Alerts

SEC Publishes Revised Soft Dollar Guidance

August 14, 2006

On July 18, 2006, the Securities and Exchange Commission ("SEC" or "Commission") issued an interpretive release (the "Interpretive Release") revising its guidance regarding money managers' use of commissions paid on client brokerage trans-actions ("soft dollars") to pay for certain research and execution products and services provided by broker-dealers. The Interpretive Release sets forth the SEC's interpretation of the statutory safe harbor provided in Section 28(e) of the Securities Exchange Act of 1934 (the "28(e) safe harbor"), which permits a money manager to use soft dollars to purchase certain "brokerage and research services" without being deemed to have breached its fiduciary duties owed to clients. Section 28(e) applies to any person or entity who exercises investment discretion with respect to the account of another (hereinafter referred to as "money managers" or "managers"), regardless of whether such person or entity is registered with the SEC as an investment adviser.