Subject: File No. S7-09-09

July 21, 2009

I am writing in regard to the distinction that is made regarding the custody of assets in this proposal. I strongly believe that 1) custody of assets at an independent third party custodian, that 2) reports statements directly to the client, should not amount to custody of assets. This common arrangment clearly lessons the possible risk for malfeasance on the part of financial advisors. The mere withdrawal of client funds from these accounts should not rise to the level of custody necessary to require surprise audits.

The fact that clients may or may not receive invoices prior to the withdrawal should not add to the determination of custody, provided the fees are less than six months in advance. The clients typically receive independent statements directly from the third party custodians a few weeks after the fees are deducted. The fees are clearly itemized on the account statements prepared by the third party custodians. The fees each month are also nominal in light of the account size, generally less than 0.25%. In addition, I believe the custodians would reject submissions for substantial withdrawals for management fees, even if they were submitted.

Admittedly, there may on occasion be errors in billing that may or may not benefit the client. But to require such a surprise audit componant seems unduely excessive and costly to the vast majority of RIAs.

I strongly hope that this rule is either rejeted or better tailored to fit the previous definition of custody that seems much more appropriate in these circumstances.

Thank you for your consideration.