Subject: File Number S7-09-09 Custody Rule Changes

July 1, 2009

Dear SEC Staff:

I am an FPA member and operate a firm that is a SEC registered RIA.

I have read the proposed rule changes to accounts the SEC considers discretionary and I am opposed to the requirement of surprise audits. I am concerned that the SEC considers advisors who have client permission to take advisory fees from the accounts as being discretionary and having custody. I believe the SEC is responding (or over-reacting) to cases like the Madof scandal in which there was not an independent custodian and independent reporting of asset values. For advisors who use independent custodians, such a rule would represent a significant burden and is an over-extension of the SEC's powers and authority that would gain nothing.

I would prefer to see rules passed and applied in situations where client funds are actually at risk. Such instances would be when there is not an independent custodian or the advisor had full discretion over client accounts. In those cases, an audit may be of some assistance in assuring that no fraud was occuring.

This requirement of an independent audit would place a tremendous hardship on small firms like mine. The estimated cost of an audit would hurt our ability to operate profitable without passing on the costs to our clients, who frankly are not at risk and would do not gain a material benefit from the audit or the rule. I understand the SEC and FINRA desire to be seen as aggressively cleaning up problems in the securities indursty and restoring the public trust, but this over-reaction appears to be more for plublicity and would do more harm than good.

I would strongly encourage you to re-consider this proposed rule and instead, promote additional funding for the SEC to beef up the audit and enforcement staff so that they can provide the real protections that are needed - and can apply the appropriate level of supervision in cases where it is mandated.

I apprecite the opportunity to make my comments regarding this proposal and ask that you strongly consider modifying it such that the enforcement is fucused on cases that require the attention.

Michael J. Fischer CFP, AIF
Sequoia Financial Advisors, Inc.