Oct. 28, 2023
Matias Sierotnik Krzemienna 22 Dydnia 36-204 28.10.2023 U. S. Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. Dear Securities and Exchange Commission, I am writing this public comment in response to the proposed rule "Safeguarding Advisory Client Assets" (Release No. IA-3384; File No. S7-06-20). While I appreciate the SEC's commitment to enhancing investor protections and addressing gaps in the custody rule, I have concerns about the potential overreach of your regulatory authority in certain areas. Firstly, I am particularly concerned about the privacy implications of the proposed rule. The requirement for investment advisers to provide detailed client account information to custodians raises concerns about the privacy and safety of sensitive financial data. With so many third parties having access to this information, including social security numbers, there is an increased risk of data breaches and identity theft. It is essential that the SEC consider the potential privacy risks and ensure appropriate safeguards are in place to protect investors' confidential information. Furthermore, the proposed rule may encroach on areas that should be regulated by other agencies. For instance, the expansion of the definition of assets and the inclusion of discretionary authority in custody may overlap with regulatory frameworks already established by other agencies. This potential overlap could lead to confusion and inefficiencies in the regulatory landscape. It is important that the SEC carefully evaluates its jurisdictional boundaries and coordinates with other relevant regulatory bodies to avoid duplication of efforts and unnecessary burdens on investment advisers. In considering the economic analysis of the proposed rule, it is crucial to accurately assess the costs and benefits. While the rule aims to enhance investor protections, the compliance costs for investment advisers should be carefully weighed against the potential benefits. The magnitude of these costs will vary depending on custodial practices and existing controls of each adviser. Therefore, it is essential that the SEC conducts a thorough and nuanced analysis of the economic effects, taking into account the diversity of practices among investment advisers. Additionally, as a respondent to the proposed rule, I request the SEC to explore reasonable alternatives to address the identified concerns. While safeguarding client assets is paramount, it is crucial to strike a balance between investor protections and the burden of compliance. By considering and incorporating alternative approaches, the SEC can identify a solution that minimizes costs for investment advisers while still ensuring robust safeguards for client assets. Finally, I appreciate the opportunity to offer comments on the potential impact of the proposed rule on small entities. It is critical to assess the regulatory burden on small investment advisers and determine if any excessive requirements could hinder their ability to serve their clients effectively. Clarification and simplification of certain provisions may be necessary to alleviate any disproportionate impact on small entities. In conclusion, while I support the SEC's goal of enhancing investor protections and addressing gaps in the custody rule, I urge the Commission to carefully evaluate the potential overreach of its regulatory authority, consider the privacy implications of increased data sharing, and accurately assess the costs and benefits of the proposed rule. It is crucial that the SEC collaborates with other regulatory bodies, explores reasonable alternatives, and takes into account the impact on small entities to ensure the resulting regulations are effective, efficient, and balanced. Thank you for considering my concerns and comments. Please feel free to reach out to me if you require any further information or clarification. Sincerely, Matias