Subject: 'File Number S7-09-09'
July 3, 2009
I am a member of the FPS and a SEC registered Rep. I oppose this proposal. It is too costly and would be of little value in catching the bad guys. You guys don’t get it!!! The bad people don’t have the clients sign forms, disclosures, etc… Most of the “bad” guys aren’t even registered with the regulatory agencies.
Isn’t the SEC and FINRA, supposed to do surprise audits? Yes they do, the problem is they are understaffed and are forced to focus on the minor stuff like the size of fonts for disclaimers instead of if Madoff or Sanford are legitimate advisers.
I also think the following points are important to note.
- The proposed surprise audit appears to be more of a political reaction to public criticism of the SEC and congressional pressure after the Madoff scandal than an effective regulatory response.
- The SEC already resolved one of the major problems with the custody rule, which was eliminating a loophole from registration for certain accounting firms with the PCAOB that Madoff's accountant used to avoid detection of its phony auditing practices.
- The Madoff and other Ponzi schemes resulted from a lack of aggressive enforcement by the SEC and FINRA of current rules and ignoring repeated warnings from the media and whistle blowers. The SEC should hold FINRA accountable for its shared oversight of Bernie Madoff in conducting the Ponzi scheme for decades as a broker-dealer before registering two years ago as an investment adviser.
- The Ponzi schemes uncovered by the SEC had nothing to do with fees deducted by investment advisers. As far as we are aware, there have been no systemic problems in this area and are unnecessary, costly and burdensome, particularly for small, independent investment advisers.
- The new surprise audit requirement will add additional costs to my business that will ultimately be passed on to my clients. [Provide an example of how this will affect your business, including taking away time needed to assist clients during the ongoing financial crisis.]
- In order to enhance consumer protection, I would support Congress appropriating additional resources to the SEC to hire and train additional examination staff to increase the regular audit cycle of investment advisers.
If there is anything I can do to help, please do not hesitate to call me.
Robert “Puma” Richards Jr.
Masters of Science in Financial Services
Certified Financial Planner®
Certified Fund Specialist
Certified Annuity Specialist
Retirement Income Specialist
Board Certified in Mutual Funds
Registered Financial Consultant
EPA Financial Services, Corp.