The SEC has published an interpretive release on the soft dollar issue.

The guidance is a first step in addressing the soft dollar issue, wrote SEC officials in the release. "Further guidance in this area may be particularly important because, under existing law and rules, money managers must disclose client commission arrangements as material information, and may provide more detailed disclosure when they receive products or services that fall outside the scope of the safe harbor," wrote officials.

The document outlines three steps that a money manager must take in determining whether a product or service fall sunder the safe harbor: "First, the money manager must determine whether the product or service falls within the specific statutory limits of Section 28(e)(3)(A), (B), or (C) … Second, the manager must determine whether the eligible product or service actually provides lawful and appropriate assistance in the performance of his investment decision-making responsibilities," wrote officials.

"Finally, the manager must make a good faith determination that the amount of client commissions paid is reasonable in light of the value of products or services provided by the broker-dealer," wrote officials.

Comments on the release can be submitted online for 30 days.  

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