With longstanding mutual fund practices such as directed brokerage and revenue sharing likely headed for the junk pile, the heated debate over the merits of soft-dollar research commissions has intensified.

The discussion over soft dollars is nothing new for the fund business, but the recent wave of impropriety that has permeated the nation's biggest fund houses has thrown gasoline on the fire. Securities regulators and Congress are stressing the importance of transparency and disclosure now more than ever. With respect to soft dollars, they're concerned about abuse of the safe-harbor provision of the Securities Exchange Act of 1934, which came into effect after the abolition of fixed commission rates in 1975. The amendment under Section 28(e) frees an investment advisor from breach of fiduciary duty claims for charging clients higher commissions for brokerage and research services.

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