Highlights Widespread Investor Confusion Over Current Unequal Protections
Provided by Advisory and Brokerage Accounts; U.S. Investors Expect Equal
Protections for The Same Services, Not Increased Disclosure of Differences
NEW YORK, Feb. 8 /PRNewswire/ -- TD Waterhouse USA today announced its
official position on the Broker-Dealer exemption re-proposal, also known as
the "The Merrill Lynch Rule" in a comment letter to the Securities Exchange
Commission. The firm is calling for a common regulatory standard with equal
protections for all investors receiving fee-based advice. The SEC's
re-proposal primarily seeks to require brokerage firms relying on the
exemption to provide enhanced disclosure to investors concerning the
differences between brokerage accounts and investment advisory accounts. TD
Waterhouse remains the only major brokerage firm to be publicly against the
adoption of Broker-Dealer exemption, a rule proposal put forth by the SEC in
1999 that would expand the exemption from the Investment Advisers Act of 1940
for stockbrokers offering fee-based financial advice.
"We applaud the SEC for seeking to enhance investor protections and for
acknowledging the confusion around fee-based advice. We urge the SEC to go
even further, and ensure that the future regulation of fee-based advice
provides investors a consistent standard of protections, whether that advice
is provided by a brokerage firm or an investment adviser," said Tim
Pinnington, President and Chief Executive Officer of TD Waterhouse USA.
"Investors don't want additional disclosure of differences in protections,
rather, they expect equal protections for the same services regardless of the
source."
TD Waterhouse highlighted key findings from its recent investor survey,
conducted by research firm Penn, Schoen & Berland Associates in the comment
letter. The survey discovered substantial investor confusion. Fifty-eight
percent of investors incorrectly believe that both stockbrokers and investment
advisers have a fiduciary responsibility to act in the investor's best
interests in all aspects of the financial relationship. Sixty three percent
incorrectly believe that both stockbrokers and investment advisors are
required to disclose all conflicts of interest prior to providing financial
advice. And, 84% of investors expect both stockbrokers and investment advisers
to be subject to the same industry regulation, a probable cause of the
confusion.
As the majority of U.S. investors do not understand the current
differences in investor protection provided by investment advisers and
brokerage firms, TD Waterhouse is concerned that the SEC's focus on increased
disclosure may be inadequate to protect investors.
"In making its final ruling, we urge the SEC to rule in the best interests
of the American investor," said J. Thomas Bradley, Jr., President of TD
Waterhouse Institutional Services. "The broker-dealer exemption doesn't
provide uniform protection and should be replaced with regulation that will
build investor trust and confidence in all providers of financial advisory
services." The survey also found that 90% of investors expressed support for
Congress to enact legislation that creates a clear uniform standard of
investor protection for all stockbrokers and investment advisers who provide
financial advice to investors.
TD Waterhouse USA commissioned research firm Penn, Schoen & Berland
Associates, Inc. to conduct interviews with 1,000 U.S. investors who own
stocks, bonds, or mutual funds outside of a company-sponsored plan. The survey
has a margin of error of +/- 3%. Interviews were conducted online from October
18 - 22, 2004.
About TD Waterhouse
TD Waterhouse Group, Inc. provides investors and financial advisors with a
broad range of brokerage, mutual fund, banking and other consumer financial
products. Worldwide, TD Waterhouse currently services 3.1 million active
customer accounts. TD Waterhouse is a wholly owned subsidiary of The Toronto-
Dominion Bank (NYSE/TSE: TD) and part of TD Bank Financial Group.
Headquartered in Toronto, Canada, with offices around the world, TD Bank
Financial Group offers a full range of financial products and services to
approximately 13 million customers worldwide. In the U.S., brokerage services
provided through TD Waterhouse Investor Services, Inc., Member NYSE/SIPC.
SOURCE TD Waterhouse USA
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http://www.tdwaterhouse.com
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CONTACT:
Jennifer Olegario of TD Waterhouse USA,
+1-212-908-7117
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