Subject: File No. S7-09-09
From: Theodore Schwartz
Affiliation: President, Capstone Investment Financial Group

July 2, 2009

As an advisor who is in the process of moving from Broker/Dealer affiliation to true independence as a Registered Investment Advisor, this new proposal is extremely difficult and is not helpful to me, my clients, or even to regulators. We seek out the independence of a quality custodian (TD Ameritrade in our case)and then are subject to very expensive and unnecessary regulation. Most potential abuses are eliminated through the use of an independent custodian. That is why we are glad to use one and absorb the cost of that relationship. I suppose the potential for abuse comes from the ability to deduct excessive fees from accounts. I suspect this is an extremely rare event (if it exists at all), but the solution should not be to add a layer of expense and inconvenience to everyone. I would be happy to have a rule capping the fees that can be deducted from an account by the custodian on behalf of an advisor or subjecting anyone who deducts over a certain amount (2.75%?) to assuming the label of custodian and being subjected to spot audits, etc. Regulation must focus on eliminating abuse rather than just adding work and expense to everyone.