Reuters- The U.S. Securities and Exchange Commission said on Wednesday it has settled with two hedge fund advisers, one for so-called “soft dollar” arrangements and another for failing to filedisclosure documents.
Schultze Asset Management LLC (SAM) has agreed to pay $100,000 and its sole principal, George Schultze, agreed to pay $50,000 to settle charges that it misrepresented its client commission, or soft dollar, practices to an advisory client, the SEC said.
The agency said the hedge fund adviser misrepresented the use of client commissions when in fact they were being used to cover expenses, such as Schultze’s salary.
Congress in 1975 approved the use of soft dollar arrangements in which money managers can pay above-average brokerage commissions on customers’ trades. Congress said the deals would be allowed as long as the extra funds were used to benefit investors, for things such as stock research.
Earlier this year, SEC Chairman Christopher Cox sent a letter to top lawmakers calling for a legislative fix to soft-dollar practices.
