Oct. 25, 2023
Public Comment on Safeguarding Advisory Client Assets Proposal Dear SEC, I am writing to provide my public comment on the proposed rule titled "Safeguarding Advisory Client Assets" (Release No. IA-4875; File No. S7-03-20) and offer my concerns regarding the cybersecurity requirements for custodians and the privacy implications of sharing sensitive financial data. Insufficient Cybersecurity Requirements for Custodians: Firstly, I would like to express my concern regarding the proposed rule's insufficient cybersecurity requirements for custodians of digital assets. In an increasingly digital world, where cyber threats have become prevalent, it is essential to ensure that custodians implement robust security measures to safeguard client assets. However, the current proposal fails to impose stringent cybersecurity requirements on custodians, potentially exposing client assets to theft and fraud. The cybersecurity landscape has evolved significantly over the years, with hackers constantly developing sophisticated techniques to breach security systems. It is imperative for the Securities and Exchange Commission to adapt and ensure that custodians are equipped with the necessary tools and protocols to effectively mitigate cyber risks. Lack of strict cybersecurity requirements is a vulnerability that could undermine investor trust and compromise the integrity of the financial markets. Therefore, I strongly urge the SEC to reconsider and strengthen the cybersecurity provisions in the proposed rule. Privacy Concerns associated with Sharing Sensitive Financial Data: Furthermore, I am deeply concerned about the privacy implications of the proposed rule, particularly regarding the sharing of sensitive financial data and personal information. As an individual investor, I value my privacy and view the protection of my financial data as paramount. While I understand the necessity for certain entities to have access to this information to fulfill their regulatory obligations, it is crucial to strike a balance between providing necessary disclosures and safeguarding investor privacy. The proposed rule requires the sharing of detailed custodian information, including custodial account numbers, with investment advisers. This raises concerns about the security of this information and the potential for misuse or unauthorized access. Additionally, the disclosure of social security numbers and other personally identifiable information to multiple third parties increases the risk of identity theft and identity fraud. Given the increasing prevalence of data breaches and the importance of protecting personal information, I urge the SEC to diligently assess the need for sharing such sensitive data and to implement stringent safeguards to protect investor privacy. It is incumbent upon the SEC to ensure that the sharing of personal data is done securely and that the entities involved are held accountable for any breaches or unauthorized disclosures. In conclusion, the proposed rule "Safeguarding Advisory Client Assets" presents an opportunity to enhance investor protection and safeguard client assets. However, there are crucial areas that require further attention. Strengthening the cybersecurity requirements for custodians and implementing stringent safeguards to protect investor privacy are essential to instill confidence in the advisory industry and promote trust in the financial markets. As a concerned investor passionate about the integrity and security of the financial system, I respectfully request the SEC to revise the proposed rule to address these concerns adequately. By doing so, the SEC will reinforce its commitment to protecting investors and maintaining the soundness of our financial markets. Thank you for considering my comments and for providing the opportunity for public input on this important matter. Sincerely, Jack Calls