question about compensation and ethics (real life)

Hey Guys, here is a situation that i am currently facing: there is a very prominent investment bank that is willing to invest some of our money to back a money market instrument that we are introducing for our small investment firm. we have examined the underlying security and think it is a good relatively safe product with good short term yields. here is the dilemma: the investment bank willingly pays commissions to individual money managers from smaller firms that place funds with them. should we refuse the commissions as it may seem like a conflict of interest EVEN though the investment is a good one and one we would use even without the commissions? or should we accept the commissions and pass it on to our firm as additional company income? the rationale being that as private individuals , we may not have been in a position to raise the level of funds for placement, whereas by using our company name the investors were willing to entrust the funds to us. i am unsure about this one from an ethical standpoint. If we receive commissions from anyone, we would tend to disclose it to customers.

As I understand your dilemma ( I may be off base here so dont bbq me): You have a MM product that you are launching and will be placing client funds there. The manager/underwritter of this product has offered you a commission to sell this product and will pay you a commission on your firms own money as well as clients. I assume you are a fee based discretionary manager and woudl not lock your cleitn up in some sort of DSC schedual, therefore, disclose the annual trailer commision and deduct the amount recived from the amount you bill you clients. That way you have no incentive to sell the product further if it is no longer appropriate and your clients are not payign more fees than agreed to. As for your firms holding some of the assets: only if you buying it will not harm clients and you belive it will not effect your judgement. My guess would be that many cleints would see that haveing some prop skin in the ganme would be a plus from there prespective unless it lowers there returns. Commissions on prop (really fee rebates) are property fo the firm and you and your partners can decide how to distrubte them as your would any other return on invested capital.