The US Securities and Exchange Commission has published guidance on money managers’ use of soft commissions. The new guidance clarifies t...

The US Securities and Exchange Commission has published guidance on money managers’ use of soft commissions. The new guidance clarifies traditional research reports, market data, and other items are eligible but that computer hardware is not. The guidance comes in the form of an interpretive release and states that under US law brokerage and research services must conform to: the application of eligibility criteria; the money manager's lawful and appropriate use of the items; and the money manager's good-faith determination that the commissions paid are reasonable in light of the value of the services received. Under Section 28(e) of the US Securities Act 1934 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 that person determines in good faith that the amount of the commission is reasonable in relation to the value of the brokerage and research services received.