Subject: File No. S7-09-09
From: Theodore Schwartz
Affiliation: Investment Advisor Representative, Cambridge Investment

June 16, 2009

I do not believe that it is in the best interest of clients or advisors to include the deduction of fees in the definition of custody. We use TD Ameritrade to custody our assets and do not engage in custodial activities. As a small firm, if we have to incur expenses as if we were actually custodying assets, it can only harm us and our clients. It will be a costly burden which will either reduce our profitability, be passed on to our clients, or both.
If there are abuses taking place through excessive fee deductions (I know of no such problems), then the solution should deal only with those situations rather than with all small independent advisors. For instance, I think it is fair to assume that all quarterly fees should be less than .5% and annual fees less than 2% if the client's interests are truly put first. Perhaps those who debit accounts in excess of that amount should be required to have surprise audits.