Oct. 23, 2023
10/23/2023 Securities and Exchange Commission 100 F Street NE Washington, DC 20549 Dear Securities and Exchange Commission, I am writing to submit my public comment on the proposed rule "Safeguarding Advisory Client Assets" (File Number S7-24-18). While I appreciate the SEC's commitment to enhancing investor protections and addressing custody rule gaps, I have significant concerns regarding the potential implications and unintended consequences of the proposed rule. Firstly, I must emphasize the importance of the SEC ensuring compliance with existing laws, regulations, and constitutional provisions. I would like to request a thorough review of the proposed rule's compatibility with the legal framework, as any inconsistencies or conflicts may render it subject to judicial scrutiny. Moreover, the economic impact of the proposed rule cannot be ignored. The enhanced compliance obligations for investment advisers could significantly burden businesses, investors, and the economy as a whole. The increased costs, decreased efficiency, and potential reduction in market liquidity may hinder economic growth and impede capital formation. To ensure a balanced approach, I urge the SEC to conduct a detailed data-driven analysis that encompasses the full range of potential economic effects. Furthermore, the practical implementation concerns outlined in the proposal raise red flags. Ambiguous language, unclear requirements, and overly complex compliance measures may present significant challenges for investment advisers. The SEC should consider more practical approaches and simpler alternatives to enhance clarity and ease the burden of compliance. While the proposed rule attempts to protect investors, it is crucial to identify and address any unintended consequences. Excessively restrictive regulations can discourage innovation, reduce transparency, and potentially create new risks. To avoid undermining the rule's intended goals, alternatives should be explored to mitigate these unintended side effects. As an alternative proposal, I suggest that the SEC strikes a balance between investor protections and regulatory burdens by considering less restrictive measures. These measures should achieve similar objectives while minimizing adverse effects on stakeholders, including businesses, clients, and market participants. Furthermore, I bring attention to the potential harm to the public interest caused by the proposed rule. Rather than nurturing wealth creation and financial access, an overbearing regulatory framework may limit individuals' ability to access vital financial services and impose increased costs on consumers. Protecting the public interest must not come at the expense of hindering capital formation or innovation in the financial sector. Given the global nature of the financial industry, international coordination is of utmost importance. The proposed rule should be evaluated from a global perspective to ensure alignment with international standards and agreements. This coordination will help foster regulatory consistency, limit regulatory arbitrage opportunities, and support the competitiveness of U.S. firms on the global stage. Furthermore, I would like to convey my concerns regarding the potential burdens on industry stakeholders. It is evident that various industry associations, advocacy groups, and lawmakers oppose the proposed rule due to its potential adverse effects. These concerns must be acknowledged and addressed genuinely to ensure regulation that is fair and effective. To achieve regulatory efficiency and avoid duplication of efforts, the SEC must ensure that the proposed rule does not replicate existing regulatory requirements. Streamlined approaches should be considered to minimize overlap between federal agencies and reduce unnecessary redundancy. Finally, in light of the complexity and scope of the proposed rule, I request an extension of the comment period to allow for a thorough evaluation of its implications. Additional time is required to fully analyze and respond comprehensively to the multifaceted aspects of the proposed rule. I appreciate the SEC's commitment to protecting investor interests and improving safeguards for advisory client assets. However, it is crucial to strike a delicate balance that achieves these goals while considering the potential consequences for businesses, investors, and the overall economy. I urge the SEC to carefully review and address the concerns outlined in this comment to ensure a regulatory environment that promotes both investor protection and financial vitality. Thank you for considering my feedback. I trust that the SEC will thoroughly evaluate all aspects of the proposed rule and make informed decisions in the best interest of all stakeholders. Sincerely, Margaret Gilchrist