Will the Senate punt the issue of soft dollar reform to the SEC? Testimony presented during a Senate Committee on Banking, Housing and Urban Affairs met Wednesday morning to discuss the issue suggested that it may.
Senator Richard Shelby (R-Alabama), chairman of
the Committee, questioned the panelists about the merits of reform alternatives and the authority of the SEC to revise or reinterpret Section 28(e) of the Securities Exchange Act of 1934.
During the testimony, Senator Charles E. Schumer (D-New York) and Dr. Benn Steil, a panelist from the Council of Foreign Relations, clashed repeatedly over whether increased disclosure of soft dollars -- which is within the SEC's authority -- would solve the problem.
Steil believes that disclosure is insufficient, and argued for a wider overhaul. Schumer countered that regulation beyond disclosure is both impractical and will lead to "dramatic decline in research." Schumer characterized Steilís views as "rarified, very academic" and "starry-eyed."
Shelby asked the panelists more than once "could the SEC handle [this issue] without the Senate?" and jokingly ended the meeting with "couldnít the SEC deal with this?"
The hearing was the eighth in a series of ten meetings reviewing practices in the mutual fund industry hearing. One hearing remains.
The panelists included executives and experts from American Century Investments
, Westcap Investments
, The Interstate Group
, The Bank of New York
, Center for Financial Research
, and the Council on Foreign Relations
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