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News July 26, 2004 Issue

Advisers and Thrifts at Odds

Whether or not you like the SECís proposal to exempt thrifts from the Advisers Act probably depends on whether you are a thrift or an adviser. The comments break down as follows: Thrifts like it. Some thrifts want the SEC to go further. Advisers generally donít like it.

The proposal would exempt thrifts from the Advisers Act to the extent their investment advice is provided in their capacity as trustee, executor, administrator, or guardian for accounts created and maintained for a fiduciary purpose. Thrifts could not publicly hold themselves out as providing advisory services, except in connection with the ordinary advertising of their traditional services.

In recent comment letters, the ICAA and Financial Planning Association told the SEC it should not exempt thrifts from the Advisers Act. The ICAA said that the exemption "would allow thrifts to engage in essentially identical activities as investment advisers while avoiding the regulatory structure of the Advisers Act." In contrast, members of the banking and thrift communities supported the proposal. Several urged the SEC to fully exempt all thrift activities from Advisers Act regulation.