[Federal Register Volume 69, Number 161 (Friday, August 20, 2004)]
[Proposed Rules]
[Page 51620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19258]



[[Page 51620]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 275 and 279

[Release Nos. 34-50213; IA-2278; File No. S7-25-99]
RIN 3235-AH78


Certain Broker-Dealers Deemed Not To Be Investment Advisers

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule; reopening of comment period.

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SUMMARY: The Securities and Exchange Commission is reopening the period 
for public comment on a rule proposal under the Investment Advisers Act 
of 1940 that would address the application of the Advisers Act to 
brokers offering certain full service brokerage services (including 
advice) for an asset-based fee instead of traditional commissions, 
mark-ups, and mark-downs, and that would address electronic trading for 
reduced brokerage commissions.

DATES: Comments should be received on or before September 22, 2004.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or
     Send an e-mail to [email protected]. Please include 
File No. S7-25-99 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 5th Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File No. S7-25-99. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post comments on the Commission's Internet 
Web site (http://www.sec.gov). Comments are also available for public 
inspection and copying in the Commission's Public Reference Room, 450 
Fifth Street, NW., Washington, DC 20549. All comments received will be 
posted without change; we do not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly.

FOR FURTHER INFORMATION CONTACT: Robert L. Tuleya, Attorney-Adviser, or 
Nancy M. Morris, Attorney-Fellow, (202) 942-0719, Office of Investment 
Adviser Regulation, Division of Investment Management, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0506.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission 
(``SEC'' or ``Commission'') is reopening the period for public comment 
on proposed rule 202(a)(11)-1 [17 CFR 275.202(a)(11)-1] and a proposed 
amendment to the instructions for Schedule I of Form ADV [17 CFR 
279.1], both under the Investment Advisers Act of 1940. These 
amendments were proposed on November 4, 1999,\1\ and the comment period 
initially closed on January 14, 2000. While the Commission received 
substantial commentary on the proposal during that period,\2\ a 
substantial number of comments have been received by the Commission 
since that date. For example, in the sixty days between June 1 and 
August 1, 2004, we received more than 45 comment letters. One of these 
commenters, The Financial Planning Association,\3\ raised some new 
issues in its comment letter, and has also filed a petition for 
judicial review of the proposal.\4\ In view of the significant 
continuing public interest in the proposal and in order to provide all 
persons who are interested in this matter a current opportunity to 
comment, we believe that it is appropriate to reopen the comment period 
before we take action on the proposal.
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    \1\ Certain Broker-Dealers Deemed Not To Be Investment Advisers, 
Investment Advisers Act Release No. 1845 (Nov. 4, 1999) [64 FR 61226 
(Nov. 10, 1999)].
    \2\ Many of the comments received on the proposal are posted on 
the Commission's Web site at (http://www.sec.gov). All comments 
received are available for public inspection and copying in the 
Commission's Public Reference Room, 450 Fifth Street, NW., 
Washington, DC 20549.
    \3\ Letter from Duane R. Thompson, Group Director, Advocacy, The 
Financial Planning Association to Jonathan G. Katz, Secretary, SEC 
(June 21, 2004), File No. S7-25-99.
    \4\ Financial Planning Association v. SEC, No. 04-1242 (DC Cir.) 
(case docketed on July 20, 2004).
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    We invite additional comment on the proposal, the issues raised in 
the proposing release, and on any other matters that may have an effect 
on the proposal. Do current fee-based programs more closely align the 
interests of investors with those of brokerage firms and their 
registered representatives than do traditional commission-based 
services? If the Commission determines not to adopt this rule as 
proposed, what would be the practical impact on broker-dealers? Should 
we require broker-dealers who would seek to rely on the rule 
nevertheless to register if they market fee-based accounts based on the 
quality of investment advice provided? For example, should brokers be 
precluded from using certain terms like ``investment advice'' and 
``financial planning'' in advertising these services, or is prominent 
disclosure that an account is a brokerage account sufficient to alert 
an investor to the nature of the account?
    In light of the time that has elapsed since we proposed the rule, 
we desire to proceed as expeditiously as we reasonably can to complete 
this proceeding. Accordingly, we will extend the comment period until 
September 22, 2004, and we currently intend to reach a final decision 
on the proposal by December 31, 2004.

    Dated: August 18, 2004.

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-19258 Filed 8-18-04; 2:16 pm]
BILLING CODE 8010-01-P