My Home About Me

The SEC decided unanimously to preserve the safe harbor under which institutional investors may use "soft dollar" commission payments to pay for independent investment research. Our DC lawyer/lobbyist friend (anonymously, of course) notes that the New York Times covers the good news "like it's a petty crime report."

The Securities and Exchange Commission issued tougher guidelines on the use of so-called soft dollars yesterday, limiting the kinds of services money managers can buy by paying brokerage firms inflated trading commissions and passing on the higher costs to clients.

The commission voted 5-0 to disallow the purchase of computer equipment and office furniture with soft dollars. Commissioners said they might also consider tightening rules on how money managers record soft-dollar expenses and disclose them to customers.

Soft dollars are controversial because they reduce investors’ returns.

My friend gets the story right:

How can you be the most powerful media force in the world's financial capital and not know that the commissions a client pays to a broker are for both research and trade execution, that trade execution is continuing to fall in cost due to technology and competition and that research, if it's good, is all about growing investor returns? (If that research is wrong, of course, you lose money.)

Wait, perhaps it's because the NYT writers insulate themselves from the infections of facts? Or is it the protective shield of ideology? No, much simpler: the NYT hates the twin ideas of republican democracy and capitalism. Anything which enhances either, must be distorted and killed.

Yesterday, the SEC voted 5-0 to preserve the policy allowing brokers to use client commissions to pay for research and brokerage services and only those services. Each of the five SEC Commissioners praised the quality and inventiveness of independent research, saying explicitly independent research deserved equal regulatory treatment to the research of the big integrated firms.

This is hardly an issue to interest the average, or even well above average investor, but it's a lifesaver to the $1 Billion independent research and an important "GO BUY INDY RESEARCH" signal to the $8 trillion mutual fund industry and $trillion hedge fund industry.

bailout   Basic Materials SPDR (XLB)   bond trading   bond yields   capitulation   climactic   commodities   credit crisis   credit crunch   Currency ETFs   day trading   Deron Wagner   DJIA chart   economic data   Emini's Nas 100   emini's S&P 500   emini's S&P 500e   ETFs (exchange trade funds)   ETFs (exchange traded funds)   Gold Miners ETF (GDX)