By Sara Hansard
WASHINGTON — Everyone should have to abide by the same rules when it comes to using soft dollars, the major mutual fund industry trade group told the Securities and Exchange Commission in a comment letter.
The SEC should prohibit the use of client commissions outside the "safe harbor" for liability protection "by all investment advisers, regardless of the type of client account involved," the Washington-based Investment Company Institute said in comments filed with the commission this month. The letter was signed by ICI General Counsel Elizabeth Krentzman.
The SEC issued interpretive guidance in July on how client commissions can be used without running afoul of securities regulations. With soft dollars, investment advisory firms pay higher fees for trading commissions in exchange for research and other services.
Meanwhile, T. Rowe Price Associates Inc. of Baltimore complained some investment advisers, such as hedge funds, aren't subject to the rules pertaining to the use of client commissions.
"Unfortunately, not all advisers are subject to this (safe-harbor provision)," Henry Hopkins, T. Rowe Price's chief legal counsel, said in a comment letter.
The SEC should adopt a rule "that will prohibit an investment adviser from using client commissions to pay for any products or services that fall outside the safe harbor," according to T. Rowe Price's letter.