, an independent research trade group, does not mince words in a letter
to the SEC
criticizing the Mutual Fund Director's Forum's
suggestion to ban all soft dollars.
Investorside's letter was a response to the MFDF's recent report
to the SEC.
"[T]he Mutual Fund Directors Forum's recent 'best practice' recommendation to eliminate all soft dollar commissions would in fact be a disastrous," stated Investorside officers.
Outcomes of banning soft dollars will range from the "emasculation of the independent fund industry," to enabling "closet indexing" fraud, state the officers.
Another unintended consequence will be that some funds (with directors who ban soft dollars) are competitively disadvantaged. Investorside officers also accuse the Mutual Fund Directors Forum of presuming that all soft dollar use is abusive, and that directors who ban soft dollars shirk their fiduciary responsibilities.
The letter was also sent to the officers of the Mutual Fund Directors Forum; members of the Senate Banking, Housing and Urban Affairs Committee; members of the House Financial Services Committee; Ann Combs, assistant secretary of the Department of Labor; and other regulators.
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