Washington | New York 1101 New York Avenue, 8th Floor | Washington, DC 20005-4269 | P: 202.962.7300 | F: 202.962.7305 www.sifma.org

June 4, 2015 Barbara Roper Director of Investor Protection Consumer Federation of America (CFA) 1620 I Street, NW - Suite 200 Washington, DC 20006 Dear Barbara: We were disappointed to read your response and press release yesterday on SIFMAs proposed best interests standard for broker-dealers, as it would appear to contradict CFA's previous comments with respect to such a standard. Further, you are missing the main point we are making, that there should be a best interests standard for broker-dealers, irrespective of the Department of Labors (DOLs) proposal. Back in 2012, CFA publicly agreed with many of SIFMAs points here and here, and even raised the prospect of a FINRA rules-based approach. A clear reading of our proposal, in a non-politicized environment, would benefit retail investors, including retirement savers, whom we both seek to help. Our proposal does not, as CFA says, focus too much on disclosure and consent to conflicts. Rather, our proposal has four distinct components, each of which is additive and equally balanced: (i) a legal and enforceable best interests obligation, (ii) a requirement to manage investment-related fees, (iii) a requirement to manage material conflicts of interests, and (iv) an obligation to provide account opening, annual and webpage disclosures. Our proposal is anything but, according to CFAs words, weak and vague. In fact, SIFMAs language describing the standard itself is taken essentially word-for-word from the DOL proposal, to wit, recommendations must reflect the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person would exercise. Moreover, the timing and content of our proposed disclosures, including account opening disclosure of material conflicts of interest, annual disclosures of investment-related fees incurred by the customer, and webpage disclosure, also bear a striking similarity to the DOL proposal. But this isnt about the DOL proposal. In publishing our best interests proposal, we chose not to discuss the various extraneous conditions and restrictions in the DOL proposal and related PTEs, which CFA raised, because our intent was and remains to focus on the bigger picture. That is, to serve the best interests of our clients and to suggest a better way to achieve such a standard for broker-dealers, in a manner entirely consistent with DOLs approach to a best interests standard, notwithstanding our views on other parts of their proposal.

Washington | New York 1101 New York Avenue, 8th Floor | Washington, DC 20005-4269 | P: 202.962.7300 | F: 202.962.7305 www.sifma.org | www.investedinamerica.org

Unfortunately, neither CFAs response nor its press release specifies how the SIFMA proposal is supposedly weak with respect to the regulation of broker-dealers. Our proposal is more straightforward and comprehensive than DOLs insofar as we propose a standard that would apply to all retail brokerage accounts across the entire marketplace, and not just to retirement accounts. And, importantly, it would set a framework for a uniform standard for broker-dealers for both retirement and non-retirement accounts, which seems like good public policy to us. It will also make it easier for investors to best work with their financial advisors across all of their investment accounts. Moreover, our proposal is constructed within the securities regulatory framework, which includes extensive oversight, examination and enforcement by the SEC, FINRA and state securities regulators. Finally, and most importantly, our proposed standard has all of the key hallmarks of a fiduciary standard albeit one designed explicitly for broker-dealers many of which were drawn directly from Dodd-Frank Section 913, the DOL proposal, and other fiduciary law sources, including a requirement to manage investment-related fees, which is arguably even more rigorous than what Section 913 would require. I recognize the increasingly political nature of the debate around the DOL proposal. Thats unfortunate because it poses real issues and consequences that we will certainly debate and comment on, but that should not detract from our previously shared goal of establishing a higher standard of care for broker-dealers across the retail investment space. We remain committed to doing so. With kindest personal regards, Sincerely,

Kenneth E. Bentsen, Jr. President and CEO, SIFMA