Soft dollars questions

  1. what does the following mean exactly? AS LONG AS NO FIDUCIARY REGULATIONS APPLY, IT IS PERMISSIBLE TO USE CLIENT BROKERAGE OBTAINED FROM PRINCIPAL TRADES TO BENEFIT OTHER CLIENT ACCOUNTS, AS LONG AS THIS IS DISCLOSED TO THE CLIENT AND PRIOR CONSENT IS RECEIVED. 2. One of the required record retention standards is: “document any arrangements that obligate the investment manager to generate a specific amount of brokerage” does this mean you’re allowed to have a goal of churning through a certain number of trades just to hit a brokerage goal?
  1. Is referring to pension accounts under ERISA. The soft dollars developed by that client can only benefit that client, and no other client.

Be careful here. You can use it for others so long us you have permission to do so from the other client…

could you only use client brokerage obtained from principal trades for other clients? You can’t do the same with agency commissions?

kochunni69 Wrote: ------------------------------------------------------- > Be careful here. You can use it for others so long > us you have permission to do so from the other > client… … but the whole point is that ERISA and some other regulations make mean you cannot do it under any circumstances.

mcf Wrote: ------------------------------------------------------- > kochunni69 Wrote: > -------------------------------------------------- > ----- > > Be careful here. You can use it for others so > long > > us you have permission to do so from the other > > client… > > … but the whole point is that ERISA and some > other regulations make mean you cannot do it under > any circumstances. this is true and definitely a concept to be aware of. If the plan is ERISA, the trustee’s request to use soft dollars to benefit the trustee is not possible. right?

Correct. And you DO NOT screw with ERISA rules.

The soft dollar section says that you can use client brokerage to pay for other clients as long as they sort of ‘balance out’, in other words as long as they get the benefit back over time. Specific client directed brokerage can never be used to pay for other clients though.