Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the intent behind this rule to enhance investor protections and address gaps in the custody rule, I have concerns about potential overreach of regulatory authority and the privacy implications associated with the proposed changes. Firstly, I believe there is a risk of the SEC exceeding its regulatory authority with this proposed rule. This rule seems to encroach on areas that should rightfully be regulated by other agencies. By expanding the coverage of the rule to include a broader range of investments held in a client's account and defining assets, the SEC may be stepping into the domain of other regulators who are better suited to address these specific investment instruments. It is important that regulatory oversight is allocated properly to ensure effective and efficient governance. Additionally, I am deeply concerned about the privacy and safety implications associated with the requirement of providing detailed information about client accounts to multiple third parties. The proposed rule requires investment advisers to notify clients in writing when opening an account with a custodian, including custodian information and custodial account number. While the objective of enhancing client protection is commendable, the widespread dissemination of such sensitive financial data, including social security numbers, raises serious privacy concerns. There is a need to strike a balance between safeguarding client assets and ensuring the privacy and confidentiality of personal financial information. Furthermore, I urge the SEC to consider the potential burdens and costs that these proposed rule amendments impose on investment advisers. The additional compliance requirements pose significant challenges, especially for smaller entities that may lack the resources and expertise to meet these new obligations. It is vital for the SEC to carefully assess the economic effects of these proposed changes and consider alternatives that minimize undue burdens on market participants without compromising the objective of investor protection. In concluding, I appreciate the SEC's efforts to enhance safeguards for advisory client assets. However, I urge the commission to reconsider the potential overreach of regulatory authority and the privacy implications associated with the proposed rule. It is crucial to strike the right balance between protecting investors and ensuring an environment that fosters trust and privacy in the financial system. Thank you for considering my comments. Sincerely, Krzysztof Dras [REDACTED]