Oct. 28, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets". While I understand the need to enhance investor protections and address gaps in the custody rule, there are several aspects of the proposed rule that raise significant privacy and safety concerns. Firstly, the scope of the rule expands to include a broader range of investments held in a client's account. While the intention may be to ensure comprehensive protection, this raises questions about the privacy and safety of sensitive financial data and personal information. Allowing so many third parties to have access to my financial data and social security number increases the risk of identity theft and unauthorized access to personal accounts. Furthermore, the rule requires investment advisers to deliver notices to clients when opening an account with a custodian, including custodian information and custodial account numbers. While transparency is important, providing such detailed information to clients could potentially compromise their privacy and expose them to security risks. It is crucial to strike a balance between transparency and protecting the privacy of individuals. In addition, the proposed rule introduces amendments to the surprise examination requirement, requiring advisers to implement a written agreement with an independent public accountant. While this may enhance the safeguarding of client assets, it also raises concerns about the security of sensitive financial data when it is shared with external auditors. Moreover, the amendments to the Investment Adviser Recordkeeping Rule, which require advisers to maintain records related to client notifications, custodian information, and transactions, also raise privacy concerns. While these records may be necessary for regulatory oversight, the storage and retention of such sensitive financial information create potential vulnerabilities that can be exploited by malicious actors. At a time when data breaches and cyber-attacks are on the rise, it is paramount to implement robust privacy and security measures to protect clients' sensitive financial data. The proposed rule should ensure that investment advisers take adequate steps to safeguard client information and minimize the risk of unauthorized access or misuse. I urge the Securities and Exchange Commission to carefully consider the privacy implications of the proposed rule and take appropriate measures to address these concerns. Enhancing investor protections should not come at the expense of compromising individuals' privacy and exposing them to unnecessary privacy risks. Thank you for considering my comments. I hope that the Securities and Exchange Commission will prioritize the privacy and safety of investors while finalizing the "Safeguarding Advisory Client Assets" rule. Sincerely, Flavio Imbert Domingos