May 1, 1975 (or, May Day) is a very significant date in the history of the U.S. securities markets and U.S. securities regulation. May 1, 1975 was the government mandated deadline for the brokerage industry to abandon its use of fixed-price brokerage commissions, and implement government mandated “fully-negotiated” brokerage commissions.

This attempt, by the U.S. Government, to force fully-negotiated brokerage commissions on the brokerage industry led to some interesting changes and consequences for the brokerage industry, and for institutional investing.

In the early 1970’s I was a retail stockbroker. In late 1976 I left the brokerage industry. Then in the early 1980’s I became employed by a major institutional investment services provider working in that that firm’s third-party broker dealer operation. I sold investment consulting services and third-party, independently produced, investment research to institutional asset managers (i.e. primarily registered investment advisors managing pension funds, mutual funds, employee benefit trusts and personal trusts). The institutional investment advisors paid for investment research with brokerage commissions “paid-up” above the fully-negotiated costs of their brokerage executions, or “trades” (i.e. soft dollars). Over the next twenty-five years I was employed by institutional investment consulting firms and institutional third-party broker dealers. My work experience gives me an intimate perspective on the history and details of May Day 1975, on Section 28(e) of The Securities Exchange Act of 1934, and on the uses of soft dollars in institutional brokerage arrangements.

Most recently I have been engaged as a lobbyist advocating constructive disclosure of all soft dollar brokerage arrangements. And, I have also been consulting with third-party brokers, independent reserch providers and fiduciaries on issues relating to soft dollar brokerage.

by Bill George