Oct. 30, 2023
Dear SEC, I am writing to provide my public comment on the proposal "Safeguarding Advisory Client Assets," issued by the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have concerns regarding certain aspects of the proposed rule. One of my primary concerns relates to the lack of clarity on custody requirements for digital assets. In today's rapidly evolving financial landscape, digital assets have become increasingly significant. However, the proposal fails to provide clear guidelines on how investment advisers should safeguard these assets, leading to uncertainty for market participants. Given the unique characteristics of digital assets and the potential for loss or theft, it is crucial that explicit and comprehensive custody requirements are established to protect investors and ensure the integrity of the market. Furthermore, the proposed rule raises privacy and safety concerns associated with allowing numerous third parties to have access to sensitive financial data and personal identification information, such as social security numbers. While I understand that increased transparency is essential for regulatory oversight and protecting investor interests, it is vital to strike the right balance between transparency and maintaining individual privacy rights. The rule should incorporate robust privacy safeguards to prevent the misuse or unauthorized access of personal and financial information, reducing the risk of identity theft or other privacy breaches. Additionally, I urge the SEC to consider the potential economic impact of the proposed rule. While it is essential to safeguard client assets, we must also ensure that the compliance costs imposed on investment advisers are reasonable and proportional to the benefits provided. The SEC's economic analysis should thoroughly assess the potential costs and benefits associated with the proposed rule, giving due consideration to the diverse practices among investment advisers so as not to unduly burden smaller market participants. Furthermore, it is crucial for the SEC to consider industry-specific feedback and expertise to ensure the framework is well-designed and adaptable to the unique challenges faced by investment advisers. Engaging with industry stakeholders and soliciting input on the practicality and feasibility of the proposed rule would further enhance the rulemaking process and the ultimate effectiveness of the safeguards implemented. In conclusion, while I support the SEC's goal of enhancing investor protections and addressing gaps in the custody rule, the proposed rule would greatly benefit from further clarification on custody requirements for digital assets and stronger privacy protections for individuals. Additionally, the economic impact of compliance costs on investment advisers, especially smaller market participants, should be carefully considered. I encourage the SEC to engage with industry stakeholders to ensure that the final rule strikes the right balance between investor protection, privacy rights, and economic feasibility. Thank you for considering my comments. If there are any further opportunities to provide input or if there are any general questions I can answer, please let me know. Sincerely, Lee Victoire