Subject: File No. S7-09-09
From: Michael D Axel, CFA
Affiliation: President, AMI Investment Management

July 2, 2009

June 30, 2009
To Whom It May Concern:
While I understand the need for proper oversight authority to help protect consumers, I believe that this proposal places an unnecessary burden and cost on investment advisers and ultimately their clients.
This is a solution in search of a problem. This is not even a problem that was at the root of the Madoff Ponzi scheme.
The proper deduction of client fees which have been fully and formally disclosed in writing and assessed on account values is hardly an example of a custody of assets. Once fees are calculated and disbursed they are no longer client assets. Like many other firms, we use third-party custodians like Schwab or Baird. Each of these companies is fully audited and reviewed. And in no case does an investment advisor have control or access to the accounting systems operated by these custodians.
Typical advisory fees may range from 0.5% per annum to 1% per annum. Fees will not be released by the custodian unless they are within the limits disclosed to the client already. How is the auditing of an amount already reviewed by a third party custodians in-place systems going to protect the client from losing billions of dollars by a notorious swindler? Its not. Thats why I believe that this proposed rule is without merit and merely a political response to the media publicity that has embarrassed regulators.
As a member of the CFA Institute, we take our fiduciary role seriously. I kindly suggest that the SEC and FINRA look elsewhere to fix real problems in the system.