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Regulation and Compliance > Federal Regulation > SEC

FPA Okays SEC's Four-Month Conversion Request

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The Financial Planning Association (FPA) told the U.S. Court of Appeals for the D.C. Circuit June 1 that while it does not oppose the SEC’s request that it give broker/dealers four months to convert their fee-based brokerage accounts under the court’s ruling in the broker/dealer exemption case, the court should deny the SEC’s request to grant further extensions if a B/D runs into unforeseen problems when converting those accounts.

In its response to the court, the FPA said “it appreciates that brokerages cannot instantaneously come into compliance with the court’s ruling in this case and understands the logic for affording brokerages this period to make the necessary changes.” The FPA further commented that while it “cannot be certain how the process of coming into compliance with the law will go,” any extensions granted by the court beyond the four-month period should be “extraordinary and limited,” adding that the court is “entitled to expect a genuine deadline for complying with the law.”

The Court’s decision on March 30 exempted brokers from being subject to regulation as investment advisors in fee-based brokerage accounts, on the basis that the SEC had exceeded its authority under the Investment Advisers Act of 1940. The SEC announced May 14 that it will ask the court to allow a 120-day stay of the Appeals court’s ruling so that investors and their brokers could respond. The Commission estimates that one million fee-based brokerage accounts are affected by the ruling. The SEC’s deadline to appeal the decision has passed, and the Commission has stated publicly that it will not appeal the decision to the Supreme Court.


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