Oct. 30, 2023
Dear Securities and Exchange Commission, I am submitting a comment about the proposed rule on safeguarding advisory client assets. Although I recognize the intention to bolster investor protections, I firmly believe that the proposed rule raises several worrisome issues that demand immediate attention. First and foremost, my deep concern lies in the rule's extensive reach and its encompassing of a broader spectrum of investments held within a client's account. While safeguarding client assets is paramount, the proposed asset definition and inclusion of discretionary authority in custody might create an onerous burden for investment advisors. This could very well impede their ability to efficiently manage client assets, all while navigating the complexities of rule compliance. Furthermore, I want to emphasize the critical challenges posed by this rule when it comes to cryptocurrency assets. The surging popularity of digital assets, particularly cryptocurrencies, has brought to light questions about their treatment under existing regulations. While I acknowledge the necessity of addressing these assets within the context of investor protection, it is absolutely vital to ensure that any regulatory mandates do not stifle innovation or pile on excessive compliance burdens for advisors. In this rapidly evolving field, crystal-clear guidelines and prudent oversight are paramount. Moreover, I am deeply troubled by the potential overreach of the SEC's regulatory authority in certain aspects of this proposed rule. We must ensure that the SEC remains focused on matters within its area of expertise and does not encroach on territories that should be regulated by other agencies. Collaborative efforts with other regulatory bodies could lead to a more comprehensive and effective approach to investor protection, while also avoiding redundancy and confusion. Regarding the economic analysis, I do appreciate the SEC's efforts to weigh the costs and benefits of this proposed rule. However, it is absolutely imperative that the SEC conducts a thorough evaluation of the economic implications and takes into account the diverse practices among investment advisors. Compliance costs must be rigorously scrutinized to prevent undue burdens, particularly on smaller entities that could be disproportionately affected. In addition, I wish to underscore the importance of preserving efficiency, competition, and capital formation within the advisory industry. While investor protection is of utmost importance, it is equally crucial to ensure that regulatory demands do not undermine the ability of advisors to offer top-notch services, attract investment, and stimulate economic growth. Striking the right balance between safeguarding investors and minimizing regulatory burdens is fundamental to nurturing a thriving and competitive marketplace. Finally, I deeply appreciate the SEC's openness to public comments and its willingness to consider reasonable alternatives to the proposed rule. I implore the SEC to meticulously weigh the input from industry experts and stakeholders to ensure that any rule amendments strike the perfect equilibrium between investor protection, compliance costs, and market efficiency. Thank you for heeding my grave concerns regarding the proposed rule on safeguarding advisory client assets. I earnestly hope that my remarks can contribute to the discourse surrounding this pivotal regulatory matter. Best Regards