Subject: File Number S7-09-09; proposed changes to the custody rule

July 6, 2009

I am writing to voice opposition to the SEC’s proposed changes to the custody rule. I am a FPA member and a SEC-registered investment advisor. I agree it is important to regulate independent advisors and keep these regulations current, especially in light of the Madoff Scandal. However, requiring surprise audits by an accounting firm is excessive.

The SEC already eliminated the problematic loophole that Madoff’s accountant used to avoid detection of its counterfeit audits (certain accounting firms must now be registered with the PCAOB). Progression of this and other ponzi schemes resulted from lack of proper enforcement of current SEC and FINRA rules. Addition of a surprise audit seems to stem from political reasons rather than necessity.

Implementing a surprise audit will also impose a great cost to my firm that will ultimately be passed down to my clients, both financially and in regards to time spent. We are currently audited regularly by the SEC and are held highly accountable to the compliance department of our third-party custodian, Raymond James Financial Services.

I do believe the governance of the regulatory bodies is very important for consumer protection. In order to support these bodies and increase investor confidence, I would endorse adding resources to the SEC to expand their regular audit cycle of investment advisors.

Thank you for your time.

Mark Smith