The Soft Dollar Safe Harbor

What this video covers

• The three-condition test for safe harbor protection: investment discretion, eligible service, and good-faith reasonableness determination
• Why the safe harbor protects the buy-side money manager, not the broker-dealer, and what rules govern the broker-dealer instead
• Which products and services qualify as eligible research, including software with analytical value, research reports, and corporate governance research
• Which items are strictly ineligible and must be paid in hard dollars: hardware, mass-marketed publications, travel and entertainment, and legal fees
• How mixed-use items require reasonable allocation between eligible and ineligible portions, with the ineligible portion paid in hard dollars and the methodology documented
• How third-party research works through client commission arrangements or commission sharing arrangements, and why the executing broker must be legally obligated to pay
• The Securities and Exchange Commission (SEC) books-and-records requirements: three years preserved, first two years readily accessible