No-Action Letter Affirms that 28(e) Research Provider is Not Investment Adviser
In a recent No-Action Letter, the staff of the SEC’s Division of Investment Management opined that the provision of research paid with commission credits does not in and of itself create an investment adviser/client relationship. The letter indicates that the research must be provided directly to the money manager who must be unaffiliated with the research provider, the client must not be involved in selecting or valuing the research services, and the money manager must exercise investment discretion (as required by 28(e). The broker-dealer seeking no-action relief indicated that several research providers expressed concern that delivering research paid with hard dollars generated by commission credit programs would create an advisory relationship and trigger prohibition on affiliate transactions between the research provider and the clients.
OUR TAKE: We think this No-Action Letter adds some certainty to commission credit programs. One open question is whether the same analysis applies where the research provider is affiliated with the money manager.
http://www.sec.gov/divisions/investment/noaction/2010/bnyconvergex092110.pdf
OUR TAKE: We think this No-Action Letter adds some certainty to commission credit programs. One open question is whether the same analysis applies where the research provider is affiliated with the money manager.
http://www.sec.gov/divisions/investment/noaction/2010/bnyconvergex092110.pdf
Posted by Todd Cipperman at 10/12/2010 6:07 AM 
Categories: Compliance and Operations
Tags: soft dollar commission brokerage research
Categories: Compliance and Operations
Tags: soft dollar commission brokerage research
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