SEC's Cox Calls On Congress to Ban Soft Dollars

The chairman says the practice may result in higher costs for investors.
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Securities and Exchange Commission Chairman Christopher Cox wants Congress to repeal legal protections for "soft dollar" deals, in which money managers pay above-average trading commissions to brokerage firms in exchange for research.

According to press reports, Cox told business leaders in New York City Thursday that "soft dollars need to see the light of day." He wants Congress to either ban the practice or significantly reduce protections for these arrangements.

The chairman said the lack of transparency in soft-dollar transactions may result in higher costs for investors.

A copy of his speech was not available early Friday.

Soft-dollar transactions have been legal since 1975, when Congress backed the inflated commissions as long as money managers had determined the money was used for services that benefited investors -- such as research or brokerage arrangements.