For now, proposals to overhaul the safe-harbor provision are just those – proposals. A top Securities and Exchange Commission official said Thursday that 2005, not 2004, will be the year where the practice of using soft money for stock research and trading commissions might end, Reuters reports.

"We should not be taking rash action or taking action which has unintended consequences," said Larry Bergmann, the Commission’s senior associate director "We hope to report to [Chairman William Donaldson] by the end of the year."

Addressing 1,000 people in a New York "soft dollar" conference sponsored by the Securities Industry Association, Bergmann was not the only one predicting a longer wait for soft dollar rule adjustments. The SIA’s vice president of government affairs, Rachel Robinson, said any Congressional action is "not likely" in 2004.

Several firms, including Janus and Morgan Stanley, have either eliminated or limited their use of soft dollars. Those who oppose changing the safe-harbor provision argue that tiny, independent research firms would be blasted away if soft dollar use was limited, because they would no longer be getting money from brokers that receive money through larger institutions.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.