Subject: File No. S7-09-09
From: Scott Healey

July 24, 2009

I wanted to take this opportunity to formally object to the proposed amendments to the custody rule that would subject investment advisers to a surprise audit by an accounting firm, solely because those advisors automatically deduct client fees from their investment accounts. To my knowledge, this is an attempted fix to a non-existent problem, in that I am unaware of any RIA citations around the subject of inappropriate fee withdrawal from client accounts.

I can understand the need for increased regulation in the financial services industry, but as a small investment adviser, the costs involved in implementing these surprise audits would be extremely costly and burdensome. Ultimately, these increased costs will end up being passed on to our clients, the very individuals this additional regulation is designed to help.

The Madoff scandal and other Ponzi schemes uncovered by the SEC had nothing to do with fees deducted by investment advisers, which is the purpose of the proposed surprise audits. Our client's assets are held at a third-party custodian, our clients receive fee invoices with an ample notice period prior to fee withdrawal, and the amount of the fees debited for our services are always clearly itemized on the client's monthly statements.