Subject: File No. S7-09-09
From: Stewart Welch, III, CFP, AEP
Affiliation: Partner & Founder, The Welch Group, LLC

June 30, 2009

As a Registered Investment Advisor with the SEC, I oppose the proposed legislation seeking 'surprise' audits for RIAs who manage discretionary accounts and automatically deduct fees from those accounts.

The Madoff scandal had nothing to do with automatic deduction of fees and there is no evidence of a systemic problem in this area. It is estimated that surprise audits would increase RIA expenses $10,000 - $25,000 or more, depending on firm size. in addition, RIA firms would have little control over fees charged by these outside auditors, which would promote abuse. Clients of RIA firms using third-party custodians such as Charles Schwab receive notice of fees in their statement so there is ample disclosure.

To punish RIA for the lack of effective oversight by FINRA in cases such as Madoff is unreasonable and will only result in higher fees to clients without benefiting consumer protection. Rather than creating a new 'cottage' industry for the accounting field, consider using SEC resources to increase the number of trained SEC auditors and the frequency of SEC audits of RIAs.

Stewart Welch, III, CFP, AEP
Partner & Founder
The Welch Group, LLC