MutualFundWire.com: SEC Proposes Advisor Database

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Wednesday, April 5, 2000

SEC Proposes Advisor Database

The Securities and Exchange Commission voted unanimously today to seek comment on a proposal to create an online database and registration system for investment advisors.

Under the proposal, investment advisors would be required to electronically file a brochure containing descriptions of their services and fees, past disciplinary problems, and potential conflicts of interest. The information would be frequently updated and written in plain English. If approved, the anticipated launch date would be sometime in 2001.

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The system would also function as a means for advisors to register with the SEC and the individual states. The SEC claims that electronic registration will be faster and easier than the current paper-based system. It may also be cheaper, depending on the speed with which the states join the federal system, according to the SEC.

Advisors contacted by the MutualFundWire.com generally supported the idea.

"I think it's absolutely fine," said Lesley Sommers, president of the Sommers Financial Group in New City, NY. "People should have that kind of information. They should do it with doctors."

David Speck, managing director of First Union Securities in Alexandria , VA, agreed. "If you're in a semi-public business like ours, if you're going to deal with people and their money, you can't be afraid to have this kind of information available."

He did see the database as a "mixed blessing. It glosses over important issues like chemistry and philosophy. It can lead people to go shopping for advisors for the wrong reasons. People shouldn't select advisors just on the basis of what's on the Internet."

The SEC will seek comment on the proposal for 60 days.

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