(November 5 – 17:50 ET) — The SEC is proposing a rule which distinguishes simple fee-based accounts from sophisticated discretionary money management that requires registration as a portfolio manager.
The commission wants to ensure that fee-based accounts can exist without exposing them to undue regulation.
“This proposal represents a sensible way to allow full service brokerage firms to offer pricing choices to their customers without imposing unnecessary regulatory obstacles or sacrificing investor protection. Asset-based fee programs better align the interests of customers and their brokers,” says SEC chairman Arthur Levitt.
Under the proposed rule the nature of the services provided, rather than the form of compensation, will be the relevant consideration in determining whether portfolio manager regulation is called for. In other words, if the broker has discretionary authority , the accountwill be subject to portfolio manager regulation.
The move to asset-based pricing is proceeding rapidly in both the U.S. and Canada. It was endorsed by the SEC’s Committee on Compensation Practices, which recommended that brokers shift some of their revenue to asset-based compensation in order to better align the interests of the brokers and their clients.
The proposal will be issued for a 60-day public comment period prior to being considered for final adoption by the Commission.
-IE Staff
For more please see:
www.sec.gov