SEC chairman testifies on soft dollar controversy

William H. Donaldson, SEC chairman, today said the securities regulator should consider narrowing the definition of "research" that money managers may obtain from brokerage firms in soft-dollar arrangements. Testifying before the Senate Banking, Housing and Urban Affairs Committee, Mr. Donaldson said only "‘real' research that has valid, intellectual content" should qualify as research under soft-dollar arrangements. Mr. Donaldson also said he expects a new SEC task force on soft dollars to consider whether brokerage firms should break out the cost of research and brokerage provided to money managers and whether to repeal Section 28(e) of the securities laws that permit soft-dollar arrangements in the first place.