FPA calls for round table on RAND report

Jan 4, 2008 @ 1:40 pm

By Aaron Siegel

The Financial Planning Association has asked the Securities and Exchange Commission to host a round table for consumer and industry groups to discuss the findings released in a report by the RAND Corp. yesterday.

The 219-page study , "Investor and Industry Perspectives on Investment Advisers and Broker-Dealers," which was commissioned by the SEC after the broker-deal exemption rule was overturned last year, found that "it is not surprising that investors fail to distinguish financial service providers along regulatory lines."

FPA president Mark E. Johannessen said that the given the potential for regulatory reform, "we believe a broad dialogue with all interested parties is not only appropriate, but vital," according to a statement.

He noted that the FPA is concerned that investors may "lose the fiduciary protections of the Investment Advisers Act of 1940 if the SEC were to support a blended form of regulation for stockbrokers and advisers.

"At a time when brokers are selling their customers collateralized mortgage securities without disclosing conflicts, we can't afford any erosion of consumer protections," he said.

Mr. Johannessen added that the report confirmed that there is "an enormous amount of confusion facing investors."

"The SEC should use the RAND data to start with a clean slate to distinguish between sellers of product from advisers who are legally required to act in the client's best interest," he said.

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