NASD Makes Suggestions On Soft Dollars, Disclosure
November 22, 2004
The NASD Mutual Fund Task Force made its recommendations on soft dollars and disclosing portfolio transaction costs to the SEC last Wednesday.
The task force has asked the SEC to narrow the types of research services that funds may obtain with soft dollars and to require them to disclose soft-dollar practices and portfolio transaction costs in fund prospectuses. The group also would like the SEC to spell out what kind of information about soft dollars that fund boards should review. In addition, the task force believes the SEC should look into the soft-dollar practices of other investment advisors, most notably hedge funds.
"When a mutual fund advisor obtains research with soft-dollar commissions, it's important that the benefits all go to investors and not to the advisor," said NASD Chairman & CEO Robert R. Glauber.
Next, the task force will look into mutual fund distribution arrangements, including shelf-space payments. This phase is expected to take several months to complete.