Subject: File Number S7-09-09

July 2, 2009

Good afternoon,

My name is Jonathan Sard and I am a member of the Financial Planners Association (FPA) and I am President of Sard Wealth Management Group, LLC, an SEC-registered Investment Advisor. I am writing to you today to express my opposition to the requirement in the proposed amendments to the custody rule that would subject investment advisors to a surprise audit by an accounting firm.

In my practice, client assets are custodied at qualified custodial firms, yet under this rule I would be considered to have custody of client funds because advisory fees are deducted from client accounts, some of which are discretionary accounts. I do not believe this should be categorized as having custody of client assets because:

1. The fees are calculated and deducted by the custodian according to the client’s advisory agreement.

2. Client assets are reported regularly on the custodian’s brokerage account statements which also clearly show any fees deducted from the account.

My business model does not take into account the cost of a surprise audit. If the audit is required, I will have to consider passing these additional costs on to my clients. I try and minimize costs to my clients and ensure that all fees are fair and reasonable. This additional overhead will be difficult to justify to clients, particularly in light of the current economy and market. I consider the extra burden proposed to be unnecessary and quite costly for a business of my size.

This action does not seem to address the root cause of the problems for which the SEC and FINRA are being criticized. Recent scandals were not caused by deduction of fees by investment advisors like me. In fact, as I understand it, the Madoff scheme, was perpetrated for decades when Bernie Madoff was not an even an investment advisor.

To focus on the causes of recent events, I support additional resources for the SEC to increase their examination staff to perform the regular audits of investment advisors. The existing audit process is the most effective tool to uncover violations and resolve issues within investment advisory firms. The SEC should have the resources to enforce current rules. New rules should be enacted to effectively address the root causes of issues. I do not see justification for this proposed amendment and do not want these additional burdens to affect my clients or my business.

Please reconsider the requirement of surprise audits and who would be subjected to them. Let’s focus resources in the areas where the risks are greatest, not on small advisors who have National Financial or similar custodians deducting agreed-upon fees from advisory accounts.

Thank you.

Jonathan Sard, CFP®
Sard Wealth Management Group, LLC