July 16, 2009
A surprise audit of Registered Investment Advisors is a bad idea! The cost/benefit is bad: weighted toward much higher costs for RIAS, and no significant benefit to clients.
Currently virtually all qualified custodians send statements directly to clients at least quarterly, and usually monthly. In today's electronic age almost all clients of qualified custodians have 24/7 online access to their accounts, including the ability to view any fee deduction. Clients of advisors who utilize an independent, qualified custodian have the ability to detect a fraudulent transaction within hours or at most within three months of the act. Why would an annual surprise examination of an advisor by a CPA to verify client assets which are not held by the advisor increase investor protection? Answer: it would not.
Do not pass this regulation.
Diane C. Jakubowski