May 10, 2000

Honorable Arthur Levitt Jr.
Chairman
Securities and Exchange Commission
550 Fifth Street, N.W.
Washington, D.C.

re: File No. S7-25-99

Honorable Levitt:

We are writing to clearly state our opposition to SEC Release Nos. 34-42099; IA-1845, "Certain Broker-Dealers Deemed Not To Be Investment Advisers."

We believe the propose Rule hurts the investor for the following reasons:

• Broker-dealers taking advantage of the exception would be required to disclose less disciplinary information (and other information) on the firm as registered investment advisers will be required to disclose in the new Form ADV. This is true even though broker-dealers will be providing the same non-discretionary advisory services as many registered investment advisers.

• Broker-dealer 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. This will create even more possibilities for confusion in the clients' minds.

• Broker-dealer representatives are not subject to the same state competency requirements (new Series 65 competency exam) as for those generally providing investment advice to the public on behalf of state and federally registered investment advisers.

In addition, we believe the intent of regulatory action is to protect and inform the investor - not to remove the added layers of protection and information they currently receive.

The proposed Rule hurts investment advisers for the following reasons:

• Broker-dealers may use client testimonials in advertising; advisers are strictly prohibited from using them. Testimonials may be very misleading.

• 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 - with the exception of 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.

In addition, it is our belief that the SEC's image of championing the investor will be harmed by adopting this 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.

We appreciate your review of these and other comments submitted to the Commission.

Very truly yours,

Nancy J. Johnson, CFP
Vice President
Chief Compliance Officer

1st Global Capital Corp., an NASD member broker-dealer
1st Global Advisors, Inc., an SEC registered investment adviser