Dear Securities and Exchange Commission, I, Phil Lawrence, am writing this public comment to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets." While I acknowledge the aim of enhancing investor protections and addressing gaps in the custody rule, I believe there are several areas of the proposal that require further examination and refinement. I will address these concerns in a nuanced manner and offer suggestions for improvement. One concern I have is regarding the scope of the rule. The proposed expansion of coverage to a broader range of investments held in a client's account is commendable, as it demonstrates a commitment to safeguarding client assets in various investment vehicles. However, I believe that the definition of assets and the inclusion of discretionary authority in custody need to be more clearly defined to avoid potential loopholes that could be exploited by unscrupulous advisers. Another area of concern is related to the safeguarding of certain assets that are unable to be maintained with a qualified custodian. While the proposed rule addresses this issue by requiring enhanced recordkeeping, separation of duties, and regular reviews, there is a need for further guidance on specific implementation measures. Clear guidelines will ensure that investment advisers have the necessary framework to adequately safeguard these assets and minimize the risk of loss. The proposed rule also emphasizes the segregation of client assets from the adviser's assets, with exceptions provided under certain circumstances. While I appreciate the need for flexibility, I urge the SEC to prioritize the protection of client assets even in cases where exceptions are granted. By maintaining stringent requirements, the SEC can further bolster investor confidence in the advisory industry. Furthermore, I support the requirement for investment advisers to deliver notice to clients when opening an account with a custodian. This promotes transparency and ensures that clients are fully informed about the custodian and custodial account details. Nevertheless, I believe that the SEC should provide additional guidance on the specific content and frequency of such notifications to better align with investor expectations and safeguard their interests. Amendments to the surprise examination requirement are also a crucial aspect of the proposed rule. Implementing written agreements between investment advisers and independent public accountants for surprise examinations will undoubtedly enhance the safeguarding of client assets. However, further clarification on the selection and qualifications of independent public accountants would be beneficial, as it would ensure the independence and objectivity of the examination process. In regards to the economic analysis, while I acknowledge the challenges in estimating the economic effects of the proposed rule, I believe more attention should be given to the potential costs of compliance for investment advisers. While the rule provides significant benefits in terms of investor protections, the compliance costs for advisers need to be carefully balanced to avoid undue burden on the industry. Collaboration between the SEC and investment advisers may facilitate the identification of areas where compliance costs could be reduced without compromising investor protections. Moreover, the proposed changes to Form ADV increase transparency and regulatory oversight. However, I recommend that the SEC considers the potential administrative burdens placed on advisers as a result of gathering and reporting additional information. Striking a balance between transparency and the practical realities faced by advisers is crucial to ensure effective implementation. Additionally, the SEC's consideration of any unintended consequences or gap in the proposal is essential to avoid potential loopholes or ambiguities that could undermine the effectiveness of the rule. Soliciting public feedback, both from industry participants and investor advocates, will help identify such issues and refine the rule to address them adequately. As an interested stakeholder, I highly encourage the SEC to actively seek input from a broad range of parties and foster critical dialogue to ensure the final rule achieves its desired objectives. In conclusion, while I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule through the proposed rule "Safeguarding Advisory Client Assets," I believe that further refinement and clarification are necessary in several areas. By addressing concerns related to scope, safeguarding of certain assets, segregation of assets, notification requirements, surprise examinations, economic analysis, and unintended consequences, the SEC can ensure that the final rule strikes an appropriate balance between protecting investors and minimizing the compliance burden on investment advisers. Thank you for considering my comments. I appreciate the opportunity to offer my insights, and I hope that my concerns and suggestions contribute to the strengthening of the proposed rule. Sincerely, Phil Lawrence Further, customize your Public Comment (Optional). For instance, "Rewrite in a passive-aggressive tone" or "Infuse with some 4chan humor." Generate Use via APIlogo ยท Built with Gradiologo