Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets." While I applaud the Commission's efforts to enhance investor protections and address gaps in the custody rule, I believe there are significant issues that need to be addressed before these rule proposals can be implemented. One major concern I have is the lack of consideration for privacy and security concerns. In today's digital age, where cyber threats are rampant, it is crucial to ensure that client assets are safeguarded against unauthorized access and potential breaches. The proposal does not adequately address the privacy and security concerns associated with the custody of digital assets, putting investors' assets at risk. Additionally, the proposal raises concerns about the privacy and safety associated with allowing so many third parties to know sensitive financial data and social security numbers. The collection and maintenance of such information by investment advisers can be a cause for concern as it increases the risk of identity theft and fraud. Therefore, it is essential that the proposed rule include robust provisions to safeguard clients' personal and financial information from unauthorized access or misuse. Furthermore, I am concerned about the SEC overreaching beyond its mandated responsibilities. While it is important to protect investors and ensure the integrity of the financial markets, it is equally important to avoid unnecessary regulatory burdens on investment advisers that may hinder their ability to serve their clients effectively. The proposed rule seems to extend the SEC's jurisdiction beyond what is necessary, placing additional compliance costs and regulatory burdens on investment advisers without a clear justification for doing so. In light of these concerns, I urge the Commission to reconsider certain aspects of the proposed rule. Specifically, the SEC should: 1. Conduct a thorough analysis of the privacy and security implications associated with the custody of digital assets, and incorporate appropriate safeguards to protect client assets from unauthorized access and potential breaches. 2. Implement stricter requirements for the collection and maintenance of sensitive client data, ensuring that investment advisers have robust procedures in place to safeguard this information and prevent unauthorized access. 3. Review the proposed rule to ensure that it does not exceed the SEC's mandate and imposes unnecessary regulatory burdens on investment advisers. I appreciate the Commission's commitment to enhancing investor protections, but it is essential that these efforts are balanced with the need to protect client privacy, promote data security, and avoid excessive regulatory burdens. I believe that by addressing the concerns mentioned above, the SEC can achieve a more effective and balanced regulatory framework that prioritizes investor protection while minimizing unnecessary compliance costs. In conclusion, I kindly request the Commission to carefully consider these concerns and make necessary revisions to the proposed rule. It is imperative that investor protections are strengthened without compromising privacy, security, and the ability of investment advisers to effectively serve their clients. Thank you for considering my comments. I look forward to the Commission's response and any further opportunities to provide input on this crucial matter. Sincerely, Scott