Why is it okay for a client to direct brokerage to a charity or something? Aren’t the two conditions of brokerage that it is property of the client that MUST be used for “research.” If the latter doesn’t apply, are there any limitations on what a client can do with their brokerage? Also, this may be a retarded question, but I thought the whole point of soft dollars was that you couldn’t really cash it out and give it to someone but it was more like credits to be used at that broker’s firm… Input appreciated. Thanks dudes.
I agree with you on all your points. On a schweser exam, however, the client was allowed to give money to a charity and this was in compliance with the standards
The issue is that who is actually your client? With a pension fund, the clients are the real beneficiaries of the fund, not the fund trustees, therefore the fund trustees can’t tell you where to spend the money. But if your guy is the client then he can tell you because it is his decision. Others can feel free to correct me.
thems Wrote: ------------------------------------------------------- > Why is it okay for a client to direct brokerage to > a charity or something? Aren’t the two conditions > of brokerage that it is property of the client > that MUST be used for “research.” If the latter > doesn’t apply, are there any limitations on what a > client can do with their brokerage? > > Also, this may be a retarded question, but I > thought the whole point of soft dollars was that > you couldn’t really cash it out and give it to > someone but it was more like credits to be used at > that broker’s firm… > > Input appreciated. Thanks dudes. The only condition is “brokerage is the property of the client”. The second one “must be used for research” is for when it is not directed by the client on how to use their brokerage. And the above poster is correct in, first id your client. To limit the soft dollar to only be used at that broker’s firm is really in the interest of the firm, not the client. The whole point in soft dollar is that Soft Dollar is the client’s property and you either do what the client (in the case of a fund, your client are the investors of that fund) tells you to do or, in absense of that, you do what is in the best interest of the client.