SEC Release 34-51523

I. INTRODUCTION I

II. BACKGROUND II.

A. The Advisers Act Broker-Dealer Exception II.A.

B. The Current Rulemaking II.B.

1. The 1999 Proposal II.B.1.
2. The Reproposal II.B.2.

III. DISCUSSION III.

A. Fee-Based Brokerage Programs III.A.

1. Historical Context III.A.1.
2. Our Conclusions III.A.2.

B. Exception for Fee-Based Brokerage Accounts III.B.

1. Solely Incidental To III.B.1.
2. Customer Disclosure III.B.2.

C.Discount Brokerage Programs III.C.
D.Scope of Exception III.D.

E.Solely Incidental To III.E.

1. Separate Contract or Fee III.E.1.
2. Financial Planning III.E.2.
3. Holding Out III.E.3.
4. Discretionary Asset Management III.E.4.
5. Wrap Fee Sponsorship III.B.5.

IV. EFFECTIVE AND COMPLIANCE DATES IV.

V. FURTHER EXAMINATION OF ISSUES V.

VI. COST BENEFIT ANALYSIS VI.

A. Fee-based and Discount Brokerage Accounts VI.A.

1. Benefits VI.A.1.
2. Costs VI.A.2.

B. Advice That Is Not Solely Incidental to Brokerage VI.B.

Separate Advisory Services VI.B.1.
2. Holding Out As A Financial Planner VI.B.2.
3. Discretionary Brokerage VI.B.3.

C.Wrap Fee Sponsorship. VI.C.

VII. EFFECTS OF COMPETITION, EFFICIENCY, CAPITAL ... VII.

A. Fee-Based and Discount Brokerage Programs VII.A.
B. Discretionary Brokerage and Financial Planning VII.B.

VIII. PAPERWORK REDUCTION ACT VIII.

A. Certain Broker-Dealers Deemed Not To Be Investment A... VIII.A.

B. Broker-Dealers Providing Discretionary Advice or Fin... VIII.B.

1. Form ADV VIII.B.1.
2. Form ADV-W and Rule 203-2 VIII.B.2.
3. Rule 203-3 and Form ADV-H VIII.B.3.
4. Form ADV-NR VIII.B.4.
5. Rule 204-2 VIII.B.5.
6. Rule 204-3 VIII.B.6.
7. Rule 204-1 VIII.B.7.
8. Rule 206(4)-3 VIII.B.8.
9. Rule 206(4)-4 VIII.B.9.
10. Rule 206(4)-6 VIII.B.10.
11. Rule 206(4)-7 VIII.B.11.

IX. REGULATORY FLEXIBILITY ANALYSIS IX.

A. Reasons for Action IX.A.
B. Significant Issues Raised by Public Comment IX.B.
C.Small Entities IX.C.
D.Reporting, Recordkeeping, and Other Compliance Requi... IX.D.
E.Duplicative, Overlapping, or Conflicting Federal Rul... IX.E.
F.Significant Alternatives IX.F.

X. STATUTORY AUTHORITY X

Clear Gif