Oct. 29, 2023
Dear SEC Commissioner, As a concerned investment advisory firm owner, I write to express my deepest reservations regarding several recent major rule proposals published by the Securities and Exchange Commission (SEC). These proposals, covering topics such as predictive data analytics, custody, cybersecurity, and outsourcing, present numerous obstacles and burdens that threaten to negatively affect our operations, infrastructure, relationships with service providers, and clients. Firstly, the proposed regulation relating to predictive data analytics presents grave cause for alarm. Instead of enhancing existing fiduciary responsibilities, this regulation would introduce a novel regulatory regime that replaces the current framework, encompasses almost every type of technology used within our organization, affects our communication with clients, and imposes considerable operational and compliance difficulties. Essentially, the implementation of this regulation would lead to unnecessary administrative burdens that fail to provide commensurate benefits. Secondly, the suggested extension of the safeguards/custody regulation raises further questions about its feasibility and effectiveness. This far-reaching regulation proposes profound changes, including prescribed criteria and requirements that may prove challenging to meet practically. Our experience demonstrates that implementing this proposal may result in unintended consequences, causing undue hardships for both investors and advisors alike. Considering the multitude of proposed regulatory measures recently brought forward by the SEC, we implore you to adopt a slower pace of deliberation, analyze the ramifications holistically, and conduct a thorough examination of cumulative expenses, burdens, and economic effects. It is crucial that the SEC considers the impact of its policies on smaller organizations such as ours because they form the bedrock of the investment advisory sector. In view of this, we endorse the Investment Adviser Association's request for modification of the definition of "small adviser" since it would enable the SEC to assess the genuine economic effect of its rules much more accurately and explore milder options.