Via electronic mail
October 10, 2002
Mr. Jonathan G. Katz
Washington, D.C. 20549-0609
Re: Release No. IA-2044; File No. S7-28-02; Custody of Funds or Securities of Clients by Investment Advisers
Dear Mr. Katz:
We are pleased to provide comments on the Commission's proposed amendments to Rule 206(4)-2 under the Investment Advisers Act of 1940, which governs the custody of client assets by registered investment advisers.
We oppose a specific part of the proposed change:
A. Proposed Custody Definition Rule (c)(1)(ii); Deduction of Advisory Fees. Subparagraph (ii) states that custody includes:
We believe that payment of fees from client accounts should not constitute custody, provided that the client has authorized this means of payment, receives a timely copy of the bill showing the calculation, and receives a statement of account activity disclosing the payment.
Stephen D. Champion