Soft Dollar Compliance for Broker-Dealers

May 30, 2007

The Securities and Exchange Commission’s July 2006 guidance on client commission arrangements under section 28(e) of the Securities and Exchange Act of 1934 provides eligible money managers with a safe harbor from violating their fiduciary duties by using client commission dollars to pay more than the lowest possible brokerage rate.  While the SEC is expected to issue additional guidance later this year, the attached two-part article outlines the current safe harbor requirements, including a discussion of research services and brokerage, and offers a detailed compliance checklist for eligibility.  

Gibson Dunn of counsel K. Susan Grafton is the author of "Practice note: soft dollar compliance for broker-dealers," Part 1 and Part II, which originally appeared on the Complinet News Service on April 24 and 26, 2007. Ms. Grafton serves as Chair of the Subcommittee on Market Regulation of the American Bar Association’s Committee on the Federal Regulation of Securities and is a member of the Association of Securities and Exchange Commission Alumni and the Securities and Exchange Commission Historical Society.   

Reprinted with permission, Complinet News Service, © 2007 Complinet, Inc.

Gibson, Dunn & Crutcher’s attorneys are available to assist with any questions you may have regarding these issues. To learn more about soft dollar compliance issues, please contact the Gibson Dunn attorney with whom you work or K. Susan Grafton (202-887-3554, [email protected]) in the firm’s Washington, D.C. office.  

© 2007 Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles, CA 90071

The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.