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U.S. Securities and Exchange Commission

SEC Moves Forward on Study to Compare Roles of Investment Advisers, Broker-Dealers


Will Ask Investors’ Views on Their Financial Service Providers

Washington, D.C., Aug. 1, 2006 — The U.S. Securities and Exchange Commission today issued a request for contract proposals to conduct the first stage of a major study comparing how the different regulatory systems that apply to broker-dealers and investment advisers affect investors.

“Our goal is to improve investor protection by updating our regulation to deal with the realities of today’s marketplace,” Chairman Christopher Cox said. “We will develop the best available information, from inside and outside of the Commission, to inform this important process. Unbiased, high-quality research provided through the contract envisioned in our request for proposals will help us to do so. We welcome bids from all firms and individuals capable of meeting that demanding standard of excellence.”

The study was first suggested in connection with a rule that the Commission adopted in April 2005. Broker-dealers are regulated under the Securities and Exchange Act of 1934. Investment advisers are regulated under the Investment Advisers Act of 1940. The 2005 rule allowed broker-dealers to offer fee-based brokerage accounts without being required to comply with the Advisers Act. The rule was the subject of a large number of comments. Many of the concerns that commenters raised in the rulemaking, however, went well beyond the circumstances covered by the rule; the investment professional study will help the Commission determine whether the concerns are justified and, if so, decide how best to respond.

The document released today, a “Request for Proposal,” follows a "Request for Information" that the Commission issued in June.  The RFI solicited comments on a draft RFP and sought indications of interest.  Today’s RFP seeks a contractor that has a proven track record of producing high-quality, unbiased, qualitative and quantitative research and that is knowledgeable about the subject matter of the study. Consulting with the Commission’s professional staff, the contractor would collect, categorize, and analyze empirical data from a wide variety of sources. The information studied would include marketing, sales, and delivery data about financial products, accounts, programs and services offered by broker-dealers and investment advisers to individual investors. Under the RFP, the contractor would summarize and evaluate the data for the Commission’s use in assessing the current legal and regulatory environment.

In response to comments received on the RFI, the Commission made some changes to the draft request. In general, those changes expand the scope of information the contractor will review and the research it will conduct and seek to encourage responses from the broadest range of objective, highly qualified offerors.

The full text of the RFP can be accessed on the Commission’s website at http://www.sec.gov/news/extra/2006/sechq1-06-r-0177.pdf. It is also posted at http://www.fedbizopps.gov, a website concerning federal government procurement opportunities.

The SEC’s rule providing for the study appears on the SEC’s website at http://www.sec.gov/rules/final/34-51523.pdf.

Responses to the RFP must be delivered by August 24, 2006, to U.S. Securities and Exchange Commission, 6432 General Green Way, MS-20, Attn: Sandy Wright, Contracting Officer, Alexandria, VA 22312.



Modified: 08/01/2006