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Article: The Fight for Independents: A crackdown on "soft dollars" may threaten the livelihood of independent research firms.
- Article from:
- Financial Planning
- Article date:
- June 1, 2004
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Among the mutual fund practices that would be ended by the Mutual Fund Reform Act of 2004 are so-called "soft-dollar" arrangements. In March, MFS announced that it would ban the use of soft dollars to acquire third-party securities research and market data. "A few other fund companies, such as Bridgeway and American Century, have said that they do not pay soft dollars," says Laura Lutton, an analyst at mutual fund research company Morningstar in Chicago.
Here, the term "soft dollars" refers to the commissions paid by fund companies to brokerage firms when securities are bought and sold. Instead of negotiating a 3-cent-per-share rate, the funds might pay 5 cents ...