Soft Dollars

Those looking to the SEC to extend or make permanent a temporary exemption tied to broker-dealers unbundling research costs from execution costs did not hear the best news at a recent industry conference. Thats when agency Division of Investment Management Director Dalia Blass told attendees that the Investment Management staff is not yet prepared to recommend such a course to the Commission.

The asset management industry wants to hear from the SEC, while the SEC wants to hear more from the asset management industry. The issue is what the agency will ultimately decide on the question of how broker-dealer research costs should be paid in light of the European Unions directive requiring that those costs be unbundled from broker-dealer execution costs.

Research and brokerage services may be charged to clients through the use of soft dollars. But advisers doing so need to ensure they use them properly.

An advisory firm that allegedly cherry-picked profitable trades and allocated them to six favored accounts, costing a widow, a profit-sharing plan and a charitable foundation $10.7 million, is now facing SEC action. The same firm is also charged with misusing $1.1 million in soft dollars to meet personal obligations of its founder, including a payment […]

Soft dollars have long been used by advisers to avoid the direct payment of certain expenses. Direct payment in hard dollars not only requires cash on hand, but also can affect mutual fund fee disclosures when such payments would increase the advisers annual fee. Shareholders bear the cost either way, but in soft dollar arrangements […]

According to OCIE director Lori Richards, the “most important” thing for compliance officers at advisory firms to do right now is to remind their firms employees about their fiduciary obligations to clients. Beyond that, she suggested a number of specific areas that compliance officers should “pay particular attention to.” SEC examiners, she noted, will be […]

Yes, were in the middle of a market crisis. But life does go on. Last week, a number of industry groups submitted comment letters on the SECs July 2008 proposed guidance on how investment company boards of directors should go about evaluating soft dollar arrangements and other portfolio trading activities of fund advisers. The comments, […]

Heres the second part of our series covering SEC official Kevin Goodmans discussion of findings in the 2008 Investment Management Compliance Testing Survey, which was conducted earlier this year by the Investment Adviser Association, ACA Compliance Group, Old Mutual, and IM Insight. Goodman, who serves as the associate regional director for examinations in the SECs […]

Whether your ERISA clients know it or not, if they have 100 or more plan participants, they – and you – are facing a looming challenge: Form 5500 Schedule C. Last month, the Department of Labors Employee Benefits Security Administration attempted to ease that challenge by releasing an FAQ providing guidance on how plans and their […]

For something that was not intended to change existing law or impose any new requirements on fund boards, the SECs recent soft dollar release sure is generating a lot of industry buzz. “Guidance” or not, the thinking goes, directors are going to be expected to march through the list of discussion items in the release. […]