Following the Mutual Fund Directors Forums "best practices" could spell a bad reality for investors, a letter to the Securities and Exchange Commission from several independent research firms representing investors suggested.
The Investorside Research Association, which conducts research from an investors point of view, said the recently proposed idea of curbing soft dollars would not help investors, but hurt them and encourage corporate malfeasance.
It would be "a disastrous practice and a perverse abdication of the independent directors fiduciary oversight duty to protect investors and the duty to maximize fund shareholder returns," the letter boldly stated. More, not less, independent research is needed, the letter contends, and halting soft-dollar commissions for such research would result in curbing the research itself, says the trade association.
The 76-member strong membership of the Investorside Research Association continued to say that "many of the investor disasters of the past few years were called early by our members, some of the markets best watchdogs.
The trade group also said, "A ban of soft dollars will cause fund managers to have limited access to research that is vital to maximize investment performance ... if a fund eliminates soft dollars, does it increase its money management fee to compensate for the change in business practice?"