1 See Memorandum to Closed-End Fund Committee No. 6-95, Investment Advisers Committee No. 13-95, SEC Rules Committee No. 23-95 and Soft Dollars Task Force, dated February 16, 1995.
April 18, 1995
TO: CLOSED-END FUND COMMITTEE No. 20-95
INVESTMENT ADVISERS COMMITTEE No. 20-95
SEC RULES COMMITTEE No. 57-95
SOFT DOLLARS TASK FORCE
RE: DRAFT INSTITUTE LETTER ON SEC SOFT DOLLARS DISCLOSURE
PROPOSAL
______________________________________________________________________________
Attached is a draft of the InstituteGs comment letter on the SECGs proposal to require
investment advisers to disclose certain information regarding their use of client brokerage and receipt of
soft dollar services.1 The letter reflects the positions agreed upon by members at the meeting held on
March 15th to discuss the proposal. A brief summary of the draft letter is set forth below.
The letter opposes all of the CommissionGs proposed disclosure requirements. In lieu of the
CommissionGs proposals, the letter recommends that the Commission require an adviser to disclose the
percentage of its total discretionary commissions that relate to specific services obtained from a broker,
as is the case where a broker purchases a service and a “conversion ratio” or other target commission
level is established for the adviser acquiring such service. In addition, the letter recommends that this
disclosure be supplemented with narrative disclosure that describes research services received by advisers
other than through the allocation of specific commissions. The letter also recommends that the ten
brokers to which the adviser directed the greatest amount of client commissions be disclosed, with no
distinction between research and execution-only brokers, and that a generic description of the types of
services and products, if any, obtained from such brokers be provided. Finally, the letter recommends
that any new disclosure regarding an adviserGs soft dollar practices be provided in Part II of its Form
ADV and provided to clients pursuant to the existing delivery requirements.
Comments are due on the CommissionGs proposal by May 19th. Please provide me with
your comments on the draft letter by May 5, 1995. In addition to your comments on the letter
generally, we are interested in your thoughts on the specific items flagged in bold print on pp. 8, 12-
14 and 17. My direct number is 202/326-5824.
Amy B.R. Lancellotta
Associate Counsel
Attachment