Oct. 29, 2023
October 30, 2023 Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re: Safeguarding Advisory Client Assets; File Number S7-0-21 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 areas of the proposal that require further clarification and consideration. Firstly, the lack of clarity in defining digital assets is a significant concern. The proposal fails to provide clear guidance on what constitutes a digital asset, which can lead to confusion and potential misinterpretation. Given the evolving nature of digital assets, it is essential to establish a robust framework to ensure proper safeguarding and protection of investor assets. Furthermore, the issue of privacy and data security also merits closer attention. Allowing a multitude of third parties access to sensitive financial data and personal information, including social security numbers, raises valid concerns about privacy and safety. It is crucial that any regulatory framework adequately protects the privacy rights and sensitive information of investors, ensuring that robust controls and safeguards are in place. Moreover, the proposal's potential impact abroad requires thorough consideration. As financial markets become more globalized, it is imperative to evaluate how the proposed rule could affect cross-border transactions and investments. Coordinating with international regulators and ensuring harmonization of rules will prevent unnecessary barriers and facilitate a seamless global financial system. In addition to these specific concerns, there are broader points that warrant attention. The proposal's economic analysis should include a comprehensive assessment of both the costs and benefits. While it is essential to enhance investor protections, it is equally crucial to evaluate the potential economic impacts, particularly for smaller entities. A thorough cost-benefit analysis would help strike an appropriate balance between investor protection and regulatory burden. Furthermore, the SEC should ensure that the proposed rule does not result in duplicative or conflicting regulations. Clear guidance should be provided to prevent any overlapping requirements or conflicting obligations between different regulatory authorities. This will promote regulatory clarity and reduce compliance burdens for investment advisers. Lastly, I find it imperative that alternative solutions or mitigations be considered. Input from industry participants and other stakeholders should be actively sought to identify reasonable alternatives that achieve the objective of safeguarding client assets while minimizing potential disruptions or unintended consequences. In conclusion, I urge the Securities and Exchange Commission to address the concerns raised regarding the proposed rule on Safeguarding Advisory Client Assets. Clarifying the definition of digital assets, safeguarding personal data, considering the impact abroad, conducting a comprehensive economic analysis, and exploring reasonable alternatives will ensure that the final rule strikes the right balance between investor protection and operational efficiency for investment advisers. Thank you Sincerely