Oct. 24, 2023
Michael Nowak [REDACTED] 24.10.2024 Securities and Exchange Commission 100 F Street NE Washington, DC 20549 Subject: Safeguarding Advisory Client Assets Proposal Dear Sir/Madam, I am writing to provide a public comment on the proposed rule, "Safeguarding Advisory Client Assets," issued by the Securities and Exchange Commission (SEC). As an individual deeply concerned about investor protection and privacy, I have significant reservations about certain aspects of the proposed rule. First and foremost, I would like to express my concern regarding the inadequate consideration of the unique properties of cryptocurrency in the proposed rule. The SEC needs to take into account the decentralized nature and technological complexities of cryptocurrency when formulating regulatory requirements. Failing to do so may result in impractical rules and hinder innovation in this rapidly evolving space. It is essential for the SEC to work collaboratively with experts and industry participants to strike a balance between safeguarding assets and supporting technological advancement. Furthermore, I am deeply concerned about the privacy and safety implications of allowing a multitude of third parties to have access to sensitive financial data, including my social security number. While the proposed rule aims to enhance investor protections, it is essential to address the potential risks associated with excessive sharing of personal information. Robust measures must be put in place to ensure that these data remain secure and are only accessible by authorized parties. Privacy breaches can have severe consequences and carry a significant cost to individuals and society as a whole. In addition to the points mentioned above, I would like to commend the SEC on the proposed rule's thoroughness in addressing the scope of the rule and enhancing qualified custodian protections. These measures will undoubtedly contribute to improving investor safeguards and minimizing the risk of asset loss. However, it is crucial to strike a delicate balance between enhanced customer protection and avoiding burdensome compliance costs that could deter competition and stifling economic growth. Furthermore, I appreciate the SEC's effort in providing exceptions for assets that cannot be maintained with a qualified custodian. The requirement for enhanced recordkeeping, separation of duties, and regular reviews is a step in the right direction to safeguard these assets effectively. I commend the SEC's focus on segregating client assets from the adviser's own assets. This separation is essential in ensuring the protection of investor funds. However, it is important to carefully consider any exceptions to this segregation requirement. Providing clear guidelines and continually evaluating these exceptions will be vital in maintaining investor trust. Regarding the proposed amendments to the surprise examination requirement, the implementation of a written agreement with an independent public accountant is a welcome addition. This measure will further safeguard client assets and lessen the risk of financial loss. However, to maximize the effectiveness of surprise examinations, it is crucial to critically evaluate any exceptions to their requirements, especially for advisers with discretionary authority over client assets. I commend the SEC on the proposed amendments to the investment adviser recordkeeping rule and changes to Form ADV. These amendments will enhance transparency and regulatory oversight, providing investors with essential information to make informed decisions. It is vital to maintain accurate records related to client notifications, custodian information, and transactions to facilitate effective oversight of investment advisers. In evaluating the economic analysis accompanying the proposed rule, it is essential that the SEC considers both the costs and benefits associated with its implementation. While the proposed rule aims to enhance investor protections, it is crucial to minimize disproportionate compliance burdens that may impede competition, particularly for smaller entities. I appreciate the SEC's openness to comments on potential alternative approaches and any potential unintended consequences of the proposed rule. It is imperative to allow for an open dialogue amongst market participants to develop a robust regulatory framework that effectively balances investor protection and industry viability. To conclude, I believe it is crucial for the SEC to recognize and address the unique characteristics and complexities of cryptocurrency when formulating regulatory requirements. Moreover, the privacy and safety implications of allowing widespread access to personal financial data must be duly considered and safeguarded. However, the proposed rule demonstrates significant progress in enhancing investor protections and regulatory oversight of client assets. Thank you for considering my comments on this matter. I appreciate the SEC's commitment to engaging with stakeholders and carefully assessing the potential impact of this proposed rule. Should you require any additional information or clarification, please do not hesitate to contact me. Sincerely, Michael Nowak Nie zawiera wirusów.www.avast.com