US Court Of Appeals For DC Circuit Vacates Rule 202(a)(11)-1, Possibly Affecting Brokerage Services

On March 30th the U.S. Court of Appeals for the D.C. Circuit issued its opinion in Financial Planning Association vs. SEC. In a 2 1 decision the court vacated Rule 202(a)(11) 1 on the basis that the SEC had exceeded

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On March 30th the U.S. Court of Appeals for the D.C. Circuit issued its opinion in Financial Planning Association vs. SEC. In a 2-1 decision the court vacated Rule 202(a)(11)-1 on the basis that the SEC had exceeded its authority under the Investment Advisers Act of 1940 in promulgating the rule.

It is not immediately clear what effect the opinion will have on broker-dealers’ ability to treat fee-based brokerage accounts, discount brokerage accounts, discretionary accounts and financial planning services as brokerage services.

In the short term, however, the rule remains in effect until the court issues its mandate, which SIFMA expects will occur on or shortly after May 14, or later if the SEC seeks rehearing.

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