Fee-based Brokerage Accounts
(Rule 202(a)(11)-1)
Last Updated: August 14, 2008
LATEST UPDATES:
- SIFMA Responds to SEC's RAND Study - January 3, 2008
- SIFMA supports Temporary Rule 206(3)-3T and appreciates SEC efforts to provide large numbers of fee-based brokerage clients and advisory clients the benefits of accounts that combine asset-based fees with access to the securities inventory of a broker-dealer – November 30, 2007
- September 28, 2007 an Interim Final Temporary Rule was published in the Federal Register. This final temporary rule establishes an alternative means for investment advisers registered as broker-dealers to meet the requirements of section 206(3) of the Advisers Act. It is effective from September 30, 2007 until December 31, 2009. Comment period expires on November 30, 2007. See Rule 206(3)-3T (PDF)
- September 28, 2007 a Proposed Interpretive Rule Under the Advisers Act Affecting Broker-Dealers was published in the Federal Register. This intepretive rule proposes to reinstate three interpretive provisions of the fee-based brokerage account rule. Comment period expires on November 2, 2007 . See Rule 202(a)(11)-1 (PDF)
- Letter from Members of Congress to Chairman Christopher Cox urging the SEC to examine all options to provide relief in advance of the October 1 stay—including granting principal trade relief. - July 13, 2007
- House Financial Services Committee Ranking Member Spencer Bachus (R-AL) sent a letter to SEC Chairman Christopher Cox calling for prompt action to provide brokerage customers and providers regulatory certainty in response to the D.C. Circuit Court decision (FPA v. SEC) - July 10, 2007
- DC Circuit Order Grants Stay of the FPA Court Decision until October 1 - pdf, June 25, 2007
- SEC Leaves Investors in the Lurch by Not Asking for Rehearing - May 14
- Poll: Investors Value Choice FPA Lawsuit Could Limit Consumer Options - May 9
- Fee-based Account Decision Should Be Reheard SIFMA Tells SEC - April 10
- FPA Win Will Require Industry Changes, Says SIFMA - March 30, 2007
- United States Court of Appeals for the District of Columbia Circuit: Financial Planning Association vs. SEC - Released: March 30, 2007, pdf
SIFMA Members may have recently received a request from researchers at the RAND Corporation for assistance in a research study that they are conducting on behalf of the SEC. They are collecting business documents from firms in order to help the SEC better understand the current state of the financial services industry. RAND has indicated that your cooperation will help our industry be properly represented in this study. An FAQ regarding the study is available here (pdf) - June 2007
Overview:
On March 30, 2007, the U.S. Court of Appeals for the D.C. Circuit found the Securities and Exchange Commission (SEC) had exceeded its authority by promulgating Rule 202(a)(11)-1, which exempts broker-dealers offering fee-based brokerage accounts from registering as advisers.
On September 28, 2007, SEC filed with the Federal Register an Interim Final Temporary Rule which took effect on September 30, 2007 and will expire on December 31, 2009. This temporary rule was put in place to facilitate investors' ability to choose between a fee-based account or a commission-based brokerage account. On September 28, 2007, the SEC also published in the Federal Register a Proposed Interpretive Rule Under the Advisers Act Affecting Broker-Dealers.
Position:
SIFMA believes fee-based accounts provide investors with the critical element of investor choice. SIFMA further believes fee-based brokerage accounts are not the type of services the Investment Advisers Act was intended to address, given the extensive regulation and supervision broker-dealers are already subject to under the Securities Exchange Act of 1934 and SRO rules, among others.
Status:
SIFMA continues to work with member firms and the SEC to address the Court’s ruling and its aftermath. .
