The Financial Planning Association filed a petition in a District of Columbia Circuit Court of Appeals challenging a Securities and Exchange Commission rule exempting certain broker/dealers from the requirements of the Investment Advisers Act of 1940.

"The FPA is concerned about the quality of financial planning advice to consumers and this rule is harmful to the profession," FPA president James A. Barnash told reporters during a press conference Thursday. Barnash added, "The act itself is beginning to look like Swiss cheese."

The rule, titled "Certain Broker/Dealers Deemed Not to Be Investment Advisors," passed in an SEC vote earlier this month, clearing the way for broker/dealers to offer fee-based accounts without registering as investment advisors. Under the rule, broker/dealers providing "nondiscretionary advice that is solely incidental" to their brokerage services are excepted from the Investment Advisers Act.

The FPA has challenged the expansion of the exemption, saying that it is contrary to law and "encourages broker/dealers to engage in self-dealing with their clients without disclosing their conflicts of interest."

Barnash said the "ideal outcome is for the rule to be withdrawn completely."

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access