US SEC guides on company websites, "soft dollars"

By Kim Dixon

WASHINGTON, July 30 (Reuters) - U.S. securities regulators on Wednesday approved guidance for investment company boards in their oversight of money managers' use of "soft dollars," and cleared standards for public companies issuing material information on their websites.

The Securities and Exchange Commission, in a wide-ranging public meeting, spelled out responsibilities of such board directors in stemming conflicts of interest when money managers pay inflated commissions to brokers for perks such as free stock research.

Critics say such "soft dollars" have been used to pay for entertainment and college tuition for children of money managers.

The guidance aims to help directors figure out "when it's necessary or advisable to rein in the use of soft dollars," SEC Chairman Christopher Cox said.

About 40 percent of U.S. households use investment companies or money managers to help manage their assets, and are likely unaware they are funding up to $1 billion a year for such transactions, Cox said.

The guidance spells out that boards have the authority to demand information from money managers to ensure that advisers are handling such conflicts of interests. They are not responsible for every single transaction, however.

No new restrictions or requirements on fund directors or investment advisors are imposed under the guidance.

"If there is one consistent complaint I hear about from directors of investment companies ... (it) is that they are literally drowning in documentation and paperwork," SEC Commissioner Paul Atkins said. "We need to help them cut through that."