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Regulation and Compliance > Federal Regulation > SEC

SEC Delays Enforcement Of Investment Advisor Rule

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Broker-dealers are getting 4 more months to comply with a new regulation that will affect sales of variable life and variable annuity products through financial planners and discretionary brokerage accounts.

The U.S. Securities and Exchange Commission on Sept. 12 extended the deadline for compliance with the rule to Jan. 31, 2006, from Oct. 24.

The SEC acted at the request of the American Council of Life Insurers, Washington; the Securities Industry Association, Washington; and the Financial Services Institute, Atlanta.

Under the new regulation, a broker-dealer that provides investment advice and delivers a financial plan to a customer as part of a financial plan or as part of financial planning services must follow the SEC rules governing investment advisors when working with that customer.

Financial services trade groups told the SEC that they needed a 6-month extension because complying with the new rule would be time-consuming and complex.

Several consumer groups opposed the request, noting that the SEC already had taken 5 years to address their concerns.

The SEC compromised by providing a 4-month extension.

“While we have concerns about the effect of the extension in delaying the anticipated benefits of the rule, in our judgment a limited extension of the compliance date is, on balance, appropriate,” the SEC says.

The decision was based on the representations by the industry trade groups “whose members are required to comply with the rule and thus are in a position to assess the level of difficulty and time involved in their complying with the rule” and “our experience in overseeing the industry,” the SEC says.

The ACLI has welcomed the 4-month extension.

“We’re thankful to the SEC for carefully considering our position and for their prompt responsiveness on this matter,” says Carl Wilkerson, an ACLI vice president.

4-month extension starts at the end of January 2006

Consumer groups argued no extra time was needed


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