As the expiration draws near for a court-ordered stay in the Financial Planning Association's lawsuit to force the agency to clarify its long-pending exemption for brokers who offer fee-based accounts, the Securities and Exchange Commission has offered for public comment the same proposal-almost verbatim-it already offered twice in the past five years.
   " Basically they've punted," says Duane Thompson, the FPA's director of advocacy, who maintained that the association will press forward with its lawsuit if the final rule the SEC must approve by April is not satisfactory. April is the deadline the court gave the SEC to take final action on its pending rule when the agency won a temporary stay of the FPA's lawsuit in August.
   FPA President Jim Barnash says: "I feel personally that it was less than valiant of the commissioners to accept another comment period instead of taking action." In addition to pressing forward with its lawsuit if the SEC fails to act responsibly, Barnash says the FPA is considering directing its 28,000 members to enlist their clients in a grassroots letter-writing campaign to Congress and the SEC.
   In its temporary rule proposal, the SEC once again asserts the broker exemption for brokers who offer advice and fee-based services on the grounds that such advice is "solely incidental" to their brokerage business. The agency also says brokers' activity does not trigger "special compensation" rules, despite the fact that they're charging fees for their accounts.  
   The only change in the proposal would require broker-dealers to disclose that the accounts are brokerage accounts and that "as a consequence, the customer's rights and the firm's duties and obligations to the customer, including the scope of the firm's fiduciary obligations, may differ." They would also be required to include a phone number investors with questions can call.
   "The rule is pretty much identical to before," says Nancy Morris, an attorney fellow with the SEC's Division of Investment Management. "We're putting everything on the table and saying, 'In light of what we've heard since 1999, what kind of interpretation and assistance can we give so that people have a clearer understanding of what a brokerage account is?'"
   Wall Street and the Securities Industry Association (SIA), which have lobbied heavily to maintain the broker exemption, are pleased. "We are supporting the rule definitively because it allows our members to continue to offer extremely popular fee-based broker-dealer accounts without being subject to unnecessary and duplicative regulation under the Adviser's Act," says SIA Spokesman Dan Michaelis.
   The proposal, S7-25-99, is available on the SEC's website ( The comment period closes February 7.