Oct. 30, 2023
Günther Resch Carossastr. 79 Passau, Bayern, 94036 reschg@aol.com 49851751695 10/30/2023 Securities and Exchange Commission 100 F Street NE Washington, DC 20549 Subject: Safeguarding Advisory Client Assets - Public Comment Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." As an informed investor and concerned citizen, I have carefully reviewed the rule amendments, and I would like to discuss certain areas of the proposal that raise concern and warrant further consideration. III. Economic Analysis: B. Broad Economic Considerations: While the proposed rule seeks to address conflicts of interest and improve investor protection, it is important to evaluate the potential unintended consequences on market competition and efficiency. Striking the right balance between regulation and fostering capital formation is crucial to prevent any adverse effects on the economy. E. Efficiency, Competition, and Capital Formation: The proposed rule may unintentionally impact investment advisory services, particularly those offered by qualified custodians. The potential increase in compliance costs could lead to higher fees for investors and act as a barrier to market entry for smaller firms. A more nuanced analysis of the rule's effect on competition and capital formation is needed to ensure that investors have sufficient choices and affordable options. IV. Paperwork Reduction Act Analysis: B. Rule 223-1: While I understand the necessity of stricter recordkeeping requirements for the safeguarding of client assets, the estimated burden of compliance appears to be significantly high. The cost of $12,203,756 and the burden of 30,974 hours raise concerns about the impact on smaller advisers who may struggle to meet these requirements without sacrificing the quality of their services. D. Total Hour Burden: The estimated total annual hour burden of approximately 398,152 hours and external cost burden of $378,598,500 on advisers subject to the proposed rule seem disproportionately onerous. It is important to carefully balance the level of regulatory oversight with the potential burdens imposed on market participants. The anticipated cost burden represents a substantial expense that could hinder innovation and stifle the growth of smaller advisory firms. V. Initial Regulatory Flexibility Analysis: B. Legal Basis: While the proposed rules align with the legal authority provided by the Advisers Act, the potential impact on small entities should be given special consideration. It is essential to assess how the amendments may disproportionately affect smaller advisers, who may lack the resources to comply with more burdensome reporting and compliance requirements. C. Small Entities Subject to the Rule and Rule Amendments: Out of the 522 SEC-registered advisers, only 321 are custodians of client assets affected by the proposed rule. It is crucial to ensure that the requirements imposed on small entities are commensurate with their practical capabilities and potential impact on their operations. VI. Consideration of Impact on the Economy: It is commendable that the proposed rule aims to enhance investor protection and SEC oversight. However, a comprehensive assessment of the broader impact on the economy is warranted, particularly in terms of potential effects on market competition, efficiency, and capital formation. Ensuring a healthy and thriving investment advisory sector is crucial for the overall economic well-being of investors and the financial markets. In conclusion, I appreciate the SEC's efforts to strengthen the safeguards for advisory client assets. However, I urge the Commission to consider the concerns regarding potential unintended consequences, the burden of compliance on smaller entities, and the impact on market efficiency and competition. Thank you for your attention to these important matters. I look forward to the Commission's thorough consideration of public input and the careful crafting of a final rule that strikes a balance between investor protection and fostering a vibrant investment advisory industry. Sincerely, Günther Resch Von der neuen AOL-App für iOS gesendet