November 12, 2019

Trading Compliance: Best Execution, Soft Dollars and Directed Brokerage


Counsel Nicholas Wendland presented “Trading Compliance: Best Execution, Soft Dollars and Directed Brokerage,” an online training for National Regulatory Services (NRS) and the Investment Adviser Association (IAA), on November 12, 2019.

As a fiduciary, an investment adviser has many obligations to a client, including developing, implementing and testing policies, procedures and disclosures to ensure proper trading practices. Nicholas was joined by NRS consultant John Van Der Wal to provide an overview of the trading process and appropriate best practices, as well as “hands-on” compliance solutions for these mission-critical areas. Incorporating polling and responses of attendees, the seminar included:

  • Insight into the meaning of “best execution”
  • Focus on how strong policies and procedures can help an investment adviser fulfill its fiduciary obligations
  • Instruction in identifying, mitigating and managing potential conflicts of interest in the trading process
  • Discussion of the regulatory issues pertaining to “soft dollar” relationships

Section 28(e) of the Securities Exchange Act of 1934 provides a “safe harbor” for some research and brokerage services received by an investment adviser in exchange for directing client commissions to a broker-dealer. Nicholas also focused on the definitions of eligible “research” and “brokerage services,” as defined by SEC interpretation.


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