In this whole mutual fund corruption mess, the use of "soft dollars" has not really been an issue. The ICI did issue a resolution to ban soft dollars, which was immediately attacked by the geniuses on Kudlow& Cramer as somehow unfair to research shops, who apparently depend on this source of funds. My understanding is that mutual funds and other institutions typically pay 5 cents a share for executions, or roughly 10 times what most of us pay. Some of this extra goes to soft dollar payment for things like research or trading systems. From an economist's standpoint, any time you have this sort of apparent extra expense that is used to subsidize something else, you have to wonder what is going on. My understanding is the arrangement is attractive for funds because they stick the fund shareholders with the excessive commissions, then use the soft dollars to pay for something that the management company would otherwise have to eat. Is this correct? If so, isn't that an enormous abuse and rip-off? I ran this by a friend who manages a fund and he made fun of me and said what they are paying the big commish for is the broker's ability to move size without distorting the price too much. My understanding was that brokers had backed off from doing this, but maybe I'm wrong. Certainly my impression is the fund guys know next to nothing about trading and execution and regard it as somehow beneath them. Is this just another rip-off or do the funds get value for paying 10 times the commish we pay?