Subject: File No. S7-20-04
From: Charles R. Lee

July 8, 2004

Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Mr. Katz,

MidFirst Bank, an Office of Thrift Supervision ("OTS") regulated savings association, appreciates the opportunity to respond to the Securities and Exchange Commission's (SEC's) proposed amendment extending investment advisor exceptions to thrift institutions. As the SEC outlined in the proposal, banks have long been exempt from the definition of investment advisor and the related registration requirements of the Investment Advisers Act of 1940. Savings associations however, due largely to the fact they were not authorized to engage in trust and investment activities contemplated by the Investment Advisors Act until 1980 with the passage of the Depository Institution Deregulation and Monetary Control Act, have not enjoyed those same exemptions with the result being a disparity in treatment. The rule change as proposed by the SEC remedies a part of this disparity; however, MidFirst requests consideration be given to providing thrifts with full parity with banks.

As the SEC has acknowledged, investment and fiduciary related activities offered by thrifts and banks continue to converge thereby making the products and services offered by both types of entities virtually indistinguishable to members of the general public. Additionally, both types of entities are subject to detailed statutes, regulations, and oversight (including in-depth safety and soundness and trust examinations on a regular schedule) by one or more of the banking agencies. Given the similarity in services, regulatory oversight, and customer expectations, the SEC's proposal to provide regulatory relief by extending some of the Investment Advisor exceptions available to banks is laudable and fully supported by MidFirst.

However, MidFirst suggests that the SEC consider extending all Investment Advisor exceptions to thrifts to the same extent they are granted to banks. The level of regulatory oversight performed by the OTS is similar to that performed by the Office of the Comptroller of the Currency ("OCC"); of note, both the OTS and the OCC are sister agencies within the United States Treasury Department thereby increasing the level of coordinated and consistent regulatory focus on both savings associations regulated by the OTS and banks regulated by the OCC. However if the rule were adopted as proposed, banks would continue to enjoy Investment Advisor exceptions that would remain unavailable to savings associations. As a result, despite the proposal, thrifts would continue to suffer a competitive disadvantage in relation to banks. Thrifts would also be at a competitive disadvantage to non-bank advisors regulated only by the SEC rather than by the SEC and a banking agency. MidFirst therefore encourages the SEC to provide savings associations with the same exceptions available to banks.

Finally, the proposal as drafted with a bifurcated approach exempting certain advisory activities but not others will require thrifts to maintain documentation meeting SEC standards for all investment advisory related activities whether exempt or not. While the level of documentation in some cases may be reduced, the need for the documentation for activities meeting the exception mitigates, perhaps fully eliminates, the benefits afforded by full parity with banks. As outlined above, banks and thrifts offer similar services to similar customer groups and are regulated by agencies with similar charges, regulations, and enforcement powers. If the full range of exemptions is appropriate for banks, then it is logical to conclude that the full range is fully appropriate for savings associations.

Again, MidFirst appreciates the opportunity to comment and supports the SEC's proposed rule, but MidFirst requests that savings associations be granted identical Investment Advisor exceptions as those enjoyed by banks.


Charles R. Lee
Vice President and Director of Bank Administration
MidFirst Bank
P.O. Box 26750
Oklahoma City, OK 73126
405 767 7000