WASHINGTON — The Securities and Exchange Commission dished up few surprises in its first guidance in years on soft-dollar arrangements, but hinted at tougher regulations yet to come for Wall Street brokerage firms.
The SEC's clarification of the definition of research available through soft-dollar arrangements was uncontroversial. But Meyer Eisenberg, acting director of the SEC's investment management division, suggested the regulator will propose a rule requiring money managers to break out the cost of research products and services they receive from full-service brokerage firms and disclose that cost to mutual fund directors and other clients.
Nancy M. Morris, an attorney-fellow in the SEC's investment management division, had announced at a conference that the SEC was working on that proposed rule (Pensions & Investments, March 21, 2005). For years, Wall Street brokerage firms have resisted efforts by regulators and law firms to disclose the cost of soft-dollar research they give money managers.
The SEC's proposed rule might be along the lines of that adopted by Britain's Financial Services Authority, sources said. U.S. investment advisers must ask brokerage firms to estimate the cost of the research they provide through soft-dollar arrangements.