Hard Times for Soft Dollars

On July 12, 2006, the Securities and Exchange Commission (the "SEC") voted to publish an Interpretive Release (the "Release") that provides guidance on money managers' use of client commissions to pay for brokerage and research services under the "soft dollars" safe harbor in Section 28(e) of the Securities Exchange Act of 1934.

Section 28(e) provides that a person who exercises investment discretion with respect to an account shall not be deemed to have acted unlawfully or to have breached a fiduciary duty under state or federal law solely by reason of having caused an account to pay more than the lowest available commission if the money manager determines in good faith that the amount of the commission is reasonable in relation to the value of the brokerage and research services received. The SEC has provided guidance on a number of occasions since Section 28(e) was enacted in 1975 in an attempt to respond to changes in the industry and indicate whether the types of products and