Chamber Files Comments with the SEC on Safeguarding Advisory Client Assets Proposal

The U.S. Chamber of Commerce’s (“Chamber”) Center for Capital Markets Competitiveness appreciates the opportunity to comment on the proposal by the Securities and Exchange Commission (“Commission” or the “SEC”) that would redesignate and amend the current custody rule covering the investment adviser safeguarding of client funds and securities as new rule 223-1 (the “Safeguarding Rule” or the “Proposal”)under the Investment Advisers Act. Client assets should be safeguarded so that those assets are not lost or misappropriated. The Commission, however, has not demonstrated any pervasive weakness of the existing custody rule that would warrant the disruptive and costly rewrite of the current custody framework. While certain targeted changes to the current rule may be appropriate, this Proposal significantly expands the scope of assets to be safeguarded and the obligations of investment advisers, custodians, and independent public accountants in such a way that is complicated, overly proscriptive, costly, and will disrupt significant markets that are already subject to comprehensive regulation.