Reuters – Soft-dollar deals — in which money managers pay above-market commission rates to get “free” brokerage services such as stock research — will be further restricted, but not banned, underrules adopted on Wednesday by the U.S. Securities and Exchange Commission.<\/p>\n
The investor protection agency voted 5-0 to approve new official guidance on a Wall Street practice that started in the 1970s and has become widely used despite some controversy.<\/p>\n
The SEC’s action follows disclosures that soft dollars have been used in some cases to pay for conferences in Bermuda, telephone calls, and even college tuition for managers’ kids.<\/p>\n
Soft-dollars are non-monetary credits given to money managers by brokerages in exchange for payment by the managers of above-market commission rates for execution of buy and sell orders. The credits commonly go to managers of mutual funds, hedge funds, pension funds and other institutions.<\/p>\n
Some investor activists have supported a complete ban on soft-dollars, arguing they sometimes are spent on products and services that benefit managers, but not fund investors.<\/p>\n