SEC’s Rule Proposal Will Encourage Brokerage Firms To Offer Fee-Based Accounts - Securities Industry Association Praises Continued Exemption From Investment Advisers Act

The Securities and Exchange Commission’s continued support for exempting broker-dealers that manage fee-based brokerage accounts from the requirements of the Investment Advisers’ Act will help firms better serve their customers, the Securities Industry Association said today in its comment letter. This exemption will facilitate the continued use and development of these accounts and better align the interests of customers and broker-dealers.

“The Tully Committee recognized the development of fee-based brokerage accounts as a positive step in handling the conflicts of interest in brokerage industry compensation practices,” said SIA Senior Vice President and General Counsel Ira Hammerman. “And clients have embraced these accounts. The SEC recognizes the value of these accounts, and how subjecting broker-dealers to the Advisers’ Act requirements would discourage firms from offering them.”

SIA reaffirmed its support of enhanced disclosure requirements so that investors have a clear understanding of the nature of the services they receive through these fee-based accounts. The letter also pointed out the detrimental impact of requiring the accounts to be subject to the Investment Advisers’ act, saying that “adding another layer of regulation on broker-dealers was clearly not one of Congress’ goals in formulating an exclusion for broker-dealers under the Advisers Act.”

The letter is available at:
http://www.sia.com/2005_comment_letters/4678.pdf.
The Exhibit A attachment is available at:
http://www.sia.com/2005_comment_letters/pdf/Chart-RegOversightExhibitA.pdf