Subject: 'File Number S7-09-09'

July 22, 2009

We are a SEC-registered investment adviser and FPA member. We are adamantly opposed to the requirement in the proposed amendments to the custody rule that would subject investment advisers to a surprise audit by an outside accounting firm. This new proposed requirement is a knee jerk reaction to the public outcry of the lack of SEC oversight related to the Madoff and other Ponzi schemes. These Ponzi schemes had nothing to do with fees deducted by investment advisers, therefore independent advisers should not be held responsible for the lack of enforcement by the SEC and FINRA of current rules and regulations even given repeated warning from the media and whistle blowers regarding Madoff. The new proposed surprise audits will dramatically increase the costs of doing business especially for small, independent investment advisers. These costs will eventually be passed on to the client. Given the current economic turmoil, taking valuable time and money away from our clients is not in the best interest of the client. If you really want to get to the solution of the problem then we would support Congress appropriating additional resources to the SEC to hire and train additional staff to increase the regular audit cycle of investment advisers in order to enhance consumer protection. Again we vehemently oppose the proposed surprise audit requirement for SEC-registered investment advisers who automatically deduct fees from its client’s accounts.

Jamie Padgett
Wealth Strategies by Bayliss & McAninch, Inc.