Securities regulators and policy commentators have questioned so-called "soft dollar" arrangements, in which fund managers promise portfolio trades to participating brokers in exchange for investment research. Johnsen examines the money management and brokerage industries,focusing on the agency costs associated with soft dollar arrangements. While many argue that soft dollar brokerage leads to the unjust enrichment of fund managers at the expense of fund beneficiaries, Johnsen concludes that soft dollars are efficient. He describes them as a vehicle that allows managers and brokers to align incentives and thereby reduce agency costs to the benefit of fund investors. Thus, this Article provides a counterpoint to the current support for either increased regulation or outright prohibition of soft dollar arrangements
D. B. Johnsen,
Property Rights to Investment Research: The Agency Costs of Soft Dollar Brokerage,
Yale J. on Reg.
Available at: http://digitalcommons.law.yale.edu/yjreg/vol11/iss1/4