William Galvin, Massachusetts state secretary, today urged a Senate panel to ban soft dollars. Mr. Galvin told the Senate Subcommittee on Financial Management, the Budget and International Security that soft dollars are "additional sources for fees coming out of the pockets of investors."
Paul Roye, director of the SEC's investment management division, said that while the agency backs a re-examination of what soft dollars can buy, an outright ban "is a complicated issue." A lot of independent research is paid for by soft dollars, he noted.
Eliot Spitzer, New York attorney general, testified that mutual fund investors often pay 25 basis points more than pension funds to investment advisers for identical services; investors would save more than $10 billion annually if the fees were the same. Mr. Spitzer also suggested that mutual funds obtain multiple bids from investment advisers to get the best deal for their shareholders.