1406 Browns Lane, 2nd Floor
Louisville, KY 40207
(502) 893-0300 FAX (502) 893-0325

September 12, 2002

Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549-0609

            Re: File No. S7-28-02

Dear Mr. Katz:

In response to your request for comments concerning proposed changes to Rule 206(4)-2 under the Investment Advisors Act, may I begin by commending your effort to modernize this Rule to reflect current practices.

While it would appear that compliance with the practices of Rule 206(4)-2 in its changed form (as we already do) will obviate the following issue, you nevertheless may want to consider explicitly resolving the longstanding question of when an Advisor (especially one doing business in corporate form) should be deemed to have custody of certain managed assets in client accounts owned by the Advisor's officer or employee individually or in a fiduciary capacity.

Employees of advisory firms frequently open managed accounts for themselves individually or in a fiduciary capacity. Such employees (or the fiduciary accounts they represent) are themselves the client, and they, in their capacity of client (not as an employee of the Advisor) obviously have authority to withdraw funds or securities from such client accounts. This ability to have access to client funds that belongs to the client does not ipso facto belong to the Advisor merely by reason of the client being an officer or employee of the advisory firm; it belongs solely to the client and should not be imputed to the Advisor.

As stated above, even though it would appear that any issue of constructive custody under these circumstances is obviated if an Advisor complies with revised Rule 206(4)-2, it might be worthwhile under "Definition of Custody" to distinguish between the authority of the Advisor itself versus that of individual officers or employees of the Advisor acting not on the Advisor's behalf but on their own, individually or as fiduciary.

            Very truly yours,

            R. Keith Cullinan