Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While I appreciate the aim to enhance investor protections and address gaps in the custody rule, I believe there are certain aspects of the proposed rule that may have unintended consequences and could potentially favor the wealthy. One aspect of concern is the scope of the rule, which expands the coverage to include a broader range of investments held in a client's account. While the intention behind this expansion is understandable, it may inadvertently burden smaller investment advisers who may not have the resources to comply with the additional requirements. It is important to strike a balance between investor protections and the burden placed on market participants. Additionally, I have reservations about the proposed amendments relating to certain assets unable to be maintained with a qualified custodian. While I acknowledge the need for enhanced recordkeeping, separation of duties, and regular reviews to safeguard these assets, there is a potential for increased costs that may disproportionately affect smaller investment advisers. It is imperative that the regulatory framework takes into account the diverse nature of the advisory industry and avoids imposing undue burdens on small entities. Furthermore, I am concerned about the potential impact on tax laws. As the proposed rule aims to enhance investor protections and ensure the segregation of client assets, there is a need to consider how these changes may interact with existing tax laws. We must ensure that the proposed rule does not unintentionally favor or disadvantage certain types of investments or clients, thus potentially exacerbating existing wealth disparities. Moreover, I believe it is important to thoroughly analyze the economic effects of the proposed rule. While the benefits of investor protections are clear, we must carefully consider the impact on investment advisers, especially smaller entities who may have limited resources. Compliance costs should be carefully evaluated, and reasonable alternatives should be explored to mitigate any potential adverse effects on the advisory industry. In summary, while I support the overarching goal of enhancing investor protections, I urge the Securities and Exchange Commission to consider the potential unintended consequences, particularly those that may favor the wealthy or impose disproportionate burdens on smaller industry participants. It is vital that the regulations strike a balance between safeguarding client assets and promoting a fair and competitive landscape for investment advisers of all sizes. Thank you for considering my concerns. I appreciate the opportunity to provide input on this important proposal. Sincerely, Dave Sent with Proton Mail secure email.