Subject: File No. S7-09-09
From: Marvin L. Appel
Affiliation: CEO, Appel Asset Management Corp.

July 1, 2009

Greetings. I am writing to object to the SECs proposed changes to the custody rule, IA-2876. My firm, Appel Asset Management Corp. is an SEC-registered investment advisor.

I understand the Commissions desire to protect future investors from Ponzi schemes like Madoffs, but requiring a surprise audit would impose a significant additional cost of doing business without affording any real protection to the public. Indeed, I remember that surprise audits used to be required of managers with custody in the late 1990s, which means that Madoff did undergo and pass surprise audits during the period he was bilking his customers.

Is the scope of any problems related to billing client accounts directly sufficient to require advisors who use independent custodians to incur thousands of dollars annually in new audit fees? Many businesses in industries with no fiduciary obligation and under less oversight than ours bill their customers credit cards directly without being audited, and their customers continue to agree to such arrangements.

I hope that the Commission will reconsider this proposal and instead focus its resources on the effective enforcement of the rules that are already on the books.

Thank you for your consideration.