Subject: File No. S7-09-09
From: Ken Bloom

July 9, 2009

We are a small investment adviser firm that uses a 3rd party custodian (Fidelity Schwab). We only use no load mutual funds and do not sell any products (annuities, insurance, etc.) and do not accept any other compensation (trailers, 12b-1 fees, etc.). The valuation of our accounts are determined by the custodian. The custodian provides trade confirmations and monthly statements.

Adoption of the proposed rule would, in our opinion, not provide any additional security or confidence to our clients (or to other similarly situated clients of other firms) and would only impose a substantial and unreasonable cost to our firm.

None of the enforcement actions referred to in Release No. IA-2876 File No. S7-09-09 involve the situation of a 3rd party custodian. The enforcement actions are serious violations of the rules and regulations of the commission and have resulted in enormous losses to investors. The commission is rightly concerned with protecting investors but should not impose a burdensome requirement that does not solve the problem or provide additional security to investors.

Small investor adviser firms are unable to maintain actual custody as a practical matter. Client assets are adequately protected in these situations and nothing would be gained by subjecting firms such as ours to annual audits (surprise or otherwise).

How would an audit of our firm determine what assets are maintained by the 3rd party custodian? To determine the accuracy of the information the audit would have to examine the 3rd party's assets since we do not have actual custody (our custody is only the result of our ability to deduct our fees).

Advisers such as ourselves who do not maintain actual custody of assets and uses a reputable 3rd party custodian are not "high risk" firms since the custodian has the ultimate responsibility to the clients for the protection of their assets. As it now stands clients have adequate protection in these circumstances.

Thank you.

Kenneth J Bloom