Subject: File No. S7-09-09
From: Beth Peters

July 28, 2009

The surprise audit rule, as proposed, will do nothing for our investors, except cost them tens of thousands of dollars with no benefit. Our hedge funds have deemed custody because we have the right to withdraw management fees. Actual custody resides with our 2 prime brokers. Several of our investors subscribe to a service that contacts the prime brokers directly to confirm the fund's asset balances and agrees the prime broker's reported balances to the fund's reported balance. Our investors may themselves also contact the prime brokers directly to confirm asset balances. The market is demanding a type of surprise audit for deemed custody funds already, at a fraction of the cost you propose. While I agree oversight is necessary in some cases, deemed custody funds are not one of those cases. Please consider adding an exception for deemed custody to the surprise audit requirement. Thank You