Oct. 17, 2023
Dear Securities and Exchange Commission (SEC), I am writing to provide my comments and concerns regarding the proposal titled "Safeguarding Advisory Client Assets," Release No. IA–6240 (Feb. 15, 2023). Firstly, I appreciate the Commission's efforts to enhance investor protections and address how advisers safeguard client assets. However, I am concerned about the implications of the proposed rule, especially in light of the adoption of the private fund adviser audit rule. The interplay between the current custody rule's audit provision and the private fund adviser audit rule needs to be clearly delineated to avoid any ambiguities or overlaps. Additionally, the proposed modifications to the audit provision, such as expanding its availability from "pooled investment vehicle" clients to "any other entity" and the requirements related to non-U.S. clients' financial statements, raise concerns about the practicality and feasibility of these changes. It is essential to ensure that these modifications do not inadvertently create undue burdens on advisers or compromise the quality of the audits. Furthermore, the requirement for the adviser or the entity to enter into a written agreement with the auditor, mandating the auditor to notify the Commission in the event of the auditor's termination or issuance of a modified opinion, is a significant change. While I understand the intent behind this provision, it is crucial to consider the potential implications on the auditor-adviser relationship and ensure that it does not deter auditors from providing candid assessments. In conclusion, while the intent behind the "Safeguarding Advisory Client Assets" proposal is commendable, it is essential to address the concerns mentioned above to ensure that the final regulations are both effective and practical. I urge the Commission to consider these points and make necessary adjustments to the proposal. Thank you for considering my comments on this matter. Sincerely, Jaden