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Disclosing Soft Dollars

Traders Magazine, October 1998

Robin Howard

The central theme of both the Securities and Exchange Commission's and the Association for Investment Management Research's reports on soft-dollar practices is disclosure, disclosure, disclosure. Not only is the SEC requiring it, but an increasing number of pension-plan sponsors are requesting information on how their commission dollars are being used to benefit the performance of their plans.

The SEC report on soft-dollar practices found that "most broker dealers and advisers lacked comprehensive soft-dollar controls. This lack of comprehensive controls may have led to instances of incomplete disclosures to clients, using soft dollars for non-research purposes without disclosure, and inappropriate mixed-use allocations."

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