The latest regulatory notice called them out: a brokerage firm covered a fund company’s overseas research expenses. The accounting here is really quite muddled.
Regulators have now reiterated that expenses such as airfare, accommodation, and expert consultations must not be paid indirectly through trading commissions, nor can they be offset by increasing the share of commissions allocated to a brokerage. Going forward, each research trip must be reported separately and have its own file. Any excessive or improper expenses must be repaid. Routing expenses that should come out of one’s own pocket through trading commissions—this kind of practice really needs a thorough cleanup.$ENA
Regulators have now reiterated that expenses such as airfare, accommodation, and expert consultations must not be paid indirectly through trading commissions, nor can they be offset by increasing the share of commissions allocated to a brokerage. Going forward, each research trip must be reported separately and have its own file. Any excessive or improper expenses must be repaid. Routing expenses that should come out of one’s own pocket through trading commissions—this kind of practice really needs a thorough cleanup.$ENA