Date: 05/08/2000 5:14 PM Subject: Re: File No. S7-25-99. To : Honorable Arthur Levitt Jr., Chairman Securities and Exchange Commission From: Ivan Bullerman, CFP Chairman Levitt, I am writing to express my opposition to SEC Release Nos. 34-42099; IA-1845, "Certain Broker-Dealers Deemed Not To Be Investment Advisers." The proposed Rule hurts the investor, for the following reasons. -- information on the firm as advisers are required to disclose in the new Form ADV, even though BDs will be providing the same non-discretionary advisory services; -- BD representatives are subject to a less stringent customer 'suitability' rule, and are not generally considered to have a fiduciary loyalty to the client as are registered investment advisers; -- the required "brokerage account" disclaimer will not be understood by the public and is completely inadequate. The public will be unduly influenced by the heavy marketing of the advisory services instead of the brokerage services and therefore assume that the services are advisory, not transaction-oriented services. -- BD representatives are not subject to the same state competency requirements (the new Series 65 competency exam) as for those generally providing investment advice to the public on behalf of state and federally registered investment advisers. * The proposed rule hurts investment advisers for the following reasons. -- broker-dealers can use client testimonials in advertising; advisers are strictly prohibited from using them. -- broker-dealers that are not also registered investment advisers will avoid the costs of compliance required under the 1940 Investment Advisers Act, even though they will be able to provide the same services except for discretionary activities. -- broker-dealers that are not registered investment advisers will not incur the significant costs associated with major revisions to the new Form ADV, as proposed in SEC Release No. IA-1862; 34-42620. -- broker-dealers will have less liability because of the more stringent fiduciary duty under the 1940 Act. * The SEC's image of championing the investor will be harmed by adopting the rule. -- Major consumer organizations, including the Consumer Federation of America and AARP, are strongly opposed. -- Commission support of functional regulation of the financial services industry, as communicated to Congress during hearings on Glass-Steagall reform, will be called into question by the Commission's subsequent support to exempt extensive investment advisory activities from the 1940 Act. Respectfully Submitted, Ivan Bullerman