Subject: File No. S7-09-09
From: Ernest R. Giacobba, Jr.
Affiliation: CLU

July 1, 2009

To whom it may concern.

The reaction to major fraud by a handful of advisers adversely affects thousands of hard working, honest small businessmen and woman. Please be assured that it is to the SEC credit that they are very concerned about the welfare of the investing public. The public is aware of the fact that if the SEC applied existing guidelines to these fraudulent advisers this problem would never have happened.

Now the Agency is placing very expensive remedies on the small adviser to correct a problem that doesn't exist, especially if the adviser is using a third party custodian such as Fidelity or TDAMERITRADE. The client receives statements from the custodian and the adviser, not to difficult for the client to compare the two.

I ask that you modify the definition of custodian by not using the ability to deduct fees as an example of custody and the expensive financial and overkill of an independent audit.

The additional cost of compliance to your proposed regulations will ultimately be born by the client. Advisers like me who have been security and registered advisers for 37 years with never a complaint are being asked to bear the burden of poor oversight by government agencies. If the existing rules were enforced no new regulations would be needed. I thank you for allowing advisers this opportunity to make comments on the proposed changes.