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Article: Soft Peddling: In the rush to clean up mutual funds, a proposed ban on soft dollars will actually harm independent firms and advisers.
- Article from:
- Financial Planning
- Article date:
- April 1, 2004
CopyrightCOPYRIGHT 2004 SourceMedia, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Soft dollars are under attack again, and independent advisers may feel the pinch. In December, the ICI asked the SEC to ban soft dollars except to pay for research that reflects unique intellectual content generated by the executing broker. The Senate also has taken up a mutual fund reform bill that prohibits mutual funds from entering into soft-dollar arrangements.
The mutual fund scandal put conflicts of interest between fund advisers and shareholders under the microscope. Soft-dollar commissions, paid from fund assets, allow advisers to buy services at no cost to themselves. Any premium over execution-only commission rates should benefit shareholders, but fund ...