Subject: File Number S7-09-09
July 6, 2009
I am an financial advisor and co-branch manager with a federally registered RIA. I am opposed to the requirement in the proposed amendments to the custody rule that would subject investment advisers to a surprise audit by an accounting firm. If this proposal is being driven by the Madoff scandal, I have the following observations:
- 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. Additionally, this will take 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.
This is not a good rule and appears to be a knee-jerk reaction to an unrelated event.
Best Regards, Terry Pender.
Terry Pender, CFP® , CPA