SEC Issues Interpretive Guidance on Soft-Dollar Practices

Washington, DC, January 4, 2002 - The Securities and Exchange Commission has issued interpretative guidance on the application of Section 28(e) of the Securities Exchange Act of 1934. Section 28(e) provides a safe harbor to money managers who use the commission dollars of their advised accounts to obtain research and brokerage services. The SEC’s interpretative guidance clarifies that the term “commission” for purposes of Section 28(e) encompasses, among other things, certain transaction costs, even if not denominated a “commission.”

Previously, the SEC interpreted Section 28(e) to be available only for research and brokerage services obtained in relation to “commissions” paid to a broker-dealer acting in an agency capacity. The SEC reconsidered its interpretation of Section 28(e) in response to a request by the Nasdaq Stock Market.