The Securities and Exchange Commission issued guidance last week for fund boards of directors in assessing their firms soft-dollar practices. The SEC said it was issuing the guidance a full two years after the limitations it put on soft dollars in 2006, restricting it only to research, due to rapidly evolving market and trading practices. True enough, there are wide discrepancies among brokerages today, due to rapidly evolving markets, trading practices and electronic crossing networks. Fund companies have until Oct. 1 to comment on the SECs guidance.
The Commission outlines numerous considerations for boards, which must rely on reports from top management, auditors, counsel and chief compliance officers in assessing day-to-day trading systems.