Subject: File No. S7-25-99
From: Theresa Habshey
October 30, 2004
Instead of creating a division between brokers and investment advisers based on the nature of the services they offer, this SEC rule proposal would expand the brokers' exclusion from the Advisers Act to include instances in which the broker receives special compensation for advice. This is exactly the wrong direction for the agency to be taking.
In view of all of the scandals and fraud perpetrated upon the general public, it is evident that the necessity of the government to look out for the interests of the people is more needed than ever. Why is the government looking out for the interests of business who are well
equiped to look after their own interests and failing to look out for the general public. In the long run, both the public and business will be the losers.
The broker/investment adviser distinction is important for investors, because investment advisors are subject to a higher standard of conduct than brokers. While advisors have a fiduciary duty to place their clients' interests ahead of their own, brokers are subject to a less exacting obligation to make suitable recommendations. Brokers are required to make some disclosure of conflicts of interest, but those requirements are neither as timely nor as extensive as the disclosure requirements that apply to investment advisers.
Investors need to know that all financial professionals who offer investment advice are subject to the same rules. To accomplish that, the SEC must define solely incidental advice, and it must do so in a way that limits such advice to the sort of buy this/sell that recommendations which are an inherent part of the broker's sales function.
Ms. Theresa Habshey
2220 Myrtlewood Dr
Birmingham, AL 35216-5124