, 2023
Dear Securities and Exchange Commission, l am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets". While I understand the aim to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the proposal may have unintended negative consequences that need to be thoroughly considered. One area that raises concerns is the potential negative impact on the competitiveness of US companies. The proposed rules may put US companies at a disadvantage compared to their international counterparts by imposing additional compliance costs and requirements. This could lead to capital flight and loss of market share, ultimately harming the US economy and its ability to remain globally competitive. It is crucial to strike a balance between investor protection and ensuring a level playing field for companies operating in the US market. Furthermore, the proposed reporting requirements have the potential to disproportionately impact small businesses and startups. These entities may not have the resources or infrastructure in place to track and maintain the personal identifiable information (PI) required by the rule. Implementing such tracking protocols would not only cause additional expenses but also divert their attention and resources away from crucial innovation and growth initiatives. This, in turn, could stifle innovation and hinder the ability of small businesses to thrive in a challenging economic landscape. It is important to carefully consider the unintended consequences of imposing extensive reporting requirements on small businesses. While investor protection is of paramount importance, we must be mindful of the potential impact on the dynamism and growth potential of our economy. Finding alternative ways to achieve investor protection without unduly burdening small entities should be a priority. In addition to these concerns, I would also like to emphasize the need for flexibility and clarity in the proposed rule. Given the complexity and diversity within the investment advisory industry, a one-size-fits-all approach may not be appropriate or effective. It is essential to provide guidance and support to investment advisers, especially small entities, to facilitate compliance without undue hardship. Moreover, the transition period and compliance dates need to be carefully considered. Adequate time and resources should be provided to ensure smooth implementation of the rule. Taking into account the varying practices and operating models among investment advisers, a well-thought-out transition period will allow for sufficient adjustment and preparation without placing an excessive burden on market participants. I also urge the SEC to carefully analyze the economic effects of the proposed rule. While investor protection is a crucial objective, it is equally important to assess the potential costs and benefits associated with the rule. Understanding the economic impact will help ensure that the proposed measures are not overly burdensome and achieve their intended objectives. In conclusion, while I agree with the underlying goal of enhancing investor protections, I believe it is crucial to carefully consider the potential negative impacts of the proposed rule. This includes assessing its impact on the competitiveness of US companies, particularly in comparison to international counterparts, as well as the potential burden it may place on small businesses and startups. Flexibility, clarity, and a well-designed transition period are essential to enable compliance without stifling innovation and growth. Thank you for considering my comments. I appreciate the opportunity to provide input on this important proposal. Sincerely, Jennifer Barns