The debate over soft dollars nearly erupted into a barroom brawl on Capitol Hill last week, as the Senate Banking Committee held an open hearing on the much-maligned practice of mutual funds using brokerage commissions to pay for research and overhead costs.

The two-part session was the ninth in a series of hearings reviewing the current investigations and regulatory actions in the $7 trillion mutual fund industry, one highlighted by the exchange of heated words from both sides. The knock on soft dollars has typically been that they are the least transparent and least understood investment tool because they are packaged with trade execution costs, a completely separate service than stock research.

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