Subject: File No. S7-25-99
From: Richard M Layne, Esq.

February 4, 2005

I write to oppose the SECs proposal to exempt broker dealers from the Investment Advisors Act of 1940.

I am an attorney in private practice and was formerly Assistant Commissioner for Enforcement for the Oregon Securities Division. I regularly represent customers in disputes with broker dealers concerning the handling of their accounts.

My experience, confirmed by every study on the subject, is that because of the titles given stock brokers and the pervasive advertising by broker dealers, the vast majority of customers believe that broker dealers are obligated to provide investment advisor services. Customers believe that broker dealers are obligated to monitor their accounts and to recommend suitable portfolio structures including appropriate asset allocations and diversification within asset classes as well as the plethora of other services advertised by the broker dealers.

Customers are shocked to find that their Financial Consultant or Financial Advisor has only enough training to pass his or her series 7 exam, joined the industry last week and his or her last job was as a used car salesman. They are even more shocked to find that the broker dealers uniformly deny any duty whatsoever to recommend suitable portfolio structures including appropriate asset allocations and diversification within asset classes. Broker dealers routinely deny having any duty to recommend when a customer sell or otherwise protect a concentrated position. The position of the industry is that they only have a duty to properly execute orders.

The industrys conduct in advertising themselves as providing more than order execution is largely responsible for this customer confusion. The broker dealers should be held to the standards of an investment advisor if they want to advertise to the public that they are providing those services. The SEC would harm the public investors by passing this rule and allowing the industry to continue to confuse and mislead the public about what the customer has a right to expect from its broker.

If the stockbrokers were called Used Stock Salesmen instead of Financial Consultants or Financial Advisors the customer would at least be on some kind of notice of what to expect. The proposed rule would serve to continue the existing confusion, harm the investors and permit the industry to continue to talk out of both sides of its mouth in advertising and arbitration.

Respectfully Submitted this February 4, 2005

Richard M. Layne
Layne Lewis, LLP
111 SW Columbia, Ste 1000
Portland, Oregon 97201