General Securities Principal Qualification (Series 24) Practice Exam

Soft dollars are commissions generated from client trades that are used to pay for research and other eligible services provided by a broker-dealer. The idea is that a portion of the trading commissions funds the broker’s research, data, and analytical tools rather than paying for them with separate cash payments. This is allowed under the Section 28(e) safe harbor if the services are eligible and the commissions are reasonable in relation to the value received. In practice, a fund might get research reports, databases, or portfolio-management software paid for through these soft-dollar arrangements as part of its trading activity. The other options don’t describe this use—unlawful name representations relate to fraud, and REITs are a separate type of investment.