On May 14, 2007, the Securities and Exchange Commission announced that it will ask a court to allow four months for investors and their brokers to respond in light of a recent court decision affecting an estimated one million fee-based brokerage accounts.

In asking for the 120-day stay of the ruling of the District of Columbia U.S. Court of Appeals in Financial Planning Association vs. SEC, the Commission announced that it will not seek further review of the March 30, 2007 decision that affects these customer accounts with holdings of an estimated $300 billion.

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.  Customers are encouraged to ask their brokers if they believe their accounts are affected by this decision.  The Commission suggests that investors carefully consider any recommended changes to their accounts before implementing them.

The Commission will consider at a later date whether further rulemaking or interpretative guidance is necessary regarding the application of the Adviser’s Act to these types of accounts.  At that time, the Commission will also consider any other relevant issues resulting from the court’s decision.

The Commission plans to work with the 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 the time they need to determine the appropriate level or form of securities services for them.