From: Gary Martinelli [mailto:gem@gemandassoc.com]
Sent: Monday, September 16, 2002 4:17 PM
To: 'rule-comments@sec.gov'
Subject: S7-28-02

September 16, 2002

Mr. Johathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Re: 	File No. S7-28-02
		Proposed Rule 206 (4)-2

Ladies and Gentlemen:

Historically, registered investment advisers who complied with the criteria set forth in certain
no-action letters such as Clifford Associates and John B. Kennedy would not have been "deemed" to
have custody of client accounts and would have answered "no" to Items 9A and 9B of Part 1A of Form
ADV.  By virtue of having been "deemed" not to have custody, these IAs would have been relieved of
the burdens of old Rule 206 (4)-2 and Item 14 of Part II of Form ADV.

Under proposed Rule 206 (4)-2, it appears that an IA in the position of a Clifford Associates or a
John B. Kennedy IA would be defined as having "custody" but could be relieved of the burden of a
surprise audit and the duty to deliver quarterly statements if its "qualified custodian" sent
monthly statements to clients.  As a consequence, it appears that under the proposed Rule, such an
IA should respond with a "yes" answer to Item 9 of Part 1A of Form ADV.  

We think it would be beneficial if in your Adopting Release you would clarify whether the old no-
action letters such as Clifford Associates and John B. Kennedy are superceded by the new rule and
whether IAs who previously check the "no" box in reliance on "no action" letters should now check
the "yes" box in response to Item 9.

                     Very truly yours,

                     The Advisory Press, Inc.

                     By
                     _________________________
GEM:slt              Gary E. Martinelli, President



Gary E. Martinelli, Esq.
Gary E. Martinelli & Associates, P.C.
1500 Main Street, Suite 912
Springfield, MA  01115
413-746-4677
www.gemandassoc.com
www.advisorypress.com