WASHINGTON — The Securities and Exchange Commission said yesterday that it will ask a court to allow four months for investors and their brokers to respond in light of a court decision affecting an estimated one million fee-based brokerage accounts.
At issue was the U.S. Court of Appeals for the District of Columbia Circuit in Financial Planning Association v. SEC ruling in which a federal appeals court in March threw out an SEC rule that allowed brokers to provide investment advice through fee-based accounts without being treated as investment advisers. In a 2-1 decision, the court said that the SEC had exceeded its authority in adopting the rule.
The court's March 30 decision primarily affects fee-based brokerage accounts, but not the traditional commission or advisory accounts that comprise the majority of accounts with brokers, according to SEC, adding customers may ask their brokers if they are affected by this decision.
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The commission said it would work with individual brokerage firms during the transition period as they respond to the March 30 decision. The goal will be to provide customers of the firms with the information and time they need to determine the appropriate form of securities services for them, according to the SEC.
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