SIFMA lambastes SEC decision

Wall Street's trade group today blasted the SEC's decision allowing the broker-dealer rule to expire.

The Securities and Exchange Commission’s decision yesterday not to appeal a court decision that threw out the so-called “Merrill Rule” is an “outrage,” according to the Securities Industry and Financial Markets Association of Washington and New York.
The decision will force about one million investors into alternative accounts that would cost more and offer fewer choices, SIFMA said in a statement.
The rule, first issued as a no-action letter in 1999, exempted fee-based brokerage accounts from the Investment Advisers Act of 1940.
The March 30 ruling by the U.S. Court of Appeals for the District of Columbia Circuit is due to take effect May 21.
The SEC said it will ask for a four-month stay of the decision to give the industry a chance to transition customers out of fee-based brokerage accounts.
SIFMA promised to “vigorously … pursue a solution that will enable investors to have access to [more] fee-based payment options.”
The trade group said that because of “the volume of accounts and the logistics involved, many firms have reported … that four months will not be enough time.”
The FPA, which brought the legal challenge to the rule, was “very pleased” with the SEC’s decision,” said Nicholas Nicolette, president of the Denver-based Financial Planning Association and principal of Sparta, N.J.-based Sterling Financial Planning Inc., in a statement.
“We really don’t know if it takes 120 days to implement a reasonable transition or even less.”
He said many brokers and brokerage firms were already dually licensed as brokers and investment advisers.
Calls to SIFMA, the FPA and Mr. Nicolette were not immediately returned.