Paul Roye, director of the SEC's division of investment management, recently indicated that clearly defining what can be exchanged between brokers and fund companies through soft dollars will be a priority of the Commission in 2005. Speaking before the Consumer Federation of America, Roye said that this will be a "front-burner" priority, one that will probably be resolved by limiting the definition of "research."

Further, the SEC will consider proposals to tackle directed-brokerage practices, which shareholder advocates say drive up fund expenses with unnecessary trading fees. Still, there are reports that while SEC Chairman William Donaldson is likely to stay in office, the Commission's unprecedented spate of new rules is likely to subside in the coming months.

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