WASHINGTON (HedgeWorld.com)–Although language purists might complain about any sentence that ends with a preposition, none will protest the concision of Keith L. Shadrick's comment to the Securities and Exchange Commission concerning its new proposed interpretation of the statutory safe harbor for the use of client commissions for research and brokerage purposes.
The comment reads in full, "Soft dollars should be completely done away with."
Mr. Shadrick is president of Axia Advisory Corp., an Indianapolis investment advisory firm created in 1989 specifically to offer consulting services independent of what its founders saw as conflicts of interest. As its web site indicates, Axia doesn't "receive commissions, referral fees … shareholder service fees [or] directed brokerage fees." Mr. Shadrick also is one of the three earliest commenters on the SEC's new release.
Another commenter shares his disdain for soft money. Junius Peake, professor of finance at the University of Northern Colorado, complained in his comment that the SEC neglected to ask commenters whether it ought to seek to have Congress remove the 28(e) safe harbor altogether. He wrote that the advocates of the safe harbor always have contended that without the provision, securities research will dry up. He found this argument reminiscent of Chicken Little.
"Quality research has value and should be sold or leased based on the market's assessment of its value," he wrote.
The other of the early three commenters took a somewhat different view. William T. George of Encino, Calif., wrote that he worked for more than 22 years marketing soft-dollar brokerage to bank trust departments, hedge and mutual funds, and pension investment managers. He asked the SEC to "interpret my comments in this context."
