Developments of Note
SEC Broadens Interpretation of Section 28(e) under the 1934 Act to Include Certain Principal Transactions
The SEC issued a release interpreting the term "commission" in Section 28(e) of the Securities Exchange Act of 1934 to include a markup, markdown, commission equivalent or other fee paid by a managed account to a dealer for executing a transaction where (a) the fee and transaction price are fully and separately disclosed in the transaction confirmation and (b) the transaction is reported under conditions that provide independent and objective verification of the transaction price subject to self-regulatory organization oversight. An investment adviser that receives research and brokerage services in relation to a "commission" within the meaning of Section 28(e) may qualify for Section 28(e)’s safe harbor which, provided certain conditions are met, prevents the adviser from being found to have acted unlawfully or breached a fiduciary duty to a client because
