Subject: File No. S7-09-09
From: Ron Moskat
Affiliation: CCO, Personal Investment Management, Inc.

July 23, 2009

I wish to formally express my strong view that the proposed new custody rule under the Investment Advisers Act of 1940, whereby investment advisors who deduct advisory fees directly from clients' accounts at qualified, third-party custodians must undergo an annual surprise audit at the firms expense, should NOT be adopted. I feel that the current rule very adequately and appropriately protects investors insofar as clients must first authorize in writing, the deduction of such fees. Additionally, the fact that clients receive at least quarterly, an account statement from such independent qualified custodian, which fully discloses the deduction of advisory fees from their account, allows for adequate opportunity for monitoring by the client and appropriately protects their interests. Deducting fees directly from the clients' custodial account also spares advisors and their clients the cost, inconvenience and risk of identity theft that would be associated with handling advisory fee payment(s) by check and US Mail.

The key component to the current rule that must be emphasized, adhered to and monitored by the Commission, is that the clients' assets must be held at an INDEPENDENT, third-party qualified custodian and not a custodian who is in any way affiliated with the advisor. Clearly, this was not the case in the Bernard Madoff matter, which, I feel, is one of the primary drivers of the proposed custody rule change.
To require all such advisors to undergo an annual surprise audit, would place an extraordinary, unnecessary and inappropriate operational and cost burden on them, especially smaller, independent investment advisors. The increased costs would ultimately be passed along to clients, which seems inappropriate and not in the investing public's best interests, especially considering the relative lack of evidence to support the view that the current rule is inadequate or has resulted in harm to investors.

Thank you for allowing me to submit my comments.