Oct. 30, 2023
Dear United States Securities amd Exchange Commission, I appreciate the opportunity to comment on this proposal. The proposed rule S7-04-23, Safeguarding Advisory Client Assets, fails to balance costs and benefits, infringes on free speech rights, goes beyond the Tenth Amendment, and falls into the realm of political questions. S7-04-23 disregards cost-benefit analysis principles. While there is no doubt about the importance of safeguarding retiree investments, it is crucial to weigh the anticipated benefits against the probable costs. However, the SEC's proposed rules don't accurately quantify the burdens and advantages for affected parties, resulting in uncertainty about the net outcome. Moreover, certain components of the plan pose extra challenges for smaller enterprises compared to larger counterparts, leading to possible disadvantageous impacts on fair competition and opportunity. Additionally, the proposal violates First Amendment freedoms. Some sections of the draft restrict communicative actions or oblige people to reveal confidential material, raising concerns about impediments to freedom of speech and expression. Private citizens have the right to communicate freely within established limits, but these proposals could restrain meaningful dialogue and communication surrounding investing decisions and personal finances. Furthermore, the proposal contradicts the Tenth Amendment's parameters. States have long been entrusted with managing fiduciaries' responsibilities towards their clients, and existing laws at the state level already provide reasonable protection for investors. Thus, the extent of federal involvement ought to be limited to areas where federal action is clearly essential or where Congress has unequivocally expressed its intention. Instead, the SEC proposal appears to usurp state prerogatives related to fiduciary obligations, potentially creating inconsistencies and confusion. Lastly, the proposal delves into political issues better handled by elected representatives. Several portions of the draft contain contentious determinations that call for evaluations extending far beyond conventional legal analyses. Decisions like distinguishing "custodial" assets from others or specifying criteria for recognizing conflicts of interest are best left to policymakers who can address broader societal priorities and allocate resources accordingly. Courts must exercise caution and limit themselves to their core functions, avoiding venturing into realms more suitably managed by democratic institutions. Overall, the SEC proposal requires adjustment to accommodate fairness, free speech, federalism, and proper allocation of power in line with constitutional norms. By adhering to these values, any revised version would likely contribute significantly to safeguarding retirement savings while minimizing negative consequences on individual liberty, economic efficiency, and governance integrity. Thank you for the opportunity to participate in the rulemaking process. I look forward to my concerns being addressed. Sincerely, Christopher J. Nash