Based on responses I received from various sources, it is clear that your article on soft dollars ("SEC proposes soft-dollar breakout," March 7, page 1) has created confusion about our position on this important topic.
The ICAA, which exclusively represents the interests of SEC-registered investment advisory firms, issued a written statement on soft dollars on March 3, 2004, and also presented written testimony to the Senate Banking Committee at a hearing on soft dollars on March 31, 2004.
Those statements (available on our website: www.icaa.org) clearly state our support for an SEC rule to require enhanced disclosure of soft dollars and to focus on whether the definition of "research" should be clarified. We do not support the elimination of soft dollars. In fact, we strongly oppose the mutual fund industry's proposal to eliminate soft dollars for third-party research, stating our belief that "market-driven decisions by investors, combined with full and complete disclosure, is certainly a better solution than abolishing soft-dollar arrangements for third-party services."
Research is the lifeblood of the investment advisory profession. While we support a rule by the SEC to enhance disclosure and to ensure that soft dollars are used for legitimate research services, we also believe the SEC must be very careful in assessing how other changes will affect the availability and quality of research to the detriment of investors and the investment advisory firms that serve them.
Investment Counsel Association of America