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Regulation and Compliance > Federal Regulation > SEC

FPA leader says battle continues after professional standards court decision

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(On March 30), the United States Court of Appeals for the District of Columbia Circuit spoke clearly in favor of investor protection (Financial Planning Association v. Securities and Exchange Commission). After 7 years of contentious debate, a court of law has rejected the SEC’s untenable argument that it could exempt Wall Street from the fiduciary duties of the Investment Advisers Act of 1940. The legal path chosen by FPA, which many said was fraught with political risks in challenging a powerful federal regulator, has proven that common sense can prevail.

However, the battle over professional standards for persons offering financial planning advice is not over. The SEC is still studying the issue and is expected to release a report on marketing practices of brokers and advisers sometime next year. We urge the SEC to delay any further action on new rules or going to Congress until after this study is completed.

In the meantime, we call on the Securities Industry and Financial Markets Association to work with the SEC on a smooth transition, and not pursue an anti-consumer agenda in Congress.

We call on the SEC not to pursue a review by the Supreme Court. This rule should have died a quick and merciful death 6 years ago. It would not be the best use of taxpayer dollars to prolong a policy that is contrary to the public interest.

Furthermore, it is critical that the SEC not delay in setting a prompt deadline for transition of these accounts to a clear legal status under the law. We call on the SEC to propose a rule within 30 days, as it did when the same court vacated the Commission’s hedge fund rule. We strongly urge the SEC to set a 90-day deadline for brokerage firms to convert fee-based accounts.

Finally, I would like to thank our friends who filed amicus briefs on behalf of FPA and to the membership of FPA for their unwavering passion for consumer protection. The support of the North American Securities Administrators Association, Consumer Federation of America, Fund Democracy and the Public Investors Arbitration Bar Association were crucial to the success of our legal challenge. None of this, however, would have been possible without the strong support of the financial planning profession itself.

Thank you.
Nicholas A. Nicolette, CFP
Financial Planning Association


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