Subject: File No. S7-09-09
From: Jane E Marchand

June 30, 2009

I represent a SEC-registered investment advisory firm that is extremely concerned with the SECs proposed changes to the Custody Rule Release No. IA-2876, Custody of Funds or Securities of Clients by Investment Advisers

Although I can appreciate the reaction to public criticism of the SEC and congress in the light of the recent Madoff scandal, the proposed rule appears to be more of a political reaction than one that would serve the publics best interests.

It is obvious that the success of the Madoff scheme resulted from a lack of enforcement by the SEC and FINRA of existing rules together with ignoring repeated warnings from the media and whistle blowers. The SEC should hold FINRA accountable for its shared oversight of Bernie Madoff in conducting the Ponzi scheme for decades as a broker-dealer before registering two years ago as an investment adviser.

The various schemes uncovered by the SEC have had nothing to do with fees deducted by investment advisers. As far as we are aware, there have been no systemic problems in this area and are unnecessary, costly and burdensome, particularly for small, independent investment advisers.
The new surprise audit requirement will add additional costs to my business that will ultimately be passed on to clients or felt through additional layoffs within small financial advisory firms adding to our already high unemployment rate.

In order to enhance consumer protection, I would support Congress appropriating additional resources to the SEC to hire and train additional examination staff to increase the regular audit cycle of investment advisers together with a focus on those firms who do not have third party custodians which provide clients with additional checks and balances.

I can appreciate that it is more difficult for the SEC to audit large firms versus small firms, however large firms can and do have a dramatic effect on more of the general public and the welfare of our financial system. As for another proposal being bandied around of calling clients to see if they are happy with their advisor if you would have called Madoffs clients a week before his confession they all would have been fine.

Thank you for listening and I am hoping that you take to heart concerns of those who are obeying the laws and working in the best interests on the investing public.

Jane E. Marchand
Marchand Faries Financial Management, Inc.
821 Montego Road West
Jacksonville, FL 32216-9366
Tel. 904-805-0207
Fax 904-805-0209

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by MFFM corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. MFFM have taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message.

MFFM only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion.