For Immediate Release
July 20, 2006
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Contact: |
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Melissa Buden |
(212) 618-0502 |
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Travis Larson |
(202) 216-2057 |
SIA Commends SEC Interpretive Guidance on “Soft Dollars”
WASHINGTON, D.C.,
July 20, 2006- The Securities and Exchange Commission (SEC) has issued an
Interpretive Release that provides guidance on money managers' use of client
commissions – also known as “soft dollars” - to pay for brokerage and research
services under the safe harbor of Section 28(e) of the Exchange Act. The Interpretive Release clarifies the scope
of brokerage and research services and offers guidance on client commission
arrangements.
“The SEC’s guidance effectively clarifies how client commissions may be used by money managers,” says Marc Lackritz, president of the Securities Industry Association (SIA). “Most importantly, the guidance does not lend itself to unnecessary over-regulation.”
Previous to the newly issued guidance, one of the main points of contention under the soft dollars rule was lack of clarity surrounding proprietary versus third-party research. The SEC’s guidance clarifies that both proprietary research and third-party research fall within the scope of the soft dollar safe harbor.
“The guidance issued by the SEC very closely reflects recommendations made by SIA and others in comment letters submitted to the SEC in late 2005,” points out Michael Udoff, vice president and associate general counsel, SIA. “We are pleased to see that the SEC carefully considered SIA’s concerns regarding commission-sharing agreements, and has recognized that best execution and the best research can often both be achieved through such arrangements.”
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The Securities Industry Association brings together the shared interests
of more than 600 securities firms to accomplish common goals. SIA's primary mission is to build and
maintain public trust and confidence in the securities markets. SIA members (including investment banks,
broker-dealers, and mutual fund companies) are active in all U.S. and foreign
markets and in all phases of corporate and public finance. According to the Bureau of Labor Statistics,
the U.S. securities industry employs nearly 800,000 individuals, and its
personnel manage the accounts of nearly 93-million investors directly and
indirectly through corporate, thrift, and pension plans. In 2005, the industry generated an estimated $322.4 billion in domestic
revenue and an estimated $474 billion in global revenues. (More information about SIA is available at: www.sia.com.)